Document:

Exhibit 10.12

EXHIBIT 10.12

EMPLOYMENT
AGREEMENT

        
THIS  AGREEMENT,  dated as of  December  2,  2000,  by and among The  Quaker  Oats  Company,  a New Jersey
corporation (the "Company"),  PepsiCo, Inc., a North Carolina corporation  ("Parent"),  and Robert S. Morrison (the
"Executive").

        
WHEREAS,  the  Company  has  entered  into an  Agreement  and Plan of Merger of even  date  herewith  (the
"Acquisition  Agreement"),  among the Parent,  the Company and BeverageCo,  Inc., a wholly-owned  subsidiary of the
Parent  (the  "Merger  Sub"),  pursuant  to which the Merger Sub will  merge  with and into the  Company,  with the
Company as the surviving corporation (the "Transaction"); and

        
WHEREAS,  the Parent,  Company and the Executive desire to set forth in a written  agreement the terms and
conditions  under which the  Executive  will render  services to the Parent and continue to render  services to the
Company after the consummation of the Transaction.

        
NOW, THEREFORE,  the parties hereto, in consideration of the mutual covenants herein contained,  and other
good and valuable consideration,  the receipt and sufficiency of which is hereby acknowledged,  and intending to be
legally bound hereby, agree as follows:

	 	1.	Employment Period.

	 	(a)	This Agreement shall become effective at the "Effective  Date," which shall mean  immediately  following the
closing of the  Transaction,  if any,  provided that the Executive  remains  employed by the Company at all times through the Effective
Date.  If the  Transaction  is not  consummated,  or if the Executive  ceases for any reason to be employed by the Company  through the
Effective Date, this Agreement shall be null and void and of no further force or effect.

	 	(b)	The Executive  shall serve the Parent and Company,  on the terms and conditions set forth in this Agreement,
for the period  beginning  at the  Effective  Date and ending on the date set forth on  Exhibit A  hereto  (the  "Employment  Period"),
subject to earlier termination as provided herein.

	 	2.	Position and Duties.

	 	(a)	During the  Employment  Period,  the Parent shall cause the  Executive to be employed by the Company and the
Executive  shall serve the Parent and the Company in the positions  set forth on Exhibit A hereto,  with primary  responsibilities  for
the  development of the Company  business plan and the  assimilation  and  integration of Company's  business  operations  with Parent.
Executive shall also be elected a director of Parent and the Company.

	 	(b)	During the  Employment  Period,  and excluding any periods of vacation and sick leave to which the Executive
is entitled,  the Executive shall devote his full business  attention and time to the business and affairs of the Company and shall use
his  reasonable  best efforts to carry out his duties and  responsibilities  hereunder  faithfully and  efficiently.  It shall not be a
violation of the  foregoing  for the  Executive to (i) serve on  corporate,  civic or  charitable  boards or  committees or (ii) manage
personal  investments,  so long as such activities do not materially interfere with the performance of his  responsibilities  hereunder
or violate Section 6 hereof.

	 	(c)	The Executive's services shall be performed primarily at the Company's offices in the Chicago,  Illinois metropolitan
area..

	 	3.	Compensation.

	 	(a)	Salary. As compensation for the Executive's  services  hereunder during the Employment  Period,  the Company
shall pay to the  Executive  a base  salary  (hereinafter  the "Base  Salary")  at an annual rate not less than the amount set forth in
Exhibit A hereto,  payable at such times and  intervals  as the  Company  customarily  pays the base  salaries  of its other  executive
employees.  During the  Employment  Period,  the Base Salary shall be reviewed  annually for possible  increase in accordance  with the
Company's  normal payroll  practices for management  personnel.  The Base Salary shall not be reduced after any such increase,  and the
term "Base Salary" shall thereafter refer to the Base Salary as so increased.

	 	(b)	Incentive  Compensation. In addition to the Base Salary,  the Executive shall be eligible to earn an annual bonus (the "Annual  Bonus"),  with a target bonus equal to the amount specified in Exhibit A hereto.  In addition,  the Executive shall
be awarded stock options on the terms and conditions  set forth on Exhibit B hereto under  Parent's 1994 Long-Term  Incentive Plan (the
"LTIP").  Finally,  the  Executive  shall be entitled to receive a special  supplemental  payment (the  "Supplemental  Payment") in the
amount and on the date set forth in Exhibit A  hereto,  if the Executive  remains employed by the Company on such date, or in the event
of his earlier  termination,  as set forth  herein.  Nothing  herein shall be deemed to modify the terms of any stock  options or other
equity-based  awards held by Executive as of the  Effective  Date,  which  awards  shall  continue to be governed by the terms  thereof
(after giving effect to the Acquisition Agreement).

	 	(c)	Group/Executive  Benefits  and Fringe  Benefits. During  the  Employment  Period,  the  Executive  shall be
 entitled to participate in any group or executive  savings,  retirement and welfare benefit plans, and in fringe benefit and perquisite
programs  (including,  without  limitation,  medical,  life  insurance  and other  welfare  benefits and benefits  under  qualified and
nonqualified  retirement  and savings  plans) of the Company or the Parent,  as the case may be, to the same extent as, and on the same
terms and  conditions  as, other  similarly  situated  executives  of the Parent or Company from time to time,  with credit for service
credited  by the  Company  under  such  plans and  programs  prior to the  closing  of the  Transaction  (collectively,  along with the
Supplemental  Retirement Benefits described in Section 5 below,  referred to as "Benefits").  In addition,  Executive shall be entitled
to defer all salary and bonus payments  hereunder  under the Parent's  Executive  Income  Deferral  Program,  provided,  however,  that
Executive shall not elect to have any deferred amounts deemed invested in Parent common stock without the prior approval of Parent.

	 	(d)	Expenses. The Executive  shall be entitled to receive  prompt  reimbursement  of all  reasonable  business
    expenses  incurred by the  Executive  during the Term in carrying  out his duties under this  Agreement,  provided  that the  Executive
complies  with the  policies,  practices  and  procedures  of the Company  for  submission  of expense  reports,  receipts,  or similar
documentation of such expenses, as in effect from time to time.

	 	(e)	Change of  Control. The Parent  shall  offer to enter  into,  or shall cause the Company to offer to enter
                            into, a  change-of-control  employment  agreement with the Executive on the same terms and conditions as such or similar  agreement may
be entered into by Parent with other similarly situated executives of Parent or its subsidiaries (the "Change of Control Agreement").

	 	(f)	Corporate  Loan. Within  five (5) days  after  the  Effective  Date or such  later  date as  requested  by
 Executive  in writing,  Parent shall lend  Executive  the amount  requested,  not  exceeding a principal  sum of  $10,000,000,  bearing
interest  on the unpaid  principal  sum,  compounded  quarterly,  at the short term  applicable  Federal  rate at the time such loan is
made.  Such  principal  and  interest  shall be due and payable 30 days after the  earlier of (i) the last day of the  Initial  Term or
(ii) the  termination  of  Executive's  employment.  The loan shall be unsecured but with full  recourse  against  Executive.  The loan
shall be evidenced by a promissory note substantially in the form attached as Exhibit C hereto.

	 	4.	Employment Termination.

	 	(a)	Termination  by the Company. (i) The  Executive's  employment may be terminated by the Parent for Cause (as
                           defined  below),  or for any other reason,  including  Disability (as defined below) (a termination  without  Cause).  The Parent shall
give the Executive notice of termination  specifying which of the foregoing  provisions is applicable and, in the case of a termination
for Cause,  the factual basis  therefor,  and the  termination  shall be effective  upon the 5th day after such notice is given or such
later day as may be specified in such notice (such day, the "Date of Termination").

	 	(ii)	"Disability"  shall mean a disability  that would entitle  Executive to receive  benefits under the
                  long-term  disability plan of the Company, or any of its affiliates,  including by limited to Parent (the "Affiliated
                  Companies"),  applicable to Executive,  as in effect from time to time,  which prevents the Executive from performing
                  his duties hereunder for 180 consecutive days or more.

	 	(iii)	"Cause" shall mean that, as  established  by clear and convincing  evidence,  Executive  engaged in
                  gross  misconduct by committing a significant  violation of the Parent's or Company's Code of Ethics or by committing
                  a significant  breach of any material  covenant,  agreement or obligation  under this  Agreement;  provided  that, if
                  appropriate  under the  circumstances  (taking  into  account the nature of the  offense),  the Parent has called the
                  alleged  misconduct to Executive's  attention and he is allowed a reasonable  opportunity to cure it. A determination
                  of Cause by gross  misconduct must be made by a two-thirds  vote of the full Board of Directors of Parent  (excluding
                  Executive),  and must be  communicated  in writing to Executive  by a Notice of  Termination,  which shall  include a
                  certification or a copy of the resolution duly adopted by said Board by the required two-thirds vote.

	 	(iv)	"Notice of  Termination"  shall mean a written  notice which (A) indicates the type of  termination
                  under this Agreement (e.g., for Cause) and cites the applicable  provision of this Agreement,  (B) briefly  describes
                  the facts and  circumstances  claimed to provide a basis for the stated type of termination,  if applicable,  and (C)
                  specifies the date of termination from active service.

	 	(b)	Termination  by  Executive. (i)  The  Executive's  employment  may be terminated by the Executive for "Good
                           Reason"( as defined below),  or without Good Reason.  The Executive  shall give the Parent and Company Notice of  Termination,  and the
termination  shall be effective  upon the 30th business day after such notice is given unless the Parent agrees to an earlier day (such
day, the "Date of Termination").

	 	(ii)	A termination by the Executive shall be for "Good Reason" if it occurs within 30 days after, and
                  as a result of, one of the following:

	 	
(A)
the Parent or Company intentionally fails to pay or provide required
compensation, after such omission has been called to the Company’s
attention and the Company has been given a reasonable opportunity to cure it;

	 	
(B)
the Parent or Company significantly reduces Executive’s titles, position,
duties or authority as set forth in Section 2(a) of this Agreement or Executive
fails to be elected or is removed from the Board of Directors of Parent or the
Company;

	 	
(C)
any material breach by the Parent or Company of this Agreement, provided, such
breach is called to the Parent’s or Company’s attention and the Parent
or Company has been given a reasonable opportunity to cure it; or

	 	
(D)
any relocation by the Parent or the Company of the Executive’s principal
place of business away from the Chicago, Illinois metropolitan area, unless the
Executive consents, in his sole discretion, to such relocation.

	 	(c)	Consequences  of  Termination by the Company  without Cause or by the Executive for Good Reason.
If, during the Employment  Period,  the Executive's  employment is terminated by the Parent without Cause or by the Executive for Good Reason, the
Executive  shall,  for the remainder of the Initial  Term,  nonetheless  remain an employee  through the end of the Initial Term of the
Company to perform  such duties as he and the Chief  Executive  Officer of Parent  shall  mutually  agree,  and shall  receive from the
Company:

	 	(i)	a lump sum cash  payment,  within  30 days  after  the  Date of  Termination,  equal to the sum of:
                  (I) the unpaid Base Salary, if any, payable through the end of the Initial Term, or if applicable,  the Extended Term
                  (determined  without deferral of any amount pursuant to based on Section 162(m) of the Internal Revenue Code of 1986,
                  as amended,  (the "Code")),  at the rate in effect  immediately before the Date of Termination (but, in the case of a
                  termination  by the  Executive  for Good  Reason,  disregarding  any  reduction  thereof  that was the basis for such
                  termination),  plus  (II) the  unpaid  Annual Bonus that would be payable  through the end of the Initial Term, or if
                  applicable  the  Extended  Term,  assuming  such Annual Bonus was payable at the rate equal to the greater of (x) the
                  most recent annual  performance  target on which such year's Annual Bonus is determined,  or (y)  Executive's  fiscal
                  2000 Annual Bonus amount awarded by the Company; plus

	 	(ii)	any unpaid Supplemental Payment; plus

	 	(iii)	any accrued but unpaid Benefits, payable in accordance with the term thereof; plus

	 	(iv)	continued  Benefits  for the  period  ending  on the  last  day of the  Initial  Term.  Thereafter,
                  Executive shall be considered to be a retiree under the terms of the applicable Benefit plans; plus

	 	(v)	full vesting on the Date of  Termination  of stock options  theretofore  granted under Section 3(b)
                  above and the grant of stock  options  described  on Exhibit B (to the extent not  theretofore  granted)  which stock
                  options shall be fully vested on the date of grant;  provided that such stock options shall not be exercisable  until
                  the earlier of the third  anniversary  of the date of grant or such date on which the  vesting of such stock  options
                  would, but for the provisions of this Section 4(c)(v),  have occurred prior to such third anniversary under the terms
                  of the LTIP or such options, and such stock options shall remain exercisable for their full ten-year term.

	 	(d)	Other Employment  Terminations.
If, during the Employment Period, the Executive's employment is terminated
                            for any reason other than by the Company  without  Cause or by the Executive  for Good Reason,  the Executive  shall not be entitled to
any compensation  provided for under this Agreement,  other than (i) Base Salary through the Date of Termination;  (ii) benefits  under
any long-term disability insurance coverage in the case of termination because of Disability; and (iii) vested Benefits.

	 	(e)	Retiree  Status.
Subject to the  provisions of any retirement  plan  qualified  under Section 401(a) of the

Code, upon  termination of Executive's  employment for any reason,  he shall be regarded as a retired senior officer of the Company for
purposes  of all  benefits  payable  under this  Agreement  and any  benefit  plan or  agreement  of the Parent or the Company in which
Executive participates, other than with respect to the stock options granted pursuant to Section 3(b).

 	 	5.	Supplemental Retirement Benefits.

	 	(a)	
Subject to the proration  provisions  described in Section 5(d) below, upon termination of employment for any reason,
Executive  shall  receive a  supplemental  retirement  benefit  pursuant  to this  Agreement  which,  in  combination  with any and all
retirement  benefits to which Executive is entitled or received under any qualified or  non-qualified  defined benefit plans of Parent,
the  Company  and any of  Executive's  former  employers,  will  produce  for him,  upon  commencement  of benefits at or after age 60,
aggregate  retirement  benefits  such that the  annualized  amount,  on a straight  life  annuity  basis,  is equal to the  greater of:
(i) fifty  percent  (50%) of his  average  cash  compensation  (annualized  base  salary  and  annual  performance  bonus) for his five
consecutive  full calendar years of employment  with the Company  (including  years prior to the Effective  Date) that produce  highest
average cash  compensation,  or if his actual number of full calendar years of employment  with the Company  (including  years prior to
the Effective Date) is less than five,  then such average for such number of full calendar  years, as determined  under Section 6(a) of
that  certain  Employment  Agreement  between  the  Executive  and the  Company,  effective  October  22,  1997 (the  "1997  Employment
Agreement"));  or (ii) fifty  percent  (50%) of such average cash  compensation  determined  by taking into account only the three full
calendar  years  of  employment  with  the  Company  prior  to the  Effective  Date;  or  (iii) nine  hundred  fifty  thousand  dollars
($950,000.00).  In  determining  the set-off for other  retirement  benefits,  the value of those  benefits  shall be  calculated as if
Executive had elected to receive each benefit on a straight life annuity basis,  regardless of the form of payment he actually  elected
(including any lump sum payment).

	 	(b)	
Executive  may elect to take the  supplemental  benefit  described  in Section 5(a) in any form  permitted  under the
Company Supplemental  Executive Retirement Program (the "SERP") or the Company Retirement Plan,  including,  but not limited to, a lump
sum payment,  subject to the  applicable  actuarial  adjustment  prescribed by the plan in question for electing such alternate form of
payment instead of a straight life annuity.

	 	(c)	
Subject to Section 5(f), if Executive  commences receipt of the supplemental  retirement benefit described in Section
5(a) before  attaining age 60, then the benefit  shall be subject to actuarial  reduction,  calculated in accordance  with the terms of
the SERP.

	 	(d)	
Subject to Section 5(f), if, before the end of the Initial Term,  Executive's employment is terminated by the Company
for Cause or is terminated by Executive without Good Reason,  then the supplemental  retirement benefit described in Section 5(a) shall
be prorated  based on the number of months  Executive was actively  employed  with the Company,  as follows:  (i) multiply  the formula
figure determined under Section 5(a)  (without subtracting any set-off for other retirement  benefits) by a fraction,  the numerator of
which is the number of months  Executive was actively  employed by the Company,  and the  denominator of which is sixty (60);  and then
(ii) subtract  the set-off for other  retirement  benefits,  as described in  Section 5(a).  Provided,  if Executive  does not accept a
position with any other company  (other than one which is wholly owned by Executive  and/or  members of his immediate  family and which
has annual gross sales revenue of less than  $1,000,000.00)  during the one-year  period  following his last day of active service with
the Company,  then the  proration  formula  shall be more  favorable to  Executive,  as follows:  (x)  calculate  the net  supplemental
retirement benefit under  Section 5(a),  including  subtracting the set-off for other retirement  benefits;  and then (y) multiply that
amount by a  fraction,  the  numerator  of which is the number of months  Executive  was  actively  employed  by the  Company,  and the
denominator of which is sixty (60).

	 	(e)	
If Executive dies before the supplemental  retirement  benefit  described in Section 5(a)  becomes payable,  his wife
shall  receive a survivor  annuity for the rest of her life equal in amount to the straight  life annuity which would have been payable
to Executive  under Section 5(a) if, on the date  immediately  before his death,  he had  terminated  his  employment  for Good Reason,
taking into account all set-offs  that would have applied to his benefit,  except that if his spouse only  receives a reduced  survivor
annuity under the Company  Retirement Plan, then that amount,  rather than the full straight life annuity which would have been payable
to Executive, shall be set-off with respect to the Company Retirement Plan.

	 	(f)	
For the purpose of the foregoing provisions of this Section 5, upon a termination of Executive's  employment with the
Company (i) in a  Qualifying  Termination  (as defined  under  Exhibit A) at any time or (ii) for any reason  after the last day of the
Initial Term, then Executive  shall be considered to have attained the later of age 60 or his actual  attained age on such  termination
date.

	 	(g)	
In addition to the  foregoing,  upon a termination  of  Executive's  employment  with the Company (i) in a Qualifying
Termination  (as defined under Exhibit A) at any time or (ii) for any reason after the last day of the Initial  Term,  Executive  shall
be entitled to such benefits under the Parent's or Company's  supplemental or non-qualified  defined pension benefit plans with respect
to his service after the Effective Date.

	 	6.	Covenants.

	 	(a)	Confidential  Information.
The Executive shall hold in a fiduciary  capacity for the benefit of the Company and
                       the Affiliated  Companies (as defined in Section  4(a)(ii)) all secret or confidential  information,  knowledge or data relating to the
Company or any of the Affiliated  Companies and their respective  businesses  (including,  without limitation,  any proprietary and not
publicly available information  concerning any processes,  methods,  trade secrets,  research,  secret data, costs or names of users or
purchasers of their respective  products or services,  business methods,  operating  procedures or programs or methods of promotion and
sale) that the Executive has obtained or obtains during his  employment by the Company or any of the  Affiliated  Companies and that is
not public knowledge  (other than as a result of the Executive's  violation of this  Section 6(a))  ("Confidential  Information").  For
the purposes of this  Section 6(a),  information shall not be deemed to be publicly  available merely because it is embraced by general
disclosures or because  individual  features or  combinations  thereof are publicly  available.  The Executive  shall not  communicate,
divulge or disseminate  Confidential  Information at any time during or after the Executive's employment with the Company or any of the
Affiliated Companies,  except with the prior written consent of the Company or such Affiliated Company, as applicable,  or as otherwise
required by law or legal process. All records,  files,  memoranda,  reports,  customer lists,  drawings,  plans, documents and the like
that the Executive  uses,  prepares or comes into contact with during the course of the  Executive's  employment  shall remain the sole
property of the Company  and/or one or more of the  Affiliated  Companies,  as  applicable,  and shall be turned over to the Company or
such Affiliated Company, as applicable, upon termination of the Executive's employment.

	 	(b)	No  Solicitation.
The Executive agrees that he shall not, at any time during the  Noncompetition  Period (as defined
                  in  Section 6(c)  below),  directly or indirectly  employ,  or solicit the  employment of (whether as an employee,  officer,  director,
agent,  consultant or  independent  contractor),  any person who is or was at any time during the previous  six (6) months an employee,
representative,  officer or director of the Company or any of the Affiliated  Companies  (except for such  employment by the Company or
any of the Affiliated Companies).

	 	(c)	Noncompetition.
In light of Executive's  exposure to and  participation  in the development of the Company's and the
Affiliated  Companies' business strategies,  operating  techniques and market development plans,  Executive shall during the Employment
Period and for a period of two years immediately following the Employment Period, abide by the  following covenants and restrictions:

	 	(i)	He shall not Participate in the management of business entity that produces,
markets, sells, distributes or licenses Covered Products, unless that entity is
merely a retailer or consumer of Covered Products who does not compete against
the Company or any Affiliated Company in any way.

	 	(ii)	The following definitions shall apply to this Section 5(c):

	 	
(A)
"Covered Products" means any product which falls into one or more of the following  categories,  so long
         as the Company or any Affiliated  Company is producing,  marketing,  distributing,  selling or licensing such product anywhere
         in  the  world,  including,   non-alcoholic  beverages;  bottled  water;  hot  cereals;  ready-to-eat  cereals;  grain  and/or
         potato-based  snacks,  including salty snacks and cookies;  value-added pasta products;  dry pasta products;  value-added rice
         products;  nuts;  pancake  mixes;  pancake  syrup;  confectionary  products  and items the Company or any  Affiliated  Company
         produces for the food service market.

	 	
(B)
"Participate"  shall be construed  broadly to include,  without  limitation:  (1) holding a position in
         which Executive  directly  manages such a business  entity;  (2) holding a position in which anyone else who directly  manages
         such a business entity is in Executive's  reporting chain or  chain-of-command,  regardless of the number of reporting  levels
         between them;  (3) providing  input,  advice,  guidance or suggestions  regarding the management of such a business  entity to
         anyone  responsible  therefor;  (4) providing  a  testimonial  on behalf of such an operation  or the product it produces;  or
         (5) doing anything else which falls within a common sense definition of the term "participate" as used in the present context.

	 	(d)	Acknowledgment  and  Enforcement.
The  Executive  acknowledges  and agrees  that:  (i) the  purpose of the

foregoing  covenants,  including without  limitation the  noncompetition  covenant of Section 6(c),  is to protect the goodwill,  trade
secrets and other  Confidential  Information  of the Company;  (ii) because  of the nature of the business in which the Company and the
Affiliated  Companies are engaged and because of the nature of the  Confidential  Information  to which the  Executive  has access,  it
would be impractical  and  excessively  difficult to determine the actual  damages of the Company and the  Affiliated  Companies in the
event the Executive  breached any of the covenants of this  Section 6;  and  (iii) remedies  at law (such as monetary  damages) for any
breach of the Executive's  obligations  under this Section 6 would be inadequate.  The Executive  therefore agrees and consents that if
he commits any breach of a covenant under this  Section 6 or threatens to commit any such breach,  the Company shall have the right (in
addition to, and not in lieu of, any other right or remedy that may be available to it) to temporary  and permanent  injunctive  relief
from a court of  competent  jurisdiction,  without  posting any bond or other  security  and without the  necessity  of proof of actual
damage.  With respect to any provision of this Section 6 finally  determined by a court of competent  jurisdiction to be unenforceable,
the Executive and the Company hereby agree that such court shall have  jurisdiction  to reform this  Agreement or any provision  hereof
so that it is  enforceable  to the maximum extent  permitted by law, and the parties agree to abide by such court's  determination.  If
any of the covenants of this Section 6 are determined to be wholly or partially  unenforceable in any jurisdiction,  such determination
shall not be a bar to or in any way diminish the Company's right to enforce any such covenant in any other jurisdiction.

         7.
        Mitigation and Set-Off. The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise.
The Parent shall not be entitled to set-off against the amounts payable to the
Executive under this Agreement any amounts owed to the Parent by the Executive,
other than amounts in default under the Corporate Loan described in Section 3(f)
of this Agreement, any amounts earned by the Executive in other employment after
termination of his employment with the Parent, or any amounts which might have
been earned by the Executive in other employment had he sought such other
employment. 

        8.
        Make-Whole Payments. If any amount payable to the Executive by the Company or any
Affiliated Company, whether under this Agreement or otherwise, or whether
arising before or after the Effective Date (a “Payment”), is subject
to any tax under section 4999 of the Code, or any similar federal or state law
(an “Excise Tax”), the Parent shall pay to the Executive an additional
amount (the “Make Whole-Amount”) which is equal to (i) the amount of
the Excise Tax, plus (ii) the aggregate amount of any interest, penalties, fines
or additions to any tax which are imposed in connection with the imposition of
such Excise Tax, plus (iii) all income, excise and other applicable taxes
imposed on the Executive under the laws of any Federal, state, or local
government or taxing authority by reason of the payments required under clause
(i) and clause (ii) and this clause (iii). 

	 	(a)	
For purposes of determining the Make-Whole  Amount, the Executive shall be deemed to be taxed at the highest marginal
rate under all applicable  local,  state,  federal and foreign income tax laws for the year in which the Make-Whole Amount is paid. The
Make-Whole  Amount payable with respect to an Excise Tax shall be paid by the Parent  coincident with the Payment with respect to which
such Excise Tax relates.

	 	(b)	
All  calculations  under this Section 8 shall be made  initially by the Parent and the Parent  shall  provide  prompt
written  notice thereof to the Executive to timely file all  applicable  tax returns.  Upon request of the Executive,  the Parent shall
provide the Executive with sufficient tax and compensation  data to enable the Executive or his tax advisor to  independently  make the
calculations  described  in  subparagraph  a. above and the Parent shall  reimburse  the  Executive  for  reasonable  fees and expenses
incurred for any such verification.

	 	(c)	
If the  Executive  gives written  notice to the Parent of any  objection to the results of the Parent's  calculations
within 60 days of the Executive's  receipt of written notice thereof,  the dispute shall be referred for  determination  to tax counsel
selected by the  independent  auditors of the Parent ("Tax  Counsel").  The Parent shall pay all fees and expenses of such Tax Counsel.
Pending such  determination  by Tax Counsel,  the Parent shall pay the  Executive  the  Make-Whole  Amount as  determined by it in good
faith.  The Parent shall pay the Executive  any  additional  amount  determined by Tax Counsel to be due under this Section 8 (together
with interest  thereon at a rate equal to 120% of the Federal  short-term rate  determined  under Section 1274(d) of the Code) promptly
after such determination.

	 	(d)	
The  determination  by Tax Counsel  shall be  conclusive  and binding upon all parties  unless the  Internal  Revenue
Service, a court of competent  jurisdiction,  or such other duly empowered  governmental body or agency (a "Tax Authority")  determines
that the Executive owes a greater or lesser amount of Excise Tax with respect to any Payment than the amount determine by Tax Counsel.

	 	(e)	
If a Tax Authority  makes a claim  against the Executive  which,  if  successful,  would require the Parent to make a
payment under this Section 8, the Executive agrees to contest the claim on request of the Parent subject to the following conditions:

	 	(i)	The Executive shall notify the Parent of any such claim within 10 days of
becoming aware thereof. In the event that the Parent desires the claim to be
contested, it shall promptly (but in no event more than 30 days after the notice
from the Executive or such shorter time as the Tax Authority may specify for
responding to such claim) request the Executive to contest the claim. The
Executive shall not make any payment of any tax which is the subject of the
claim before the Executive has given the notice or during the 30-day period
thereafter unless the Executive receives written instructions from the Parent to
make such payment together with an advanced of funds sufficient to make the
requested payment plus any amounts payable under this Section 8 determined as if
such advance were an Excise Tax, in which case the Executive shall act promptly
in accordance with such instructions.

	 	(ii)	If the Parent so requests, the Executive shall contest the claim by either
paying the tax claimed and suing for a refund in the appropriate court or
contesting the claim in the United States Tax Court or other appropriate court,
as directed by the Parent; provided, however, that any request by the Parent for
the Executive to pay the tax shall be accompanied by an advanced from the Parent
to the Executive of funds sufficient to make the requested payment plus any
amounts payable under this Section 8 determined as if such advance were an
Excise Tax. If directed by the Parent in writing the Executive shall take all
action necessary to compromise or settle the claim, but in no event shall the
Executive compromise or settle the claim or cease to contest claim without the
written consent of the Parent; provided, however, that the Executive may take
any such action if the Executive waives in writing his right to a payment under
this Section 8 for any amounts payable in connection with such claim. The
Executive agrees to cooperate in good faith with the Parent in contesting the
claim and to comply with any reasonable request from the Parent concerning the
contest of the claim, including the pursuit of administrative remedies, the
appropriate forum for any judicial proceedings, and the legal basis for
contesting the claim. Upon request of the Parent, the Executive shall take
appropriate appeals of any judgment or decision that would require the Parent to
make a payment under this Section 8. Provided that the Executive is in
compliance with the provisions of this section, the Parent shall be liable for
and indemnify the Executive against any loss in connection with, and all costs
and expenses, including attorney’s fees, which may be incurred as a result
of, contesting the claim, and shall provide the Executive within 30 days after
each written request therefor by the Executive cash advances or reimbursement
for all such costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.

	 	(f)	
Should a Tax  Authority  finally  determine  that an  additional  Excise Tax is owed,  then the  Parent  shall pay an
additional  Make-Up Amount to the Executive in a manner  consistent  with this Section 8 with respect to any additional  Excise Tax and
any assessed  interest,  fines,  or penalties.  If any Excise Tax as  calculated  by the Parent or Tax Counsel,  as the case may be, is
finally  determined by a Tax Authority to exceed the amount  required to be paid under  applicable  law, then the Executive shall repay
such excess to the Parent,  but such  repayment  shall be reduced by the amount of any taxes paid by the Executive on such excess which
are not offset by the tax benefit attributable to the repayment.

	 	9.	Notices.

	 	(a)	Methods.
Each notice, demand, request,  consent, report, approval or communication  (hereinafter,  "Notice")
which is or may be  required  to be given by any party to any  other  party in  connection  with this  Agreement  and the  transactions
contemplated  hereby,  shall be in writing,  and given by facsimile,  personal delivery,  receipted delivery services,  or by certified
mail, return receipt requested, prepaid and properly addressed to the party to be served as shown in Section 9(b) below.

	 	(b)	Addresses.
Notices shall be effective on the date sent via facsimile,  the date delivered  personally or by
receipted delivery service, or three (3) days after the date mailed:

		If to the Parent:		PepsiCo, Inc.
700 Anderson Hill Road

Purchase, New York 10577-1444

Attn.: Chief Executive Officer

Facsimile:  (914) 249-8144

		If to the Executive:		At his residence address most recently filed 
with the
                                                             Company.

		with a copy to:		Vedder, Price, Kaufman & Kammholz

                                                             222 North LaSalle Street

                                                             Chicago, IL 60601

                                                             Attn:  Robert J. Stucker

                                                                           Thomas P. Desmond

                                                             Facsimile:  (312) 609-5005

		In each case, with
a copy to Company:		

		If to Company:		The Quaker Oats Company

                                                             321 North Clark Street

                                                             Chicago, Illinois 60610

                                                             Attn.: Senior Vice President -- General Counsel

                                                             Facsimile: (312) 222-7696

	 	(c)	Changes.
Each party may designate by Notice to the other in writing,  given in the foregoing  manner, a new
                           address to which any Notice may thereafter be so given, served or sent.

        10. Arbitration.
         Any controversy or claim arising out of or relating to this Agreement or the breach
thereof, except with respect to Section 6(d) and Section 8, shall be settled by
arbitration in the City of Chicago in accordance with the laws of the State of
Illinois by three arbitrators appointed by the parties. If the parties cannot
agree on the appointment, one arbitrator shall be appointed by the Parent and
one by the Executive, and the third shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the Chief
Judge of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 10. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. In
the event that it shall be necessary or desirable for the Executive to retain
legal counsel or incur other costs and expenses in connection with enforcement
of his rights under this Agreement, Executive shall be entitled to recover from
the Parent his reasonable attorneys’ fees and costs and expenses in
connection with enforcement of his rights (including the enforcement of any
arbitration award in court). Payment shall be made to the Executive by the
Parent at the time these attorneys’ fees and costs and expenses are
incurred by the Executive. If, however, the arbitrators should later determine
that under the circumstances the Executive could have had no reasonable
expectation of prevailing on the merits at the time he initiated the arbitration
based on the information then available to him, he shall repay any such payments
to the Parent in accordance with the order of the arbitrators. Any award of the
arbitrators shall include interest at a rate or rates considered just under the
circumstances by the arbitrators. 

        11. Effect on Existing
Agreements; Entire Agreement.         Executive agrees that notwithstanding the
provisions of his 1997 Employment Agreement or that certain Executive Separation
Agreement between the Company and the Executive dated April 3, 2000 (the
“ESA”), any resignation by Executive after the date hereof shall not
constitute a resignation for “Good Reason” under the 1997 Employment
Agreement or a “Termination” under the ESA; provided, however, that
the foregoing agreement shall only apply with respect to the Transaction and
matters consistent therewith. The agreement of Executive set forth in the
preceding sentence shall be effective as of the date of execution of this
Agreement, notwithstanding the Effective Date provisions of Section 1(a) or the
next sentence of this Section 11. If this Agreement becomes effective as
provided in Section 1(a), then as of the Effective Date, this Agreement
shall constitute the entire agreement of the parties with respect to the subject
matter hereof and shall supersede all prior agreements with respect thereto,
including, without limitation, the 1997 Employment Agreement and the ESA. In the
event the closing of the Transaction does not occur, then this Agreement shall
be of no force or effect. 

	 	12.	Successors.

	 	(a)	Executive.
This  Agreement  is personal to the  Executive  and,  without the prior  written  consent of the
                           Parent and Company,  shall not be assignable  by the Executive  otherwise  than by will or the laws of descent and  distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

	 	(b)	The  Company.
This  Agreement  shall inure to the benefit of and be binding upon the Parent and Company and
their successors and assigns.

	 	(c)	Assigns.
The Parent  shall  require  any  successor  (whether  direct or  indirect,  by  purchase,  merger,
                           consolidation  or otherwise) to all or  substantially  all of the business  and/or assets of the Parent and/or the Company to expressly
assume and perform this  Agreement in the same manner and to the same extent that the Parent  and/or  Company  would have been required
to perform it if no such  assignment  had taken place.  As used in this  Agreement,  "Parent" and  "Company"  shall mean the Parent and
Company, respectively, each as defined above and any such successor by operation of law or otherwise.

        13. Indemnification.
        To the fullest extent permitted by law and the Parent’s and Company’s
by-laws, the Parent and the Company shall indemnify Executive (including the
advancement of expenses) for any judgments, fines, amounts paid in settlement
and reasonable expenses, including attorney’s fees, incurred by Executive
in connection with the defense of any lawsuit or other claim to which he is made
a party by reason of being an officer, director or employee of the Parent, the
Company or any Affiliated Companies. 

	 	14.	Miscellaneous.

	 	(a)	Governing Law.
The Agreement  shall be construed and enforced  according to the Employee  Retirement  Income
Security Act of 1974  ("ERISA"),  and the laws of the State of Illinois,  other than its laws  respecting  choice of law, to the extent
not pre-empted by ERISA.

	 	(b)	Severability.
The invalidity or  unenforceability  of any provision of this Agreement  shall not affect the
validity or  enforceability  of any other  provision of this  Agreement.  If any provision of this  Agreement  shall be held invalid or
unenforceable  in part, the remaining  portion of such provision,  together with all other  provisions of this Agreement,  shall remain
valid and enforceable and continue in full force and effect to the fullest extent consistent with law.

	 	(c)	Tax  Withholding.
Notwithstanding  any other  provision of this  Agreement,  the Company may withhold  from
amounts  payable under this Agreement all federal,  state,  local and foreign taxes that are required to be withheld by applicable laws
or regulations.

	 	(d)	No Waiver.
The  Executive's,  the Parent's or the Company's  failure to insist upon strict  compliance with
any  provision of, or to assert any right under,  this  Agreement  shall not be deemed to be a waiver of such  provision or right or of
any other provision of or right under this Agreement.

	 	(e)	Headings.
The Section headings  contained in this Agreement are for convenience only and in no manner shall
be construed as part of this Agreement.

	 	(f)	Counterparts.
This  Agreement may be executed  simultaneously  in two or more  counterparts,  each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.

        IN
WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the
authorization of its Board of Directors, the Company and the Parent has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written. 

		EXECUTIVE:

		/s/ ROBERT S. MORRISON
Robert S. Morrison

		COMPANY:

		THE QUAKER OATS COMPANY

		By: /s/ JOHN J. GARTZ
Name:  John J. Gartz
Title:Senior Vice President

		PARENT:

		PEPSICO, INC.

		By: /s/ ROBERT F. SHARPE, JR.

                                                             Name: Robert F.Sharpe, Jr.

                                                             Title: Senior Vice President

                                                   EXHIBIT A TO EMPLOYMENT AGREEMENT

                                              TERMS AND CONDITIONS FOR ROBERT S. MORRISON

Employment Period:
Eighteen (18) months following the Effective Date (the “Initial
Term”). The term shall automatically be extended at the end of the Initial
Term for one additional year (any such additional period being the
“Extended Term”), and for one additional year at the end of each
Extended Term, unless the Executive or Parent shall give written notice of
non-renewal to the other party at least one year prior to the scheduled end of
the Initial Term or such Extended Term. 

Position:  Vice Chairman of Parent and Chairman and CEO of the Company; Director of Parent and Company.

Minimum Annual Rate of
Base Salary: $1,107,750; provided, such amount of Executive’s Base
Salary as exceeds the maximum amount allowable as a deduction by the Company (or
Parent as the case may be) under Section 162(m) of the Code shall be deferred
and payable to the Executive in the first succeeding year in which such amount
shall be so allowable, but not later than the date on which Executive terminates
employment with the Company, unless such amounts have been deferred at the
election of Executive under the Parent’s Executive Income Deferral Program,
in which case such amount shall be paid in accordance with the terms thereof). 

Annual Bonus: The
Executive shall be eligible to receive an annual bonus with respect to the
calendar year in which the Effective Date occurs based on the Company’s
performance as measured against goals related to general Company performance and
to the assimilation of the Company into Parent, which goals shall be established
in consultation with Executive. The target annual bonus for such period shall
not be less than 100% of the Base Salary payable for such calender year (which
Base Salary shall be determined by including any amount deferred for such year
pursuant to Section 162(m) of the Code), with a maximum bonus opportunity of not
less than 200% of such Base Salary. To the extent that the Executive receives a
pro rata bonus award under the Company’s bonus plan as in effect prior to
the Effective Date for the period from January 1, 2001 through the Effective
Date, then the Annual Bonus payable with respect to the remainder of such
calendar year shall be a pro rata bonus, based on the fraction of the calendar
remaining as of the Effective Date. With respect to each subsequent calendar
year in the Employment Term, the Executive shall be eligible to receive an
annual bonus with respect to the calendar year based on the Company’s
performance as measured against goals established in consultation with
Executive, and based on an annual target bonus of 100% of Base Salary and a
maximum bonus opportunity of 200% of Base Salary. To the extent that
Executive’s employment during such calendar year is less than the full
calendar year (for example, because the Initial Term expires during such year
and is not renewed), then such annual bonus shall be pro rated to reflect such
period. 

Supplemental
Payment: Executive shall receive a Supplemental Payment equal to $19.2
million (the “Supplemental Payment”); provided, however, that Parent,
Company and Executive acknowledge that such amount is based on a December 1,
2000, estimate prepared by Arthur Andersen LLP (which estimate has been
delivered to Parent, Company and Executive and assumes certain facts not known
as the date hereof) and Arthur Andersen LLP shall update the calculation of the
Supplemental Payment immediately prior to the Effective Date based upon the
actual facts, which updated amount shall be the Supplemental Payment. Unless the
Supplemental Payment is to be credited to the Parent’s Executive Income
Deferral Program pursuant to the election of the Executive made in the time and
manner required by such Plan (in which case it shall be paid in accordance with
the terms thereof), the Supplemental Payment shall be paid not later than thirty
(30) days following the last day the Initial Term, provided Executive is
employed with the Company or an Affiliated Company through such date. The
Executive’s death, termination by the Executive for Good Reason or
termination of Executive by the Parent or Company other than for Cause shall be
a “Qualifying Termination.” Upon a Qualifying Termination before the
Supplemental Payment has been paid in full, the Executive (or his beneficiary)
shall be entitled to receive such unpaid Supplemental Payment in a lump sum no
later than thirty (30) days following such termination, unless the Supplemental
Payment is to be credited to the Parent’s Executive Income Deferral Program
pursuant to the election of the Executive made in the time and manner required
by such Plan (in which case it shall be paid in accordance with the terms
thereof). In the event the Executive’s employment terminates prior to the
last day of the Initial Term for any reason other than a Qualifying Termination,
Executive shall forfeit his right to receive the Supplemental Payment. 

                                                   EXHIBIT B TO EMPLOYMENT AGREEMENT

                                              OPTIONS TO BE GRANTED TO ROBERT S. MORRISON

Number of Options:
In each of 2001 and 2002, Executive will be granted a 10-year option with
respect to no less than 300,000 shares of Parent common stock. The 2001 grant
shall be made not later than 30 days after the Effective Date and the 2002 grant
will be made in 2002 when options are granted to Parent officers generally, but
no later than the first anniversary of the Effective Date. 

Per-share exercise
price: The options will be priced at the “Fair Market Value,” as
defined in the LTIP, of the Parent stock on the Effective Date and will vest and
become exercisable as to all of the shares on the third anniversary of the date
of grant (or such earlier date as may be provided under the LTIP, such as upon
death or the occurrence of a change in control). 

General Terms and
Conditions: The options otherwise will be subject to the LTIP. A Qualifying
Termination (as defined in Exhibit A) prior to the end of the Initial Term, and
any termination upon or after the last day of the Initial Term, will cause such
options to vest in full and to remain outstanding and become exercisable on the
third anniversary of the date of grant (or such earlier date as any be provided
under the LTIP, such as upon death or the occurrence of a change in control) as
if Executive’s employment had not terminated, and such options shall not
expire before the last day of the 10-year grant. In the event the
Executive’s employment terminates prior to the last day of the Initial Term
for any reason other than a Qualifying Termination, any option granted pursuant
to this Exhibit B shall be forfeited. 

                                                   EXHIBIT C TO EMPLOYMENT AGREEMENT

                                            FORM OF PROMISSORY NOTE FOR ROBERT S. MORRISON

                                                   Promissory Note

	$________________		Date: __________, 200__

        _________________  (herein  referred  to as  "Holder")  has agreed to  advance to  _________________  (herein  referred  to as
"Maker") on  _____________,  200__,  such amount as  requested  by Maker from time to time not  exceeding  the total  principal  sum of
$10,000,000,  and for said value  received  Maker  promises to repay to the order of Holder,  said  principal sum on or before the date
which  is  30  days  after  the  date  of  [18  months  + 30  days],  20___,  or  the  date  of  Maker's  termination  of  employment
with Holder and all affiliated  companies,  together with interest on the unpaid  principal sum,  compounded  quarterly,  at the [short
term applicable Federal rate at the time of this Promissory Note].

                 If Maker fails to make any payment set forth above when due, Holder may elect to declare the entire unpaid  principal  amount,
including all unpaid interest, immediately due and payable with or without notice.

                 In the event of  commencement  of legal action to enforce  payment of this note,  the  non-prevailing  party agrees to pay the
prevailing party's reasonable attorney's fees and court costs in connection therewith.

                 Holder  reserves the right to assign or transfer all or any part of, or any interest in,  Holder's  rights and benefits  under
this Note to any successor to all or part of its business or assets.

                 This Note  shall be  construed  in  accordance  with and  governed  by the  internal  laws of the State of  Illinois,  without
reference to principles of conflict of laws.

		By:___________________________________

Witnessed by:

_____________________NEW CENTURY MORTGAGE SECURITIES, INC.

                                    Depositor

                             OCWEN FEDERAL BANK FSB

                                 Master Servicer

                               NATIONAL CITY BANK

                                     Trustee

                                       and

                         U.S. BANK NATIONAL ASSOCIATION

                               Trust Administrator

                         POOLING AND SERVICING AGREEMENT
                          Dated as of February 1, 2002

                New Century Home Equity Loan Trust, Series 2002-1
                     Asset Backed Pass-Through Certificates

                                  Series 2002-1

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
<S>                                                                                                            <C>
                                                     ARTICLE I

                                                    DEFINITIONS
         SECTION 1.01.     Defined Terms........................................................................-1-
         SECTION 1.02.     Allocation of Certain Interest Shortfalls...........................................-40-

                                                    ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES
         SECTION 2.01.     Conveyance of the Mortgage Loans....................................................-42-
         SECTION 2.02.     Acceptance of REMIC I by Trustee....................................................-44-
         SECTION 2.03.     Repurchase or Substitution of Mortgage Loans by the
                           Originator or the Seller............................................................-45-
         SECTION 2.04.     Reserved............................................................................-47-
         SECTION 2.05.     Representations, Warranties and Covenants of the Master
                           Servicer............................................................................-47-
         SECTION 2.06.     Issuance of the REMIC I Regular Interests and the Class R-I
                           Certificates........................................................................-49-
         SECTION 2.07.     Conveyance of the REMIC I Regular Interests; Acceptance of
                           REMIC II by the Trustee.............................................................-50-
         SECTION 2.08.     Issuance of Class R-II Certificates.................................................-50-
         SECTION 2.09.     Conveyance of the REMIC II Regular Interests; Acceptance of
                           REMIC III by the Trustee............................................................-50-
         SECTION 2.10.     Issuance of Class R-III Certificates................................................-51-

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                               OF THE MORTGAGE LOANS
         SECTION 3.01.     Master Servicer to Act as Master Servicer...........................................-52-
         SECTION 3.02.     Sub-Servicing Agreements Between Master Servicer and Sub-
                           Servicers...........................................................................-54-
         SECTION 3.03.     Successor Sub-Servicers.............................................................-55-
         SECTION 3.04.     Liability of the Master Servicer....................................................-55-
         SECTION 3.05.     No Contractual Relationship Between Sub-Servicers and the
                           Trustee or Certificateholders.......................................................-56-
         SECTION 3.06.     Assumption or Termination of Sub-Servicing Agreements by
                           Trustee.............................................................................-56-
         SECTION 3.07.     Collection of Certain Mortgage Loan Payments........................................-56-
         SECTION 3.08.     Sub-Servicing Accounts..............................................................-57-
         SECTION 3.09.     Collection of Taxes, Assessments and Similar Items; Servicing
                           Accounts............................................................................-57-
         SECTION 3.10.     Collection Account and Distribution Account.........................................-58-

                                       -i-

<PAGE>

         SECTION 3.11.     Withdrawals from the Collection Account and Distribution
                           Account.............................................................................-60-
         SECTION 3.12.     Investment of Funds in the Collection Account and the Distribution
                           Account.............................................................................-62-
         SECTION 3.13.     [Reserved]..........................................................................-64-
         SECTION 3.14.     Maintenance of Hazard Insurance and Errors and Omissions and
                           Fidelity Coverage...................................................................-64-
         SECTION 3.15.     Enforcement of Due-On-Sale Clauses; Assumption
                           Agreements..........................................................................-65-
         SECTION 3.16.     Realization Upon Defaulted Mortgage Loans...........................................-66-
         SECTION 3.17.     Trustee to Cooperate; Release of Mortgage Files.....................................-68-
         SECTION 3.18.     Servicing Compensation..............................................................-69-
         SECTION 3.19.     Reports to the Trustee; Collection Account Statements...............................-70-
         SECTION 3.20.     Statement as to Compliance..........................................................-70-
         SECTION 3.21.     Independent Public Accountants' Servicing Report....................................-70-
         SECTION 3.22.     Access to Certain Documentation.....................................................-71-
         SECTION 3.23.     Title, Management and Disposition of REO Property...................................-71-
         SECTION 3.24.     Obligations of the Master Servicer in Respect of Prepayment
                           Interest Shortfalls.................................................................-74-
         SECTION 3.25.     Obligations of the Master Servicer in Respect of Mortgage Rates
                           and Monthly Payments................................................................-74-
         SECTION 3.26.     Advance Facility....................................................................-75-
         SECTION 3.27.     PMI Policy; Claims Under the PMI Policy.............................................-75-
         SECTION 3.28      Net WAC Rate Carryover Reserve Account..............................................-76-

                                                    ARTICLE IV

                                          PAYMENTS TO CERTIFICATEHOLDERS
         SECTION 4.01.     Distributions.......................................................................-78-
         SECTION 4.02.     Statements to Certificateholders....................................................-84-
         SECTION 4.03.     Remittance Reports; P&I Advances....................................................-88-
         SECTION 4.04.     Allocation of Realized Losses.......................................................-89-
         SECTION 4.05.     Compliance with Withholding Requirements............................................-91-

                                                     ARTICLE V

                                                 THE CERTIFICATES
         SECTION 5.01.     The Certificate.....................................................................-92-
         SECTION 5.02.     Registration of Transfer and Exchange of Certificates...............................-93-
         SECTION 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates...................................-98-
         SECTION 5.04.     Persons Deemed Owners...............................................................-98-
         SECTION 5.05.     Certain Available Information.......................................................-99-

                                                    ARTICLE VI

                                       THE DEPOSITOR AND THE MASTER SERVICER

                                      -ii-

<PAGE>

         SECTION 6.01.     Liability of the Depositor and the Master Servicer.................................-100-
         SECTION 6.02.     Merger or Consolidation of the Depositor or the Master
                           Servicer...........................................................................-100-
         SECTION 6.03.     Limitation on Liability of the Depositor, the Master Servicer
                           and Others.........................................................................-100-
         SECTION 6.04.     Limitation on Resignation of the Master Servicer...................................-101-
         SECTION 6.05.     Rights of the Depositor in Respect of the Master Servicer..........................-102-

                                                    ARTICLE VII

                                                      DEFAULT
         SECTION 7.01.     Master Servicer Events of Default..................................................-103-
         SECTION 7.02.     Trustee to Act; Appointment of Successor...........................................-105-
         SECTION 7.03.     Notification to Certificateholders.................................................-106-
         SECTION 7.04.     Waiver of Master Servicer Events of Default........................................-106-

                                                   ARTICLE VIII

                                CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
         SECTION 8.01.     Duties of Trustee..................................................................-107-
         SECTION 8.02.     Certain Matters Affecting the Trustee..............................................-108-
         SECTION 8.03.     Trustee not Liable for Certificates or Mortgage Loans..............................-109-
         SECTION 8.04.     Trustee May Own Certificates.......................................................-109-
         SECTION 8.05.     Trustee's Fees and Expenses........................................................-109-
         SECTION 8.06.     Eligibility Requirements for Trustee...............................................-110-
         SECTION 8.07.     Resignation and Removal of the Trustee.............................................-110-
         SECTION 8.08.     Successor Trustee..................................................................-111-
         SECTION 8.09.     Merger or Consolidation of Trustee.................................................-112-
         SECTION 8.10.     Appointment of Co-Trustee or Separate Trustee......................................-112-
         SECTION 8.11.     Appointment of Office or Agency....................................................-113-
         SECTION 8.12.     Representations and Warranties.....................................................-113-

                                                    ARTICLE IX

                                                    TERMINATION
         SECTION 9.01      Termination Upon Repurchase or Liquidation of All Mortgage
                           Loans..............................................................................-115-
         SECTION 9.02      Additional Termination Requirements................................................-117-

                                                     ARTICLE X

                                                 REMIC PROVISIONS
         SECTION 10.01.             REMIC Administration......................................................-118-
         SECTION 10.02.             Prohibited Transactions and Activities....................................-120-
         SECTION 10.03.             Master Servicer and Trustee Indemnification...............................-121-

                                      -iii-

<PAGE>

                                                    ARTICLE XI

                                             MISCELLANEOUS PROVISIONS
         SECTION 11.01.             Amendment.................................................................-122-
         SECTION 11.02.             Recordation of Agreement; Counterparts....................................-123-
         SECTION 11.03.             Limitation on Rights of Certificateholders................................-123-
         SECTION 11.04.             Governing Law.............................................................-124-
         SECTION 11.05.             Notices...................................................................-124-
         SECTION 11.06.             Severability of Provisions................................................-124-
         SECTION 11.07.             Notice to Rating Agencies.................................................-125-
         SECTION 11.08.             Article and Section References............................................-125-
         SECTION 11.09.             Grant of Security Interest................................................-126-
</TABLE>

                                      -iv-

<PAGE>

<TABLE>
<CAPTION>
Exhibits
<S>               <C>

Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Form of Class M-1 Certificate
Exhibit A-3       Form of Class M-2 Certificate
Exhibit A-4       Form of Class M-3 Certificate
Exhibit A-5       Form of Class M-4 Certificate
Exhibit A-6       Form of Class CE Certificate
Exhibit A-7       Form of Class P Certificate
Exhibit A-8       Form of Class R Certificate
Exhibit B         [Reserved]
Exhibit C-1       Form of Trustee's Initial Certification
Exhibit C-2       Form of Trustee's Final Certification
Exhibit D         Form of Mortgage Loan Purchase Agreement
Exhibit E-1       Request for Release
Exhibit E-2       Request for Release Mortgage Loans paid in full
Exhibit F-1       Form of Transferor Representation Letter and Form of Transferee Representation
                  Letter in Connection with Transfer of the Class CE Certificates, Class P
                  Certificates or Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in
                  Connection with Transfer of Residual Certificates
Exhibit G         Form of Certification with respect to ERISA and the Code
Exhibit H         Form of Report Pursuant to Section 4.06 Exhibit I Form of Lost Note Affidavit

Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule
</TABLE>

                                       -v-

<PAGE>

                  This Pooling and Servicing Agreement, is dated and effective
as of February 1, 2002, among NEW CENTURY MORTGAGE SECURITIES, INC. as
Depositor, OCWEN FEDERAL BANK FSB as Master Servicer, NATIONAL CITY BANK as
Trustee and U.S. BANK NATIONAL ASSOCIATION as Trust Administrator.

                             PRELIMINARY STATEMENT:

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

                                     REMIC I
                                     -------

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

<TABLE>
<CAPTION>
                                        REMIC II                       Initial                   Latest Possible
         Designation                 Remittance Rate           Uncertificated Balance           Maturity Date(1)
         -----------                 ---------------           ----------------------           -------------
<S>                                  <C>                       <C>                              <C>
           II-LTAA                     Variable(2)                 $194,671,115.87               March 25, 2032
           II-LTA                      Variable(2)                 $  1,609,010.00               March 25, 2032
           II-LTM1                     Variable(2)                 $    124,150.00               March 25, 2032
           II-LTM2                     Variable(2)                 $    114,230.00               March 25, 2032
           II-LTM3                     Variable(2)                 $     94,350.00               March 25, 2032
           II-LTM4                     Variable(2)                 $      4,970.00               March 25, 2032
           II-LTZZ                     Variable(2)                 $  2,026,169.92               March 25, 2032
           II-LTP                      Variable(2)                 $        100.00               March 25, 2032
</TABLE>

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

                                      -vi-

<PAGE>

                                    REMIC II
                                    --------

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

<TABLE>
<CAPTION>
                                                                  Initial Aggregate
                                                                Certificate Principal            Latest Possible
         Designation                Pass-Through Rate                  Balance                  Maturity Date(1)
         -----------                -----------------                  -------                  -------------
<S>                                 <C>                         <C>                             <C>
           Class A                     Variable(2)                 $160,901,000.00               March 25, 2032
          Class M-1                    Variable(2)                 $ 12,415,000.00               March 25, 2032
          Class M-2                    Variable(2)                 $ 11,423,000.00               March 25, 2032
          Class M-3                    Variable(2)                 $  9,435,000.00               March 25, 2032
          Class M-4                    Variable(2)                 $    497,000.00               March 25, 2032
          Class CE                     Variable(2)                 $  3,972,995.79(3)            March 25, 2032
           Class P                       N/A(4)                    $        100.00               March 25, 2032
</TABLE>

---------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date immediately following the maturity
         date for the Mortgage Loans with the latest maturity date has been
         designated as the "latest possible maturity date" for each Class of
         Certificates.
(2)      Calculated in accordance with the definition of "Pass-Through Rate"
         herein.
(3)      The Class CE Certificates will accrue interest at their variable
         Pass-Through Rate on the Notional Amount of the Class CE Certificates
         outstanding from time to time which shall equal the Uncertificated
         Balance of the REMIC I Regular Interests. The Class CE Certificates
         will not accrue interest on their Certificate Principal Balance.
(4)      The Class P Certificates will not accrue interest.

                  As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $198,644,095.79.

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

                                      -vii-

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01.             Defined Terms.

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

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

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

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

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

                  "Administration Fee": The amount payable to the Trust
Administrator on each Distribution Date pursuant to Section 8.05 as compensation
for all services rendered by it or the Trustee in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties of the Trust Administrator and the Trustee hereunder, which amount shall
equal the Administration Fee Rate accrued for one month on the aggregate
Scheduled Principal Balance of the Mortgage Loans and any REO Properties as of
the second preceding Due Date (or,

<PAGE>

in the case of the initial Distribution Date, as of the Cut-off Date),
calculated on the basis of a 360- day year consisting of twelve 30-day months.
The fee payable to the Trustee for all services rendered by it in the execution
of the trust hereby created and the exercise and performance of any of the
powers and duties of the Trustee hereunder will be paid by the Trust
Administrator out of the Trust Administrator's own funds or out of the
Administration Fee received by the Trust Administrator.

                  "Administration Fee Rate": 0.0165% per annum.

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

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

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

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

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

                  "Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Master Servicer for such Distribution Date pursuant to
Section 4.03, (e) the aggregate of any advances made by the Trust Administrator
or the Trustee, as applicable, for such Distribution Date pursuant to Section
7.02(b) and (f) with respect to the first Distribution Date, the Initial
Deposit, reduced (to not less than zero), by (2) the sum of (x) the portion of
the amount described in clause (1)(a) above that represents (i) Monthly Payments
on the

                                       -2-

<PAGE>

Mortgage Loans received from a Mortgagor on or prior to the Determination Date
but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Master Servicer, the
Trustee, the Trust Administrator, the Originator, the Seller or any Sub-Servicer
pursuant to Section 3.11 or Section 3.12 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) Stayed Funds (vi) the Administration Fee
payable from the Distribution Account pursuant to Section 8.05, (vii) amounts
deposited in the Collection Account or the Distribution Account in error and
(viii) the amount of any Prepayment Charges collected by the Master Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans or any
Master Servicer Prepayment Charge Payment Amount, and (y) amounts reimbursable
to the Trustee or the Trust Administrator, as applicable, for an advance made
pursuant to Section 7.02(b) which advance the Trustee or Trust Administrator, as
applicable, has determined to be nonrecoverable from the Stayed Funds in respect
of which it was made.

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

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

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

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

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

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

                  "Certificate": Any one of the Asset Backed Pass-Through
Certificates, Series 2002-1, Class A, Class M-1, Class M-2, Class M-3, Class
M-4, Class CE, Class P, Class R issued under this Agreement.

                  "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class CE

                                       -3-

<PAGE>

Certificates) of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and allocations of Realized
Losses in reduction of the Certificate Principal Balance (or the Notional
Amount, in the case of the Class CE Certificates) of such Class of Certificates
to be made on such Distribution Date), and the denominator of which is the
initial aggregate Certificate Principal Balance (or the Notional Amount, in the
case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.

                  "Certificate Margin": With respect to the Class A Certificates
and REMIC I Regular Interest I-LTA, 0.32% in the case of each Distribution Date
through and including the Distribution Date on which the aggregate principal
balance of the Mortgage Loans (and properties acquired in respect thereof)
remaining in the Trust Fund is reduced to less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date and 0.64% in the
case of each Distribution Date thereafter.

                  With respect to the Class M-1 Certificates and REMIC I Regular
Interest I-LTM1, 0.80% in the case of each Distribution Date through and
including the Distribution Date on which the aggregate principal balance of the
Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 1.20% in the case of each Distribution
Date thereafter.

                  With respect to the Class M-2 Certificates and REMIC I Regular
Interest I-LTM2, 1.40% in the case of each Distribution Date through and
including the Distribution Date on which the aggregate principal balance of the
Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the sum of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date and 2.10% in the case of
each Distribution Date thereafter.

                  With respect to the Class M-3 Certificates and REMIC I Regular
Interest I-LTM3, 2.00% in the case of each Distribution Date through and
including the Distribution Date on which the aggregate principal balance of the
Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 3.00% in the case of each Distribution
Date thereafter.

                  With respect to the Class M-4 Certificates and REMIC I Regular
Interest I-LTM4, 2.35% in the case of each Distribution Date through and
including the Distribution Date on which the aggregate principal balance of the
Mortgage Loans (and properties acquired in respect thereof) remaining in the
Trust Fund is reduced to less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date and 3.525% in the case of each
Distribution Date thereafter.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except

                                       -4-

<PAGE>

as otherwise provided in Section 11.01. The Trustee and the Trust Administrator
may conclusively rely upon a certificate of the Depositor or the Master Servicer
in determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

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

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

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

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

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

                  "Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 62.00% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period minus $993,220.48.

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

                  "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed,

                                       -5-

<PAGE>

authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
74.50% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$993,220.48.

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

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 86.00% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus $993,220.48.

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

                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 95.50% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $993,220.48.

                                       -6-

<PAGE>

                  "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-4 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the payment of
the Class M-3 Principal Distribution Amount on such Distribution Date) and (v)
the Certificate Principal Balance of the Class M-4 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
96.00% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$993,220.48.

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

                  "Class R Certificate": Any one of the Class R Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-8 and evidencing the
ownership of the Class R-I Interest and the Class R-II Interest.

                  "Class R-I Interest": The uncertificated Residual Interest in
REMIC I.

                  "Class R-II Interest": The uncertificated Residual Interest in
REMIC II.

                  "Closing Date": February 26, 2002.

                  "Code": The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Master Servicer
pursuant to Section 3.10(a), which shall be entitled "Ocwen Federal Bank FSB, as
Master Servicer for National City Bank, as Trustee, in trust for the registered
holders of New Century Mortgage Securities, Inc., New Century Home Equity Loan
Trust, Series 2002-1, Asset Backed Pass-Through Certificates." The Collection
Account must be an Eligible Account.

                  "Commission": The Securities and Exchange Commission.

                  "Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee, as the case may be, at which at any
particular time its corporate trust

                                       -7-

<PAGE>

business in connection with this Agreement shall be administered, which office,
with respect to the Trust Administrator, at the date of the execution of this
instrument is located at 180 East Fifth Street, St. Paul, Minnesota 55101, or at
such other address as the Trust Administrator may designate from time to time by
notice to the Certificateholders, the Depositor, the Master Servicer and the
Trustee and, with respect to the Trustee, at the date of the execution of this
instrument is located at 629 Euclid Avenue, Suite 635, Cleveland, Ohio
44114-3484, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Master Servicer and
the Trust Administrator.

                  "Corresponding Certificate": With respect to (i) REMIC I
Regular Interest I-LTA, (ii) REMIC I Regular Interest I-LTM1, (iii) REMIC I
Regular Interest I-LTM2, (iv) REMIC I Regular Interest I-LTM3, (v) REMIC I
Regular Interest I-LTM4 and (vi) REMIC I Regular Interest I-LTP, (i) the Class A
Certificates, (ii) the Class M-1 Certificates, (iii) the Class M-2 Certificates,
(iv) the Class M-3 Certificates, (v) the Class M-4 Certificates and (vi) the
Class P Certificates, respectively.

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

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

                  "Cut-off Date": With respect to each Original Mortgage Loan,
February 1, 2002. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

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

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

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

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

                                       -8-

<PAGE>

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

                  "Depositor": New Century Mortgage Securities, Inc., a Delaware
corporation, or its successor in interest.

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

                  "Depository Institution": Any depository institution or trust
company, including the Trustee and the Trust Administrator that (a) is
incorporated under the laws of the United States of America or any State
thereof, (b) is subject to supervision and examination by federal or state
banking authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other short-term unsecured debt
obligations) that are rated P-1 by Moody's, F-1 by Fitch and A-1 by S&P.

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

                  "Determination Date": With respect to each Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.

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

                                       -9-

<PAGE>

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

                  "Distribution Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 3.10(b), which
shall be entitled "U.S. Bank National Association, as Trust Administrator for
National City Bank, as Trustee, in trust for the registered holders of New
Century Mortgage Securities, Inc., New Century Home Equity Loan Trust, Series
2002-1, Asset Backed Pass-Through Certificates." The Distribution Account must
be an Eligible Account.

                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in March 2002.

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

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

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

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

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

                                      -10-

<PAGE>

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

                  "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of determination, a per annum
rate of interest equal to the applicable Mortgage Rate thereon as of the first
day of the month preceding the month in which the Distribution Date occurs minus
the sum of (i) the Administration Fee Rate and (ii) the Servicing Fee Rate.

                  "Expense Adjusted Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of determination, a
per annum rate of interest equal to the applicable Maximum Mortgage Rate (in the
case any Adjustable-Rate Mortgage Loan) or Mortgage Rate (in the case of any
Fixed Rate Mortgage Loan) thereon as of the first day of the month preceding the
month in which the Distribution Date occurs minus the sum of (i) the
Administration Fee Rate and (ii) the Servicing Fee Rate.

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

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

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

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

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

                  "Formula Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, the lesser of (i) One-Month LIBOR
plus the related Certificate Margin and (ii) the Maximum Cap Rate.

                  "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage

                                      -11-

<PAGE>

Corporation, or any successor thereto.

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

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

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

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

                  "Initial Deposit": $5,489.29 in cash to be deposited by the
Depositor with the Trust Administrator for deposit into the Initial Deposit
Account on or before the Closing Date, relating to Mortgage Loans having a first
Due Date in the Due Period relating to the Distribution Date in April 2002.

                  "Initial Deposit Account": The Initial Deposit Account
established in accordance with

                                      -12-

<PAGE>

Section 3.10(b) hereof and maintained by the Trust Administrator, which shall be
entitled "Initial Deposit Account, U.S. Bank National Association, as Trust
Administrator, in trust for registered Holders of New Century Home Equity Loan
Trust 2002-1, Asset-Backed Pass-Through Certificates, Series 2002-1" and which
must be an Eligible Account.

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

                  "Interest Accrual Period": With respect to any Distribution
Date and the Class A Certificates and the Mezzanine Certificates, the period
commencing on the Distribution Date of the month immediately preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class CE Certificates and the REMIC I Regular Interests, the one-month period
ending on the last day of the calendar month preceding the month in which such
Distribution Date occurs.

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

                  "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, REMIC I Regular Interest I-LTA, REMIC
I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
I-LTM3 and REMIC I Regular Interest I- LTM4 and any Interest Accrual Period
therefor, the second London Business Day preceding the commencement of such
Interest Accrual Period.

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

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

                  "Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without

                                      -13-

<PAGE>

regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.

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

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Master Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

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

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

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

                  "Marker Rate": With respect to the Class CE Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC I Remittance Rate for each of the REMIC I Regular Interests
(other than REMIC I Regular Interest I-LTP), with the rate on each such REMIC I
Regular Interest (other than REMIC I Regular Interest I-LTZZ) subject to a cap
equal to the related Formula Rate for the purpose of this calculation for such
Distribution Date and with the rate on REMIC I Regular Interest I-LTZZ subject
to a cap of zero for the purpose of this calculation; provided, however, each
cap shall be multiplied by a fraction, the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 30.

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

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

                                      -14-

<PAGE>

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

                  "Master Servicer Remittance Date": With respect to any
Distribution Date, by 1:00 p.m. New York time on the Business Day preceding the
related Distribution Date.

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

                  "Maximum Cap Rate": For any Distribution Date, a per annum
rate equal to the product of (x) the weighted average of the Expense Adjusted
Maximum Mortgage Rates of the Mortgage Loans, weighted based on their Scheduled
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs (after giving effect to unscheduled
collections of principal received during the related Prepayment Period) and (y)
a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period.

                  "Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralized Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on REMIC I
Regular Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest
I-LTM4 for such Distribution Date, with the rate on each of REMIC I Regular
Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4
subject to a cap equal to the related Formula Rate; provided, however, each cap
shall be multiplied by a fraction, the numerator of which is the actual number
of days in the related Interest Accrual Period and the denominator of which is
30.

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

                  "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate, Class M- 3 Certificate or Class M-4 Certificate.

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

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act;

                                      -15-

<PAGE>

(b) without giving effect to any extension granted or agreed to by the Master
Servicer pursuant to Section 3.07 and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.

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

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

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

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

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

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

                  (i)      the Mortgage Loan identifying number;

                  (ii)     the Mortgagor's name;

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

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

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

                  (vi)     the original months to maturity;

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

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

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

                  (x)      (A) the date on which the first Monthly Payment was
                           due on the Mortgage

                                      -16-

<PAGE>

         Loan and (B) if such date is not consistent with the Due Date currently
         in effect, such Due Date;

                  (xi)     the stated maturity date;

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

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

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

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

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

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

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

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

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

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

                  (xxii)   the Mortgage Rate at origination;

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

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

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

                  (xxvi)   the risk grade;

                  (xxvii)  the Value of the Mortgaged Property;

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

                                      -17-

<PAGE>

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

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

                  (xxxi)   the rounding code (i. e., nearest 0.125%, next
         highest 0.125%);

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

                  (xxxiii)  the program code.

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

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

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

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

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

                                      -18-

<PAGE>

                  "Mortgagor": The obligor on a Mortgage Note.

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

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

                  "Net WAC Pass-Through Rate": With respect to each REMIC I
Regular Interest, the Class A Certificates and the Mezzanine Certificates and
any Distribution Date, a rate per annum equal to the product of (x) the weighted
average of the Expense Adjusted Mortgage Rates of the Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the related Due
Period and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period.

                  "Net WAC Rate Carryover Reserve Account": The account
established and maintained pursuant to Section 3.28.

                  "Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the sum
of (A) the positive excess of (i) the amount of interest payable to such Class
of Certificates on such Distribution Date calculated at the related Pass-Through
Rate for such Distribution Date over (ii) the amount of interest payable on such
Class of Certificates at the Net WAC Rate for such Distribution Date and (B) the
related Net WAC Rate Carryover Amount for the previous Distribution Date not
previously paid, together with interest thereon at a rate equal to the related
Pass-Through Rate for such Class of Certificates for such Distribution Date.

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

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

                  "Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, will
not or, in the case of a proposed Servicing Advance, would

                                      -19-

<PAGE>

not be ultimately recoverable from related Late Collections, Insurance Proceeds
or Liquidation Proceeds on such Mortgage Loan or REO Property as provided
herein.

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

                  "Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC I Regular
Interests for such Distribution Date.

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

                  "One-Month LIBOR": With respect to the Class A Certificates,
the Mezzanine Certificates and for purposes of the Marker Rate, REMIC I Regular
Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 and
any Interest Accrual Period therefor, the rate determined by the Trust
Administrator on the related Interest Determination Date on the basis of the
offered rate for one-month U.S. dollar deposits, as such rate appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination
Date; provided that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates of the
Reference Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London
time) on such Interest Determination Date. In such event, the Trust
Administrator will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If on such Interest Determination
Date, two or more Reference Banks provide such offered quotations, One-Month
LIBOR for the related Interest Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the nearest whole
multiple of 1/16%). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trust Administrator shall select an alternative comparable index (over
which the Trust Administrator has no control), used for determining one-month
Eurodollar lending rates that is calculated and published (or otherwise made
available) by an independent party.

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

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

                                      -20-

<PAGE>

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

                  "Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).

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

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

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

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

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

                  (A) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTAA minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTAA;

                  (B) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTA minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular

                                      -21-

<PAGE>

         Interest I-LTA;

                  (C) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTM1 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTM1;

                  (D) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTM2 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTM2;

                  (E) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTM3 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTM3;

                  (F) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTM4 minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTM4;

                  (G) the REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTZZ minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and

                  (H) 100% of the interest on REMIC I Regular Interest I-LTP.

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

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

                                      -22-

<PAGE>

Adjustment Date from the Mortgage Rate in effect immediately prior to such
Adjustment Date.

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

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

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

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

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

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

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

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

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

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

                                      -23-

<PAGE>

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

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

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

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

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

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

                  (i)      the Mortgage Loan identifying number;

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

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

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

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

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

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

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each

                                      -24-

<PAGE>

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

                  "Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the calendar month in which such Distribution Date
occurs.

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

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

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

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

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

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

         minus:

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

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

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

                                      -25-

<PAGE>

which satisfies the conditions of the exemption.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Master Servicer and to the Trustee and the Trust Administrator an amount equal
to the sum of (i) 100% of the Stated Principal Balance thereof as of the date of
purchase (or such other price as provided in Section 9.01), (ii) in the case of
(x) a Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an advance by the Master Servicer
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Master Servicer, the Trustee or the Trust Administrator in respect of the breach
or defect giving rise to the purchase obligation.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) with respect to any Adjustable- Rate
Mortgage Loan, have a Maximum Mortgage Rate not less than the Maximum Mortgage
Rate on the Deleted Mortgage Loan, (iv) with respect to any Adjustable-Rate
Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the Deleted Mortgage Loan, (v) with respect to any Adjustable-Rate
Mortgage Loan, have a Gross Margin equal to the Gross Margin of the Deleted
Mortgage Loan, (vi) with respect to any Adjustable-Rate Mortgage Loan, have a
next Adjustment Date not more than two months later than the next Adjustment
Date on the Deleted Mortgage Loan, (vii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (viii) have the same Due Date as the Due Date on the Deleted Mortgage
Loan, (ix) have a Loan-to-Value Ratio as of the date of substitution equal to or
lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date,
(x) have a

                                      -26-

<PAGE>

risk grading determined by the Originator at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (xi) [reserved] and (xii) conform to each
representation and warranty set forth in Section 6 of the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the terms
described in clause (vii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(ix) hereof shall be satisfied as to each such mortgage loan, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xi) hereof must be satisfied
as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.

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

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

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

                  With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the

                                      -27-

<PAGE>

calendar month in which such REO Property was acquired, calculated in the case
of each calendar month during such period (A) at an annual rate equal to the
annual rate at which interest was then accruing on the related Mortgage Loan and
(B) on a principal amount equal to the Stated Principal Balance of the related
Mortgage Loan as of the close of business on the Distribution Date during such
calendar month, plus (iii) REO Imputed Interest for such REO Property for each
calendar month commencing with the calendar month in which such REO Property was
acquired and ending with the calendar month in which such Final Recovery
Determination was made, plus (iv) any amounts previously withdrawn from the
Collection Account in respect of the related Mortgage Loan pursuant to Section
3.11(a)(ix) and Section 3.16(b), minus (v) the aggregate of all P&I Advances and
Servicing Advances (in the case of Servicing Advances, without duplication of
amounts netted out of the rental income, Insurance Proceeds and Liquidation
Proceeds described in clause (vi) below) made by the Master Servicer in respect
of such REO Property or the related Mortgage Loan for which the Master Servicer
has been or, in connection with such Final Recovery Determination, will be
reimbursed pursuant to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

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

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

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

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

                  "Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE

                                      -28-

<PAGE>

Certificate or Class P Certificate.

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

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

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

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

                  "REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof; (ii) any REO Property, together
with all collections thereon and proceeds thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); (v) the Collection Account (other than any
amounts representing any Master Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Master Servicer
Prepayment Charge Payment Amount) and any REO Account, and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto. Notwithstanding
the foregoing, however, REMIC I specifically excludes the Net WAC Rate Carryover
Reserve Account, all payments and other collections of principal and interest
due on the Mortgage Loans on or before the Cut-off Date and all Prepayment
Charges payable in connection with Principal Prepayments made before the Cut-off
Date.

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

                  "REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTP, in each case as of such date of
determination.

                                      -29-

<PAGE>

                  "REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 and the denominator
of which is the aggregate of the Uncertificated Balances of REMIC I Regular
Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ.

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

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

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

                  "REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                      -30-

<PAGE>

                  "REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

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

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

                  "REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest and any Distribution Date, the Net WAC Pass-Through Rate.

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

                  "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of the Class R-I Interests pursuant to Section 2.08, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.

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

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

                                      -31-

<PAGE>

Master Servicer.

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

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

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

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

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

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

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

                  "Required Overcollateralized Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $3,972,995.79, (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (x) 4.00% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (y) $993,220.48, and (iii) on or
after the Stepdown Date if a Trigger Event is in effect, the Required
Overcollateralized Amount for the immediately preceding Distribution Date.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates

                                      -32-

<PAGE>

which New York City banks selected by the Trust Administrator are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Trust
Administrator can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Trust
Administrator are quoting on such Interest Determination Date to leading
European banks.

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

                  "Residual Certificate": The Class R Certificates.

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

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

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

                  "Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut- off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal

                                      -33-

<PAGE>

of such Mortgage Loan not yet due (without regard to any acceleration of
payments under the related Mortgage and Mortgage Note) as of the date of such
Deficient Valuation; and (c) as of any Due Date subsequent to the occurrence of
a Liquidation Event with respect to such Mortgage Loan, zero. With respect to
any REO Property: (a) as of any Due Date subsequent to the date of its
acquisition on behalf of the Trust Fund up to and including the Due Date in the
calendar month in which a Liquidation Event occurs with respect to such REO
Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of such REO Property for all
previously ended calendar months; and (b) as of any Due Date subsequent to the
occurrence of a Liquidation Event with respect to such REO Property, zero.

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

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

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

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

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

                  "Servicing Fee Rate": 0.50% per annum.

                  "Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans, whose name and specimen signature appear on a list of Servicing Officers
furnished by the Master Servicer to the Trust Administrator, the

                                      -34-

<PAGE>

Trustee and the Depositor on the Closing Date, as such list may from time to
time be amended.

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

                  "Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.

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

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

                                      -35-

<PAGE>

                  "Stepdown Date": The later to occur of (i) the Distribution
Date occurring in March 2005 and (ii) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 38.00%.

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

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

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

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

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

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

                  "Termination Price": As defined in Section 9.01.

                  "Terminator": As defined in Section 9.01.

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

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

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

                  "Trigger Event": A Trigger Event is in effect if:

                                      -36-

<PAGE>

                  (a) the Delinquency Percentage exceeds (i) 40% of the then
current Credit Enhancement Percentage, multiplied by a fraction, the numerator
of which is the aggregate Principal Balance of the Fixed-Rate Mortgage Loans as
of the last day of the related Due Period and the denominator of which is the
aggregate Principal Balance of all of the Mortgage Loans as of the last day of
the related Due Period, plus (ii) 40% of the then current Credit Enhancement
Percentage, multiplied by a fraction, the numerator of which is the aggregate
Principal Balance of the Adjustable- Rate Mortgage Loans as of the last day of
the related Due Period and the denominator of which is the aggregate Principal
Balance of all of the Mortgage Loans as of the last day of the related Due
Period; or

                  (b) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period divided by aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:

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

March 2005 through February 2006                   3.50%
March 2006 through February 2007                   4.50%
March 2007 through February 2008                   5.50%
March 2008 through February 2009                   6.50%
March 2009 and thereafter                          7.50%

                  "Trust Administrator": U.S. Bank National Association, a
national banking association, or its successor in interest, or any successor
trust administrator appointed as herein provided.

                  "Trust Fund": Collectively, all of the assets of the Trust
REMICs, and the other assets conveyed by the Depositor to the Trustee pursuant
to Section 2.01.

                  "Trust REMIC": Either REMIC I or REMIC II.

                  "Trustee": National City Bank, a national banking association,
or its successor in interest, or any successor trustee appointed as herein
provided; provided, however, that immediately following the Trustee Transfer
Date, the Trustee will be U.S. Bank National Association.

                  "Trustee Transfer Date": The Business Day immediately
following the day on which either (i) U.S. Bank National Association disposes of
all shares beneficially owned by it in New Century Financial Corporation or (ii)
the Depositor, the Master Servicer and the Trust Administrator each receive an
Opinion of Counsel stating that U.S. Bank National Association is not in control
of the Depositor or any of its Affiliates for purposes of the Underwriters'
Exemption.

                  "Uncertificated Balance": The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial

                                      -37-

<PAGE>

uncertificated balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I Regular Interest shall be reduced by all distributions of principal
made on such REMIC I Regular Interest on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04. The Uncertificated Balance of REMIC I Regular Interest I-LTZZ
shall be increased by interest deferrals as provided in Section 4.01(a)(1)(i).
The Uncertificated Balance of each REMIC I Regular Interest shall never be less
than zero.

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

                  "Underwriters' Exemption": An individual exemption issued by
the United States Department of Labor, Prohibited Transaction Exemption 91-23
(56 Fed. Reg. 15936, April 19, 1991), as amended, to Salomon Smith Barney Inc.
(formerly known as Smith Barney Inc.), for specific offerings in which Salomon
Smith Barney Inc. or any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Salomon
Smith Barney Inc. is an underwriter, placement agent or a manager or co-manager
of the underwriting syndicate or selling group where the trust and the offered
certificates meet specified conditions. The Underwriters' Exemption, as amended,
provides a partial exemption for transactions involving certificates
representing a beneficial interest in a trust and entitling the holder to
pass-through payments of principal, interest and/or other payments with respect
to the trust's assets.

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

                  "United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or, District of Columbia
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of Class
R Certificates, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required by the applicable operative agreement
to be United States Persons or an estate whose income is subject to United
States federal income tax regardless of its source, or a trust if a court within
the United States is able to exercise primary supervision over the

                                      -38-

<PAGE>

administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996 (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States person on
August 20, 1996 may elect to continue to be treated as a United States person
notwithstanding the previous sentence. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.

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

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, 98% of all Voting Rights will be allocated among the holders
of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class P Certificates and 1% of all Voting Rights
will be allocated among the holders of the Residual Certificates. The Voting
Rights allocated to each Class of Certificate shall be allocated among Holders
of each such Class in accordance with their respective Percentage Interests as
of the most recent Record Date.

                  SECTION 1.02.             Allocation of Certain Interest
                                            Shortfalls.

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

                                      -39-

<PAGE>

respective Notional Amount of each such Certificate and, thereafter, among the
Class A Certificates and the Mezzanine Certificates on a PRO RATA basis based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance of each such
Certificate and (2) the aggregate amount of any Realized Losses and Net WAC Rate
Carryover Amounts incurred for any Distribution Date shall be allocated among
the Class CE Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Notional Amount of each such Certificate.

                  For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Master Servicer pursuant to Section 3.24) and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an
aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98% and
2%, respectively, and thereafter among REMIC I Regular Interest I- LTAA, REMIC I
Regular Interest I-LTA, REMIC I Regular Interest I-LM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ PRO RATA based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Uncertificated Balance of each such REMIC I Regular Interest.

                                      -40-

<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01.             Conveyance of the Mortgage Loans.

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

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trust Administrator, as custodian
for the Trustee (in which capacity the Trust Administrator will, unless
otherwise specified, be acting under this Article II) the following documents or
instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):

                  (i) the original Mortgage Note, endorsed to _____________, as
         Trustee under the applicable agreement, without recourse," with all
         prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

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

                  (iii) an original Assignment in blank;

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

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

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

                                      -41-

<PAGE>

         commitment or uniform binder or preliminary report of title issued by
         the title insurance or escrow company.

                  Promptly following the Trustee Transfer Date, the Trustee
shall cause each Mortgage Note to be endorsed as follows: "Pay to the order of
U.S. Bank National Association, as Trustee, without recourse."

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

                  Notwithstanding the foregoing, the Trust Administrator need
not cause to be recorded any Assignment which relates to a Mortgage Loan in any
jurisdiction where the Rating Agencies do not require recordation in order to
receive the ratings on the Certificates at the time of their initial issuance;
provided, however, each Assignment shall be submitted for recording by the Trust
Administrator (at the expense of the Originator) in the manner described above,
at no expense to the Trust Fund, the Trustee or the Trust Administrator, upon
the earliest to occur of: (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) the occurrence of a Master
Servicer Event of Termination, (iii) the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Master Servicer, (iv) the occurrence of a
servicing transfer as described in Section 7.02 hereof, (v) with respect to any
one Assignment, the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the related Mortgage and (vi) any Mortgage Loan
that is 90 days or more Delinquent. Upon (a) receipt of written notice by the
Trust Administrator that recording of the Assignments is required pursuant to
one or more of the conditions (excluding (vi) above) set forth in the preceding
sentence or (b) upon the occurrence of condition (vi) in the preceding sentence,
the Depositor shall be required to deliver such Assignments within 30 days
following receipt of such notice.

                  With respect to a maximum of approximately 2.0% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any original Mortgage Note referred to
in Section 2.01(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trustee of a photocopy of such Mortgage Note, if available, with a lost note
affidavit substantially in the form of Exhibit I attached hereto. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Trust Administrator is subsequently located, such original Mortgage Note shall
be

                                      -42-

<PAGE>

delivered to the Trust Administrator within three Business Days.

                  If any of the documents referred to in Sections 2.01(ii),
(iii) or (iv) above has, as of the Closing Date, been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Depositor to deliver such documents
shall be deemed to be satisfied upon (1) delivery to the Trust Administrator of
a copy of each such document certified by the Originator in the case of (x)
above or the applicable public recording office in the case of (y) above to be a
true and complete copy of the original that was submitted for recording and (2)
if such copy is certified by the Originator, delivery to the Trust Administrator
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. Notice shall be provided to the Trustee, the Trust
Administrator and the Rating Agencies by the Originator if delivery pursuant to
clause (2) above will be made more than 180 days after the Closing Date. If the
original lender's title insurance policy was not delivered pursuant to Section
2.01(vi) above, the Depositor shall deliver or cause to be delivered to the
Trust Administrator, promptly after receipt thereof, the original lender's title
insurance policy. The Depositor shall deliver or cause to be delivered to the
Trust Administrator promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.

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

                  SECTION 2.02.             Acceptance of REMIC I by Trustee.

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

                  The Trust Administrator agrees, for the benefit of the
Certificateholders, to review each Mortgage File on or before the Closing Date
and to certify in substantially the form attached hereto as Exhibit C-1 that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
exception

                                      -43-

<PAGE>

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

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

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

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

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

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Originator of any representation, warranty or covenant under
the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Trust Administrator shall promptly notify
the Originator, the Seller, the Master Servicer and the Trustee of such defect,
missing document or breach and request that the Originator or the Seller, as the
case may be, deliver such missing document or cure such defect or breach within
60 days from the date the Originator or the Seller, as the case may be, was
notified of such missing document, defect or breach, and if the Originator or
the Seller, as the case

                                      -44-

<PAGE>

may be, does not deliver such missing document or cure such defect or breach in
all material respects during such period, the Master Servicer, to the extent it
is not the Originator, the Seller or an Affiliate of the Seller, and otherwise
the Trust Administrator, in accordance with Section 3.02(b), shall enforce the
obligations of the Originator or the Seller, as the case may be, under the
Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC I
at the Purchase Price within 90 days after the date on which the Originator or
the Seller, as the case may be, was notified (subject to Section 2.03(c)) of
such missing document, defect or breach, if and to the extent that the
Originator or the Seller, as the case may be, is obligated to do so under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account and the Trust
Administrator, upon receipt of written certification from the Master Servicer of
such deposit, shall release to the Originator or the Seller, as the case may be,
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Originator or the Seller, as the case may be, shall furnish to it and as shall
be necessary to vest in the Originator or the Seller, as the case may be, any
Mortgage Loan released pursuant hereto. Neither the Trustee nor the Trust
Administrator shall have any further responsibility with regard to such Mortgage
File. In lieu of repurchasing any such Mortgage Loan as provided above, if so
provided in the Mortgage Loan Purchase Agreement, the Originator or the Seller,
as the case may be, may cause such Mortgage Loan to be removed from REMIC I (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.03(b). It is understood and agreed that the obligation of
the Originator or the Seller, as the case may be, to cure or to repurchase (or
to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee and the Certificateholders.

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

                  As to any Deleted Mortgage Loan for which the Originator or
the Seller substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Originator or the Seller, as the case may
be, delivering to the Trust Administrator, for such Qualified Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.01, together with an
Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Trust Administrator shall acknowledge receipt for such Qualified Substitute
Mortgage Loan or Loans and, within ten Business Days thereafter, review such
documents as specified in Section 2.02 and deliver to the Depositor and the
Master Servicer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit C-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trust Administrator shall deliver to the Depositor, the Master
Servicer and the Trustee a certification substantially in the form of Exhibit
C-2 hereto with respect to such Qualified Substitute Mortgage Loan or Loans,
with any applicable exceptions noted thereon. Monthly Payments due with respect
to Qualified Substitute Mortgage

                                      -45-

<PAGE>

Loans in the month of substitution are not part of REMIC I and will be retained
by the Originator or the Seller, as the case may be. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date in the month
of substitution, and the Originator or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Mortgage Loan. The Depositor shall give or cause to be given
written notice to the Certificateholders that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee and the Trust Administrator. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool and shall be subject in all respects to the
terms of this Agreement and the Mortgage Loan Purchase Agreement, including, all
applicable representations and warranties thereof included in the Mortgage Loan
Purchase Agreement.

                  For any month in which the Originator or the Seller
substitutes one or more Qualified Substitute Mortgage Loans for one or more
Deleted Mortgage Loans, the Master Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such
Qualified Substitute Mortgage Loan, the Scheduled Principal Balance thereof as
of the date of substitution, together with one month's interest on such
Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding P&I Advances and Servicing Advances (including Nonrecoverable P&I
Advances and Nonrecoverable Servicing Advances) related thereto. On the date of
such substitution, the Originator or the Seller, as the case may be, will
deliver or cause to be delivered to the Master Servicer for deposit in the
Collection Account an amount equal to the Substitution Shortfall Amount, if any,
and the Trust Administrator, upon receipt of the related Qualified Substitute
Mortgage Loan or Loans and certification by the Master Servicer of such deposit,
shall release to the Originator or the Seller, as the case may be, the related
Mortgage File or Files and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, the
Originator or the Seller, as the case may be, shall deliver to it and as shall
be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

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

                  (c) Upon discovery by the Depositor, the Originator, the
Seller, the Master Servicer, the Trustee or the Trust Administrator that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties. In connection
therewith, the Originator shall repurchase or, subject to the limitations set
forth in Section 2.03(b), substitute one or more Qualified Substitute Mortgage
Loans for the affected Mortgage Loan

                                      -46-

<PAGE>

within 90 days of the earlier of discovery or receipt of such notice with
respect to such affected Mortgage Loan. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.03(a). The Trustee
shall reconvey to the Originator the Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty.

                  SECTION 2.04.             Reserved

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

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

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

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

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

                                      -47-

<PAGE>

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

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

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

                  (vi) [Reserved];

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

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

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

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

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trust Administrator and shall inure to the benefit
of the Trust Administrator, the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, the Master Servicer,
the Trust Administrator or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and

                                      -48-

<PAGE>

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

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

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

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

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

                                      -49-

<PAGE>

                  SECTION 2.08.             Issuance of Class R Certificates.

                  The Trustee acknowledges the assignment to it of the REMIC
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee or the Trust Administrator has executed, authenticated and delivered
to or upon the order of the Depositor, the Class R Certificates in authorized
denominations.

                                      -50-

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

                  SECTION 3.01.             Master Servicer to Act as Master
                                            Servicer.

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

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

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

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

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

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

                                      -51-

<PAGE>

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

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

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

                                      -52-

<PAGE>

startup date" under the REMIC Provisions.

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

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

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

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

                  (b) As part of its servicing activities hereunder, the Master
Servicer, for the

                                      -53-

<PAGE>

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

                  SECTION 3.03.             Successor Sub-Servicers.

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

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

                  SECTION 3.04.             Liability of the Master Servicer.

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

                                      -54-

<PAGE>

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

                  SECTION 3.05.             No Contractual Relationship Between
                                            Sub-Servicers, Trust Administrator,
                                            the Trustee or the
                                            Certificateholders.

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

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

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

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

                                      -55-

<PAGE>

                  SECTION 3.07.             Collection of Certain Mortgage Loan
                                            Payments.

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

                  SECTION 3.08.             Sub-Servicing Accounts.

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

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

                  The Master Servicer shall establish and maintain, or cause to
be established and

                                      -56-

<PAGE>

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

                  SECTION 3.10.             Collection Account, Distribution
                                            Account and Initial Deposit Account.

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

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

                                      -57-

<PAGE>

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

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

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

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

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

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

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

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

                  On behalf of the Trust Fund, the Trust Administrator shall
establish and maintain the Initial Deposit Account, held in trust for the
benefit of the Certificateholders. On the Closing Date, the Depositor shall
remit or cause to be remitted to the Trust Administrator, for deposit in the
Initial Deposit Account, the Initial Deposit and the Trust Administrator shall
deposit the Initial Deposit, to the extent received by it, into the Initial
Deposit Account. The Initial Deposit Account shall be treated as an "outside
reserve fund" under applicable Treasury regulations and shall not be part of any
Trust REMIC. Any investment earnings on the Initial Deposit Account shall be
treated as owned by the Depositor and will be taxable to the Depositor. The
Trust Administrator shall be required to withdraw such earnings from the Initial
Deposit Account and remit the same to the Depositor in the month following the
first Distribution Date, and shall thereupon terminate such account.

                  (b) On behalf of the Trust Fund, the Trust Administrator, as
agent for the Trustee, shall establish and maintain one or more accounts (such
account or accounts, the "Distribution Account"), held in trust for the benefit
of the Trustee, the Trust Fund and the Certificateholders. On behalf of the
Trust Fund, the Master Servicer shall deliver to the Trust Administrator in
immediately

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<PAGE>

available funds for deposit in the Distribution Account by 1:00 p.m. New York
time (i) on the Master Servicer Remittance Date, that portion of the Available
Distribution Amount (calculated without regard to the references in clause (2)
of the definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by the Master
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advancing Person pursuant to Section 3.26 and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Master Servicer shall,
by 1:00 p.m. New York time on such Business Day, withdraw from the Collection
Account any and all amounts payable or reimbursable to the Depositor, the Master
Servicer, the Trustee, the Trust Administrator, the Originator, the Seller or
any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

                  (iv) to reimburse itself pursuant to Section 7.02;

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

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

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

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

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

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

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

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<PAGE>

                  (b) All income and gain realized from the investment of funds
deposited in the Collection Account, the Distribution Account and any REO
Account held by or on behalf of the Master Servicer, shall be for the benefit of
the Master Servicer and shall be subject to its withdrawal in accordance with
Section 3.11 or Section 3.23, as applicable, or withdrawal by the Trust
Administrator in accordance with Section 3.11 or Section 3.25, as applicable.
The Master Servicer shall deposit in the Collection Account, the Distribution
Account or any REO Account, as applicable, the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon realization of such loss. All income in the nature of
interest from the investment of funds in the Initial Deposit Account shall be
for the benefit of the Depositor. The Depositor shall remit from its own funds
to the Trustee for deposit into the Initial Deposit Account the amount of any
loss incurred on Permitted Investments in the Initial Deposit Account, and the
Trustee shall deposit such amount remitted to it by the Depositor into the
Initial Deposit Account.

                  (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 Trust Administrator may and, subject to Section 8.01
and Section 8.02(v), upon the request of the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.

                  SECTION 3.13.             [Reserved].

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

                  (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Master Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Master Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Master Servicer under
any such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO

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<PAGE>

Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).

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

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

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

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<PAGE>

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

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

                  SECTION 3.16.             Realization Upon Defaulted Mortgage
                                            Loans.

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<PAGE>

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

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

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

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

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

                                      -66-

<PAGE>

                  If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.03(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (a)(ix), such right
of reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.

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

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

                  (e) If the Master Servicer determines that it is in the best
economic interest of the Certificateholders to sell a Mortgage Loan that is over
90 days Delinquent, rather than foreclosing,

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the Master Servicer may effect such a sale. The net proceeds of such sale shall
be Liquidation Proceeds.

                  SECTION 3.17.             Trust Administrator to Cooperate;
                                            Release of Mortgage Files.

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

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

                  (c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Master Servicer or the Sub-Servicer, as
the case may be, any court pleadings, requests for trustee's sale or other
documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against any
Mortgagor on the

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Mortgage Note or Mortgage or to obtain a deficiency judgment, or to enforce any
other remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Each such certification shall include a request
that such pleadings or documents be executed by the Trustee and a statement as
to the reason such documents or pleadings are required and that the execution
and delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.

                  SECTION 3.18.             Servicing Compensation.

                  As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.

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

                  SECTION 3.19.             Reports to the Trust Administrator
                                            and the Trustee; Collection Account
                                            Statements.

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

                  SECTION 3.20.             Statement as to Compliance.

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<PAGE>

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

                  SECTION 3.21.             Independent Public Accountants'
                                            Servicing Report.

                  Not later than 90 days following the end of each fiscal year
of the Master Servicer, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer which includes an assertion that the Master Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of residential mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
Immediately upon receipt of such report, the Master Servicer shall, at its own
expense, furnish a copy of such report to the Trust Administrator Trustee and
each Rating Agency. Copies of such statement shall be provided by the Trust
Administrator to any Certificateholder upon request, provided that such
statement is delivered by the Master Servicer to the Trust Administrator.

                  SECTION 3.22.             Access to Certain Documentation.

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

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<PAGE>

applicable laws, upon reasonable request during normal business hours at the
offices of the Master Servicer designated by it at the expense of the Person
requesting such access.

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in

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<PAGE>

the Distribution Account in accordance with Section 3.10(d)(ii) on the Master
Servicer Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).

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

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

                  The Master Servicer shall deliver to the Trust Administrator
for deposit into the Distribution Account by 1:00 p.m. New York time on the
Master Servicer Remittance Date from its own funds an amount equal to the lesser
of (i) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting from full or partial Principal Prepayments during
the related Prepayment Period and (ii) the aggregate Servicing Fee for the
related Prepayment Period. Any amounts paid by the Master Servicer pursuant to
this Section 3.24 shall not be reimbursed by REMIC I.

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

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

                  SECTION 3.26.             Advance Facility.

                  (a) The Master Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility") under
which (1) the Master Servicer assigns or pledges to another Person (an
"Advancing Person") the Master Servicer's rights under this Agreement to be
reimbursed for any P&I Advances or Servicing Advances and/or (2) an Advancing
Person agrees to fund some or all P&I Advances and/or Servicing Advances
required to be made by the Master Servicer pursuant to this Agreement. No
consent of the Trustee, the Trust Administrator,

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<PAGE>

the Certificateholders or any other party is required before the Master Servicer
may enter into an Advance Facility; provided, however, that the consent of the
Trustee and the Trust Administrator shall be required before the Master Servicer
may cause to be outstanding at one time more than one Advance Facility with
respect to P&I Advances or more than one Advance Facility with respect to
Servicing Advances. Notwithstanding the existence of any Advance Facility under
which an Advancing Person agrees to fund P&I Advances and/or Servicing Advances
on the Master Servicer's behalf, the Master Servicer shall remain obligated
pursuant to this Agreement to make P&I Advances and Servicing Advances pursuant
to and as required by this Agreement. If the Master Servicer enters into an
Advance Facility, and for so long as an Advancing Person remains entitled to
receive reimbursement for any P&I Advances and/or Servicing Advances, as
applicable, pursuant to this Agreement, then the Master Servicer shall not be
permitted to reimburse itself for P&I Advances and/or Servicing Advances, but
instead the Master Servicer shall be required to include amounts collected that
would otherwise be retained by the Master Servicer to reimburse it for
previously unreimbursed P&I Advances ("P&I Advance Reimbursement Amounts")
and/or previously unreimbursed Servicing Advances ("Servicing Advance
Reimbursement Amounts" and together with P&I Advance Reimbursement Amounts,
"Reimbursement Amounts") (in each case to the extent such type of Reimbursement
Amount is included in the Advance Facility), in the remittance to the Trust
Administrator made pursuant to this Agreement, to the extent of amounts on
deposit in the Collection Account on the related Master Servicer Remittance
Date. Notwithstanding anything to the contrary herein, in no event shall P&I
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in the "Available Distribution Amount" or distributed to
Certificateholders. If the Master Servicer makes a remittance to the Trust
Administrator of Reimbursement Amounts as described above, the Master Servicer
shall report to the Trust Administrator the portions of such remittance that
consist of Available Distribution Amount, P&I Advance Reimbursement Amounts and
Servicing Advance Reimbursement Amounts, respectively.

                  (b) If the Master Servicer enters into an Advance Facility,
the Master Servicer and the related Advancing Person shall deliver to the
Trustee and the Trust Administrator a written notice and payment instruction (an
"Advance Facility Notice"), providing the Trust Administrator with written
payment instructions as to where to remit P&I Advance Reimbursement Amounts
and/or Servicing Advance Reimbursement Amounts (each to the extent such type of
Reimbursement Amount is included within the Advance Facility) on subsequent
Distribution Dates. The payment instruction shall require the applicable
Reimbursement Amounts to be distributed to the Advancing Person or to a trustee
or custodian (an "Advance Facility Trustee") designated in the Advance Facility
Notice. An Advance Facility Notice may only be terminated by the joint written
direction of the Master Servicer and the related Advancing Person (and any
related Advance Facility Trustee); provided, however, that the provisions of
this Section 3.26(b) shall cease to be applicable when all P&I Advances and
Servicing Advances funded by an Advancing Person, and when all P&I Advances and
Servicing Advances the rights to be reimbursed for which have been assigned or
pledged to an Advancing Person, have been repaid to the related Advancing Person
in full.

                  (c) Reimbursement Amounts shall consist solely of amounts in
respect of P&I Advances and/or Servicing Advances made with respect to the
Mortgage Loans for which the Master Servicer would be permitted to reimburse
itself in accordance with this Agreement, assuming the Master Servicer had made
the related P&I Advance(s) and/or Servicing Advance(s). Notwithstanding the
foregoing, no Person shall be entitled to reimbursement from funds held in the

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<PAGE>

Collection Account for future distribution to Certificateholders pursuant to
this Agreement. Neither the Trustee nor the Trust Administrator shall have any
duty or liability with respect to the calculation of any Reimbursement Amount
and shall be entitled to rely without independent investigation on the Advance
Facility Notice shall be provided on the Master Servicer's report of the amount
of P&I Advance Reimbursement Amounts and Servicing Advance Reimbursement Amounts
that were included in the remittance from the Master Servicer to the Trust
Administrator. The Master Servicer shall maintain and provide to any successor
master servicer and (upon request) the Trust Administrator a detailed accounting
on a loan by loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any Advancing Person. The successor master servicer shall be
entitled to rely on any such information provided by the predecessor master
servicer, and the successor master servicer shall not be liable for any errors
in such information.

                  (d) An Advancing Person who receives an assignment or pledge
of the rights to be reimbursed for P&I Advances and/or Servicing Advances,
and/or whose obligations hereunder are limited to the funding of P&I Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Sub-Servicer set forth in this Agreement.

                  (e) The documentation establishing any Advance Facility shall
require that Reimbursement Amounts distributed with respect to each Mortgage
Loan be allocated to outstanding unreimbursed P&I Advances or Servicing Advances
(as the case may be) made with respect to that Mortgage Loan on a "first in,
first out" (FIFO) basis. Such documentation shall also require the Master
Servicer to provide to the related Advancing Person or Advance Facility Trustee
loan by loan information with respect to each Reimbursement Amount distributed
by the Trust Administrator to such Advancing Person or Advance Facility Trustee
on each Distribution Date, to enable the Advancing Person or Advance Facility
Trustee to make the FIFO allocation of each Reimbursement Amount with respect to
each Mortgage Loan. The Master Servicer shall remain entitled to be reimbursed
by the Advancing Person or Advance Facility Trustee for all P&I Advances and
Servicing Advances funded by the Master Servicer to the extent the related
rights to be reimbursed therefor have not been assigned or pledged to an
Advancing Person.

                  (f) The Master Servicer who enters into an Advance Facility
shall indemnify the Trustee, the Trust Administrator, the Trust Fund and any
successor resulting from any claim by the related Advancing Person, except to
the extent that such claim, loss, liability or damage resulted from or arose out
of negligence, recklessness or willful misconduct on the part of the Trustee,
the Trust Administrator or the successor master servicer, or failure by the
successor master servicer or the Trust Administrator to remit funds as required
by this Agreement or the commission of an act or omission to act by the
successor master servicer or the Trust Administrator, and the passage of any
applicable cure or grace period, such that an event of default under this
Agreement occurs or such entity is subject to termination for cause under this
Agreement.

                  (g) Any amendment to this Section 3.26 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.26,
including amendments to add provisions relating to a successor master servicer,
may be entered into by the Trustee, the Trust Administrator and the Master
Servicer without the consent of any Certificateholder, notwithstanding anything
to the contrary in this Agreement.

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<PAGE>

                  SECTION 3.27.             [Reserved].

                  SECTION 3.28              Net WAC Rate Carryover Reserve
                                            Account.

                  (a) No later than the Closing Date, the Trust Administrator
shall establish and maintain with itself, as agent for the Trustee, a separate,
segregated trust account titled, "Net WAC Rate Carryover Reserve Account, U.S.
Bank National Association, as agent for National City Bank, as Trustee, in trust
for the registered holders of New Century Mortgage Securities, Inc., New Century
Home Equity Loan Trust, Series 2002-1, Asset Backed Pass-Through Certificates."
On the Closing Date, the Depositor will deposit, or cause to be deposited, into
the Net WAC Rate Carryover Reserve Account $1,000.

                  (b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trust Administrator has been directed by the Class CE
Certificateholders to, and therefore will, deposit into the Net WAC Rate
Carryover Reserve Account the amounts described in Section 4.01(a)(4), rather
than distributing such amounts to the Class CE Certificateholders. On each such
Distribution Date, the Trust Administrator shall hold all such amounts for the
benefit of the Holders of the Class A Certificates and the Mezzanine
Certificates, and will distribute such amounts to the Holders of the Class A
Certificates and the Mezzanine Certificates in the amounts and priorities set
forth in Section 4.01(a). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Trust Administrator shall deposit into the Net WAC Rate
Carryover Reserve Account on behalf of the Class CE Certificateholders, from
amounts otherwise distributable to the Class CE Certificateholders, an amount
such that when added to other amounts already on deposit in the Net WAC Rate
Carryover Reserve Account, the aggregate amount on deposit therein is equal to
$1,000.

                  (c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Net WAC Rate Carryover
Reserve Account and all amounts deposited into the Net WAC Rate Carryover
Reserve Account (other than the initial deposit therein of $1,000) shall be
treated as amounts distributed by REMIC III to the Holders of the Class CE
Certificates. Upon the termination of the Trust Fund, or the payment in full of
the Class A Certificates and the Mezzanine Certificates, all amounts remaining
on deposit in the Net WAC Rate Carryover Reserve Account will be released by the
Trust Fund and distributed to the Class CE Certificateholders or their
designees. The Net WAC Rate Carryover Reserve Account will be part of the Trust
Fund but not part of any REMIC and any payments to the Holders of the Class A
Certificates or the Mezzanine Certificates of Net WAC Rate Carryover Amounts
will not be payments with respect to a "regular interest" in a REMIC within the
meaning of Code Section 860(G)(a)(1).

                  (d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees to direct the Trust Administrator, and the Trust
Administrator hereby is directed, to deposit into the Net WAC Rate Carryover
Reserve Account the amounts described above on each Distribution Date as to
which there is any Net WAC Rate Carryover Amount rather than distributing such
amounts to the Class CE Certificateholders. By accepting a Class CE Certificate,
each Class CE Certificateholder further agrees that such direction is given for
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by such acceptance.

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<PAGE>

                  (e) At the direction of the Holders of a majority in
Percentage Interest in the Class CE Certificates, the Trust Administrator shall
direct any depository institution maintaining the Net WAC Rate Carryover Reserve
Account to invest the funds in such account in one or more Permitted Investments
bearing interest or sold at a discount, and maturing, unless payable on demand,
(i) no later than the Business Day immediately preceding the date on which such
funds are required to be withdrawn from such account pursuant to this Agreement,
if a Person other than the Trust Administrator or an Affiliate manages or
advises such investment, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trust Administrator or an Affiliate manages or advises such investment. If no
investment direction of the Holders of a majority in Percentage Interest in the
Class CE Certificates with respect to the Net WAC Rate Carryover Reserve Account
is received by the Trust Administrator, the Trust Administrator shall invest the
funds in such account in Permitted Investments managed by the Trust
Administrator or an Affiliate of the kind described in clause (vi) of the
definition of Permitted Investments. All income and gain earned upon such
investment shall be deposited into the Net WAC Rate Carryover Reserve Account.

                  (f) For federal tax return and information reporting, the
right of the Class A Certificateholders and the Mezzanine Certificateholders to
receive payments from the Net WAC Rate Carryover Reserve Account in respect of
any Net Wac Rate Carryover Amount shall be assigned a value of zero.

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                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01.             Distributions.

                  (a)(1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-I Interest, as the case
may be:

                  (i) first, to Holders of the REMIC I Regular Interest I-LTA,
         REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
         I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4, in an
         amount equal to (A) the Uncertificated Interest for such Distribution
         Date, plus (B) any amounts in respect thereof remaining unpaid from
         previous Distribution Dates. Amounts payable as Uncertificated Interest
         in respect of REMIC I Regular Interest I-LTZZ shall be reduced when the
         sum of the REMIC I Overcollateralized Amount is less than the REMIC I
         Required Overcollateralized Amount, by the lesser of (x) the amount of
         such difference and (y) the Maximum Uncertificated Interest Deferral
         Amount and such amounts will be payable to the Holders of REMIC I
         Regular Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I
         Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I
         Regular Interest I-LTM4 in the same proportion as the
         Overcollateralization Increase Amount is allocated to the Corresponding
         Certificates;

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

                           (a) to the Holders of REMIC I Regular Interest
                  I-LTAA, 98.000% of such remainder (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC I Regular Interest is reduced to zero;

                           (b) to the Holders of REMIC I Regular Interest I-LTA,
                  REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
                  I-LTM2, REMIC I Regular Interest I- LTM3 and REMIC I Regular
                  Interest I-LTM4, 1.000% of such remainder (less the amount
                  payable in clause (d) below), in the same proportion as
                  principal payments are allocated to the Corresponding
                  Certificates, until the Uncertificated Balances of such REMIC
                  I Regular Interests are reduced to zero;

                           (c) to the Holders of REMIC I Regular Interest
                  I-LTZZ, 1.000% of such remainder (less the amount payable in
                  clause (d) below), until the Uncertificated Balance of such
                  REMIC I Regular Interest is reduced to zero; then

                           (d) to the Holders of REMIC I Regular Interest I-LTP,
                  on the Distribution Date immediately following the expiration
                  of the latest Prepayment Charge as

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                  identified on the Prepayment Charge Schedule or any
                  Distribution Date thereafter until $100 has been distributed
                  pursuant to this clause; and

                           (e) any remaining amount to the Holders of the Class
                  R Certificates (as Holder of the Class R-I Interest);

provided, however, that 98.000% and 2.000% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.

                  (2) On the first Distribution Date, the Initial Deposit will
be transferred from the Initial Deposit Account to the Distribution Account for
inclusion among the Available Distribution Amount, for such Distribution Date.
On each Distribution Date, the Trust Administrator shall withdraw from the
Distribution Account an amount equal to the Interest Remittance Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority:

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

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

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

                  (iv) to the Holders of the Class M-3 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-3
         Certificates; and

                  (v) to the Holders of the Class M-4 Certificates, an amount
         equal to the Interest Distribution Amount allocable to the Class M-4
         Certificates.

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

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

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

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

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<PAGE>

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

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

                           FIFTH, to the Holders of the Class M-4 Certificates,
         until the Certificate Principal Balance of such Class has been reduced
         to zero.

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

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

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

                           THIRD, the Class M-2 Principal Distribution Amount
         shall be distributed to the Holders of the Class M-2 Certificates,
         until the Certificate Principal Balance of such Class has been reduced
         to zero;

                           FOURTH, the Class M-3 Principal Distribution Amount
         shall be distributed to the Holders of the Class M-3 Certificates,
         until the Certificate Principal Balance of such Class has been reduced
         to zero; and

                           FOURTH, the Class M-4 Principal Distribution Amount
         shall be distributed to the Holders of the Class M-4 Certificates,
         until the Certificate Principal Balance of such Class has been reduced
         to zero.

                  (4) On each Distribution Date, the Net Monthly Excess Cashflow
shall be distributed by the Trust Administrator as follows:

                           (i) to the Holders of the Class or Classes of
         Certificates then entitled to receive distributions in respect of
         principal, as part of the Principal Distribution Amount in an amount
         equal to the Overcollateralization Increase Amount for the
         Certificates, applied to reduce the Certificate Principal Balance of
         such Certificates until the aggregate Certificate Principal Balance of
         such Certificates is reduced to zero;

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

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<PAGE>

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

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

                           (v) to the Holders of the Class M-4 Certificates, in
         an amount equal to the Interest Carry Forward Amount allocable to such
         Class of Certificates;

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

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

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

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

                           (x) to the Holders of the Class M-4 Certificates, in
         an amount equal to the aggregate of any Prepayment Interest Shortfalls
         (to the extent not covered by payments pursuant to Section 3.24) and
         any Relief Act Interest Shortfall on the Mortgage Loans allocated to
         such Certificates;

                           (xi) to the Net WAC Rate Carryover Reserve Account,
         the amount required by Section 3.28(b);

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

                           (xiii) to the Holders of the Class R Certificates,
         any remaining amounts; provided that if such Distribution Date is the
         Distribution Date immediately following the expiration of the latest
         Prepayment Charge term on a Mortgage Loan as identified on the Mortgage
         Loan Schedule or any Distribution Date thereafter, then any such
         remaining amounts will be distributed first, to the Holders of the
         Class P Certificates, until the

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<PAGE>

         Certificate Principal Balance thereof has been reduced to zero; and
         second, to the Holders of the Class R Certificates.

                  (b) On each Distribution Date, after making the distributions
of the Available Distribution Amount as set forth above, the Trust Administrator
will FIRST, withdraw from the Net WAC Rate Carryover Reserve Account all income
from the investment of funds in the Net WAC Rate Carryover Reserve Account and
distribute such amount to the Holders of the Class CE Certificates, and SECOND,
withdraw from the Net WAC Rate Carryover Reserve Account, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount with respect to the Class A Certificates and the Mezzanine Certificates
for such Distribution Date and distribute such amount first, to the Class A
Certificates; second, to the Class M-1 Certificates, third, to the Class M-2
Certificates, fourth, to the Class M-3 Certificates and fifth, to the Class M-4
Certificates, in each case to the extent such Net WAC Carryover Amount is
allocable to each such Class.

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

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

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be

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<PAGE>

responsible for disbursing funds to the Certificate Owners that it represents.
None of the Trust Administrator, the Trustee, the Depositor or the Master
Servicer shall have any responsibility therefor except as otherwise provided by
this Agreement or applicable law.

                  (d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trust
Administrator, the Trustee or the Master Servicer shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.

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

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

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

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

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Trust Administrator; provided, however, that the Trust Administrator shall
deposit in such account the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon the realization of such loss.

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

                  SECTION 4.02.             Statements to Certificateholders.

                  On each Distribution Date, the Trust Administrator shall
prepare and forward by mail to each Holder of the Regular Certificates, a
statement as to the distributions made on such Distribution Date setting forth:

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         principal, and the amount of the distribution made on such Distribution
         Date to the Holders of the Class P Certificates allocable to Prepayment
         Charges;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         interest;

                  (iii) the aggregate Servicing Fee received by the Master
         Servicer during the related Due Period and such other customary
         information as the Trust Administrator deems necessary or desirable, or
         which a Certificateholder reasonably requests, to enable
         Certificateholders to prepare their tax returns;

                  (iv) the aggregate amount of P&I Advances for such
         Distribution Date;

                  (v) the aggregate Stated Principal Balance of the Mortgage
         Loans and any REO Properties as of the close of business on such
         Distribution Date;

                  (vi) the number, aggregate principal balance, weighted average
         remaining term to maturity and weighted average Mortgage Rate of the
         Mortgage Loans as of the related Due Date;

                  (vii) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
         days, (c) delinquent 90 or more days, in each case, as of the last day
         of the preceding calendar month, (d) as to which foreclosure

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<PAGE>

         proceedings have been commenced and (e) with respect to which the
         related Mortgagor has filed for protection under applicable bankruptcy
         laws, with respect to whom bankruptcy proceedings are pending or with
         respect to whom bankruptcy protection is in force;

                  (viii) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number of such
         Mortgage Loan, the unpaid principal balance and the Stated Principal
         Balance of such Mortgage Loan as of the date it became an REO Property;

                  (ix) the book value of any REO Property as of the close of
         business on the last Business Day of the calendar month preceding the
         Distribution Date;

                  (x) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period;

                  (xi) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period (or, in the case of Bankruptcy Losses
         allocable to interest, during the related Due Period), separately
         identifying whether such Realized Losses constituted Bankruptcy Losses
         and the aggregate amount of Realized Losses incurred since the Closing
         Date;

                  (xii) the aggregate amount of Extraordinary Trust Fund
         Expenses withdrawn from the Collection Account or the Distribution
         Account for such Distribution Date;

                  (xiii) the aggregate Certificate Principal Balance and
         Notional Amount, as applicable, of each Class of Certificates, after
         giving effect to the distributions, and allocations of Realized Losses,
         made on such Distribution Date, separately identifying any reduction
         thereof due to allocations of Realized Losses;

                  (xiv) the Certificate Factor for each such Class of
         Certificates applicable to such Distribution Date;

                  (xv) the Interest Distribution Amount in respect of the Class
         A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Interest Carry Forward
         Amount, if any, with respect to the Class A Certificates and the
         Mezzanine Certificates on such Distribution Date, and in the case of
         the Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates, separately identifying any reduction thereof due to
         allocations of Realized Losses, Prepayment Interest Shortfalls and
         Relief Act Interest Shortfalls;

                  (xvi) the aggregate amount of any Prepayment Interest
         Shortfall for such Distribution Date, to the extent not covered by
         payments by the Master Servicer pursuant to Section 3.24;

                  (xvii) the aggregate amount of Relief Act Interest Shortfalls
         for such Distribution Date;

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                  (xviii) the Required Overcollateralized Amount and the Credit
         Enhancement Percentage for such Distribution Date;

                  (xix) the Overcollateralization Increase Amount, if any, for
         such Distribution Date;

                  (xx) the Overcollateralization Reduction Amount, if any, for
         such Distribution Date;

                  (xxi) the respective Pass-Through Rates applicable to the
         Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Pass-Through Rate
         applicable to the Class A Certificates and the Mezzanine Certificates
         for the immediately succeeding Distribution Date;

                  (xxii) the Loss Severity Percentage with respect to each
         Mortgage Loan;

                  (xxiii)  the Aggregate Loss Severity Percentage; and

                  (xxiv) the Net WAC Rate Carryover Amount for the Class A
         Certificates and the Mezzanine Certificates, if any, for such
         Distribution Date and the amount remaining unpaid after reimbursements
         therefor on such Distribution Date.

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trust Administrator
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trust Administrator pursuant to
any requirements of the Code as from time to time are in force.

                  On each Distribution Date, the Trust Administrator shall
forward to the Depositor, the Trustee, to each Holder of a Residual Certificate
and to the Master Servicer, a copy of the reports forwarded to the Regular
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.

                  The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not

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provided for herein, as shall be reasonable with respect to the
Certificateholder, or otherwise with respect to the purposes of this Agreement,
all such reports or information to be provided at the expense of the
Certificateholder in accordance with such reasonable and explicit instructions
and directions as the Certificateholder may provide. For purposes of this
Section 4.02, the Trust Administrator's duties are limited to the extent that
the Trust Administrator receives timely reports as required from the Master
Servicer.

                  On each Distribution Date the Trust Administrator shall
provide Bloomberg Financial Markets, L. P. (" Bloomberg") CUSIP level factors
for each class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Trust Administrator and Bloomberg.

                  SECTION 4.03.             Remittance Reports; P&I Advances.

                  (a) On the tenth day of each calendar month, the Master
Servicer shall deliver to the Trust Administrator in an electronic format
acceptable to the Trust Administrator, information with respect to each Mortgage
Loan as is mutually agreed upon between the Master Servicer and the Trust
Administrator. On the Business Day following each Determination Date, the Master
Servicer shall deliver to the Trust Administrator by telecopy (or by such other
means as the Master Servicer or the Trust Administrator, as the case may be, may
agree from time to time) a Remittance Report with respect to the related
Distribution Date. On the same date, the Master Servicer shall forward to the
Trust Administrator by overnight mail a computer readable magnetic tape or
electronically transmit (in a format acceptable to the Trust Administrator) on
the day thereafter, a data file containing the information set forth in such
Remittance Report with respect to the related Distribution Date. Such Remittance
Report will include (i) the amount of P&I Advances to be made by the Master
Servicer in respect of the related Distribution Date, the aggregate amount of
P&I Advances outstanding after giving effect to such P&I Advances, and the
aggregate amount of Nonrecoverable P&I Advances in respect of such Distribution
Date and (ii) such other information with respect to the Mortgage Loans as the
Trust Administrator may reasonably require to perform the calculations necessary
to make the distributions contemplated by Section 4.01 and to prepare the
statements to Certificateholders contemplated by Section 4.02. The Trust
Administrator shall not be responsible (except with regard to any information
regarding the Prepayment Charges to the extent set forth below) to recompute,
recalculate or verify any information provided to it by the Master Servicer.
Notwithstanding the foregoing, in connection with any Principal Prepayment on
any Mortgage Loan listed on Schedule 2 hereto, the Trust Administrator shall
verify that the related Prepayment Charge was delivered to the Trust
Administrator for deposit in the Distribution Account in the amount set forth on
such Schedule 2 or that such Prepayment Charge was waived in accordance with the
terms hereof.

                  (b) The amount of P&I Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the related Servicing Fee), due on the related Due Date in
respect of the Mortgage Loans, which Monthly Payments were delinquent as of the
close of business on the related Determination Date and (ii) with respect to
each REO Property, which REO Property was acquired during or prior to the
related Prepayment Period and as to which REO Property an REO Disposition did
not occur during the related Prepayment Period, an amount

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equal to the excess, if any, of the REO Imputed Interest on such REO Property
for the most recently ended calendar month, over the net income from such REO
Property transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

                  By 1:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Distribution Account an amount equal to
the aggregate amount of P&I Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Master Servicer in discharge of any such P&I Advance) or (iii) in the form of
any combination of (i) and (ii) aggregating the total amount of P&I Advances to
be made by the Master Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trust
Administrator will provide notice to the Trustee and the Master Servicer by
telecopy by the close of business on the third Business Day prior to the
Distribution Date in the event that the amount remitted by the Master Servicer
to the Trust Administrator on such date is less than the P&I Advances required
to be made by the Master Servicer for the related Distribution Date.

                  (c) The obligation of the Master Servicer to make such P&I
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.

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

                  SECTION 4.04.             Allocation of Realized Losses.

                  (a) Prior to each Determination Date, the Master Servicer
shall determine as to each Mortgage Loan and REO Property: (i) the total amount
of Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii)

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whether and the extent to which such Realized Losses constituted Bankruptcy
Losses; and (iii) the respective portions of such Realized Losses allocable to
interest and allocable to principal. Prior to each Determination Date, the
Master Servicer shall also determine as to each Mortgage Loan: (i) the total
amount of Realized Losses, if any, incurred in connection with any Deficient
Valuations made during the related Prepayment Period; and (ii) the total amount
of Realized Losses, if any, incurred in connection with Debt Service Reductions
in respect of Monthly Payments due during the related Due Period. The
information described in the two preceding sentences that is to be supplied by
the Master Servicer shall be evidenced by an Officers' Certificate delivered to
the Trust Administrator and the Trustee by the Master Servicer prior to the
Determination Date immediately following the end of (i) in the case of
Bankruptcy Losses allocable to interest, the Due Period during which any such
Realized Loss was incurred, and (ii) in the case of all other Realized Losses,
the Prepayment Period during which any such Realized Loss was incurred.

                  (b) All Realized Losses on the Mortgage Loans shall be
allocated by the Trust Administrator on each Distribution Date as follows:
first, to Net Monthly Excess Cashflow; second, to the Class CE Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; third,
to the Class M-4 Certificates until the Certificate Principal Balance thereof
has been reduced to zero; fourth, to the Class M-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fifth, to the
Class M-2 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; and sixth, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.

                  All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated and any allocation of Realized Losses
to a Class CE Certificate shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(a)(4)(xiii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

                  As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.

                  (c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trust Administrator on each Distribution Date to the following
REMIC I Regular Interests in the specified

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percentages, as follows: first, to Uncertificated Interest payable to the REMIC
I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an aggregate
amount equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%,
respectively; second, to the Uncertificated Balances of the REMIC I Regular
Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an aggregate amount
equal to the REMIC I Principal Loss Allocation Amount, 98% and 2%, respectively;
third, to the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC
I Regular Interest I-LTM4 and REMIC I Regular Interest I-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM4 has been reduced to zero; fourth to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM3 and REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LTM3 has been reduced to zero; fifth to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM2 and REMIC I Regular Interest I-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM2 has been reduced to zero; and sixth to the Uncertificated Balances of
REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM1 and REMIC I
Regular Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM1 has been reduced to zero.

                  SECTION 4.05.             Compliance with Withholding
                                            Requirements

                  Notwithstanding any other provision of this Agreement, the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trust Administrator reasonably believes are applicable under the Code.
The consent of Certificateholders shall not be required for such withholding. In
the event the Trust Administrator does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trust Administrator shall
indicate the amount withheld to such Certificateholders.

                  SECTION 4.06.             Exchange Commission; Additional
                                            Information.

                  Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2003, the Trust Administrator shall file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
2003, the Trust Administrator shall file a Form 10-K, substantially in the form
attached hereto as Exhibit H, with respect to the Trust Fund. The Depositor
hereby grants to the Trust Administrator a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until the earlier of (i) receipt by the Trust Administrator from
the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. Upon request, the Trust Administrator shall
deliver to the Depositor a copy of any Form 8-K or Form 10-K filed pursuant to
this Section 4.06.

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                                    ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01.             The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-8. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

                  Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or the Trust Administrator to or upon
the order of the Depositor. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee or the Trust Administrator by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee or the Trust Administrator
by manual signature, and such certificate of authentication shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.

                  (b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Trust Administrator except to another Depository that agrees
to hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trust Administrator is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to act
as such in accordance herewith and in accordance with the agreement that it has
with the Depository authorizing it to act as such. The Book-Entry Custodian may,
and, if it is no longer qualified to act

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<PAGE>

as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer, the Trustee and, if the Trust
Administrator is not the Book-Entry Custodian, the Trust Administrator, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor Trust Administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor's duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

                  The Trust Administrator, the Trustee, the Master Servicer and
the Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trust Administrator may establish a
reasonable record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository of such
record date.

                  If (i)(A) the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Master Servicer Event
of Default, Certificate Owners representing in the aggregate not less than 51%
of the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $10,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $10,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Master Servicer, the Trust Administrator or the Trustee shall be liable for any
delay in the delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon

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<PAGE>

and performed by the Trust Administrator, to the extent applicable with respect
to such Definitive Certificates, and the Trust Administrator shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.

                  SECTION 5.02.             Registration of Transfer and
                                            Exchange of Certificates.

                  (a) The Trust Administrator shall cause to be kept at one of
the offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11, a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.

                  (b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate (the "Private Certificates") shall be made
unless that transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of a Class CE Certificate, Class P Certificate or
Residual Certificate is to be made without registration or qualification (other
than in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor), the Trust Administrator shall
require receipt of: (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the forms attached
hereto as Exhibit F-1; and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trust Administrator, the Trustee, the Master
Servicer in its capacity as such or any Sub-Servicer), together with copies of
the written certification(s) of the Certificateholder desiring to effect the
transfer and/or such Certificateholder's prospective transferee upon which such
Opinion of Counsel is based, if any. None of the Depositor, the Trust
Administrator or the Trustee is obligated to register or qualify any such
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of any such Certificate shall, and does hereby
agree to, indemnify the Trust Administrator, the Trustee, the Depositor and the
Master Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.

                  (c) No transfer of a Private Certificate or any interest
therein shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such Plan or any
Person acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29 C. F. R. ss.
2510.3-101 ("Plan Assets") unless the Depositor, the Trust Administrator, the
Trustee and the Master Servicer are provided with an Opinion of Counsel which
establishes to the satisfaction of the Depositor, the Trust Administrator, the
Trustee and the Master Servicer that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Master Servicer, the Trust Administrator, the Trustee
or the Trust Fund to any obligation or liability (including obligations or

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<PAGE>

liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Depositor, the Master Servicer, the Trust Administrator, the Trustee or
the Trust Fund. In lieu of such Opinion of Counsel, any prospective Transferee
of such Certificates may provide a certification in the form of Exhibit G to
this Agreement (or other form acceptable to the Depositor, the Trust
Administrator, the Trustee and the Master Servicer), which the Trust
Administrator may rely upon without further inquiry or investigation. Neither an
Opinion of Counsel nor any certification will be required in connection with the
initial transfer of any such Certificate by the Depositor to an affiliate of the
Depositor (in which case, the Depositor or any affiliate thereof shall have
deemed to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Trust Administrator shall be entitled to
conclusively rely upon a representation (which, upon the request of the Trust
Administrator, shall be a written representation) from the Depositor of the
status of such transferee as an affiliate of the Depositor.

                  Each beneficial owner of a Mezzanine Certificates or any
interest therein shall be deemed to have represented, by virtue of its
acquisition or holding of that certificate or interest therein, that either (i)
it is not a Plan investor, (ii) it has acquired and is holding such Mezzanine
Certificates in reliance on the Underwriters' Exemption, and that it understands
that there are certain conditions to the availability of the Underwriters'
Exemption, including that the Mezzanine Certificates must be rated, at the time
of purchase, not lower than" BBB-" (or its equivalent) by Fitch, Moody's or S&P
or (iii) (1) it is an insurance company, (2) the source of funds used to acquire
or hold the certificate or interest therein is an "insurance company general
account," as such term is defined in PTCE 95-60, and (3) the conditions in
Sections I and III of PTCE 95-60 have been satisfied.

                  If any Private Certificate or any interest therein is acquired
or held in violation of the provisions of the preceding paragraph, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, the
Master Servicer, the Trust Administrator, the Trustee and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by those
parties as a result of that acquisition or holding.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trust Administrator
or its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale under
clause (iii)(B) below and to execute all instruments of Transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:

                           (A) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall be a Permitted
                  Transferee and shall promptly notify the

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<PAGE>

                  Trust Administrator of any change or impending change in its
                  status as a Permitted Transferee.

                           (B) In connection with any proposed Transfer of any
                  Ownership Interest in a Residual Certificate, the Trust
                  Administrator shall require delivery to it, and shall not
                  register the Transfer of any Residual Certificate until its
                  receipt of, an affidavit and agreement (a "Transfer Affidavit
                  and Agreement," in the form attached hereto as Exhibit F-2)
                  from the proposed Transferee, in form and substance
                  satisfactory to the Trust Administrator, representing and
                  warranting, among other things, that such Transferee is a
                  Permitted Transferee, that it is not acquiring its Ownership
                  Interest in the Residual Certificate that is the subject of
                  the proposed Transfer as a nominee, trustee or agent for any
                  Person that is not a Permitted Transferee, that for so long as
                  it retains its Ownership Interest in a Residual Certificate,
                  it will endeavor to remain a Permitted Transferee, and that it
                  has reviewed the provisions of this Section 5.02(d) and agrees
                  to be bound by them.

                           (C) Notwithstanding the delivery of a Transfer
                  Affidavit and Agreement by a proposed Transferee under clause
                  (B) above, if a Responsible Officer of the Trust Administrator
                  who is assigned to this transaction has actual knowledge that
                  the proposed Transferee is not a Permitted Transferee, no
                  Transfer of an Ownership Interest in a Residual Certificate to
                  such proposed Transferee shall be effected.

                           (D) Each Person holding or acquiring any Ownership
                  Interest in a Residual Certificate shall agree (x) to require
                  a Transfer Affidavit and Agreement in the form attached hereto
                  as Exhibit F-2 from any other Person to whom such Person
                  attempts to transfer its Ownership Interest in a Residual
                  Certificate and (y) not to transfer its Ownership Interest
                  unless it provides a Transferor Affidavit (in the form
                  attached hereto as Exhibit F-2) to the Trust Administrator
                  stating that, among other things, it has no actual knowledge
                  that such other Person is not a Permitted Transferee.

                           (E) Each Person holding or acquiring an Ownership
                  Interest in a Residual Certificate, by purchasing an Ownership
                  Interest in such Certificate, agrees to give the Trust
                  Administrator written notice that it is a "pass-through
                  interest holder" within the meaning of temporary Treasury
                  regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
                  acquiring an Ownership Interest in a Residual Certificate, if
                  it is, or is holding an Ownership Interest in a Residual
                  Certificate on behalf of, a "pass-through interest holder."

                  (ii) The Trust Administrator will register the Transfer of any
         Residual Certificate only if it shall have received the Transfer
         Affidavit and Agreement and all of such other documents as shall have
         been reasonably required by the Trust Administrator as a condition to
         such registration. In addition, no Transfer of a Residual Certificate
         shall be made unless the Trust Administrator shall have received a
         representation letter from the Transferee of such Certificate to the
         effect that such Transferee is a Permitted Transferee.

                                      -96-

<PAGE>

                  (iii) (A) If any purported Transferee shall become a Holder of
         a Residual Certificate in violation of the provisions of this Section
         5.02(d), then the last preceding Permitted Transferee shall be
         restored, to the extent permitted by law, to all rights as holder
         thereof retroactive to the date of registration of such Transfer of
         such Residual Certificate. The Trust Administrator shall be under no
         liability to any Person for any registration of Transfer of a Residual
         Certificate that is in fact not permitted by this Section 5.02(d) or
         for making any payments due on such Certificate to the holder thereof
         or for taking any other action with respect to such holder under the
         provisions of this Agreement.

                           (B) If any purported Transferee shall become a holder
                  of a Residual Certificate in violation of the restrictions in
                  this Section 5.02(d) and to the extent that the retroactive
                  restoration of the rights of the holder of such Residual
                  Certificate as described in clause (iii)(A) above shall be
                  invalid, illegal or unenforceable, then the Trust
                  Administrator shall have the right, without notice to the
                  holder or any prior holder of such Residual Certificate, to
                  sell such Residual Certificate to a purchaser selected by the
                  Trust Administrator on such terms as the Trust Administrator
                  may choose. Such purported Transferee shall promptly endorse
                  and deliver each Residual Certificate in accordance with the
                  instructions of the Trust Administrator. Such purchaser may be
                  the Trust Administrator itself or any Affiliate of the Trust
                  Administrator. The proceeds of such sale, net of the
                  commissions (which may include commissions payable to the
                  Trust Administrator or its Affiliates), expenses and taxes
                  due, if any, will be remitted by the Trust Administrator to
                  such purported Transferee. The terms and conditions of any
                  sale under this clause (iii)(B) shall be determined in the
                  sole discretion of the Trust Administrator, and the Trust
                  Administrator shall not be liable to any Person having an
                  Ownership Interest in a Residual Certificate as a result of
                  its exercise of such discretion.

                  (iv) The Trust Administrator shall make available to the
         Internal Revenue Service and those Persons specified by the REMIC
         Provisions all information necessary to compute any tax imposed (A) as
         a result of the Transfer of an Ownership Interest in a Residual
         Certificate to any Person who is a Disqualified Organization, including
         the information described in Treasury regulations sections
         1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
         inclusions" of such Residual Certificate and (B) as a result of any
         regulated investment company, real estate investment trust, common
         trust fund, partnership, trust, estate or organization described in
         Section 1381 of the Code that holds an Ownership Interest in a Residual
         Certificate having as among its record holders at any time any Person
         which is a Disqualified Organization. Reasonable compensation for
         providing such information may be accepted by the Trust Administrator.

                  (v) The provisions of this Section 5.02(d) set forth prior to
         this subsection (v) may be modified, added to or eliminated, provided
         that there shall have been delivered to the Trust Administrator at the
         expense of the party seeking to modify, add to or eliminate any such
         provision the following:

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<PAGE>

                           (A) written notification from each Rating Agency to
                  the effect that the modification, addition to or elimination
                  of such provisions will not cause such Rating Agency to
                  downgrade its then-current ratings of any Class of
                  Certificates; and

                           (B) an Opinion of Counsel, in form and substance
                  satisfactory to the Trust Administrator, to the effect that
                  such modification of, addition to or elimination of such
                  provisions will not cause any Trust REMIC to cease to qualify
                  as a REMIC and will not cause any Trust REMIC to be subject to
                  an entity-level tax caused by the Transfer of any Residual
                  Certificate to a Person that is not a Permitted Transferee or
                  a Person other than the prospective transferee to be subject
                  to a REMIC-tax caused by the Transfer of a Residual
                  Certificate to a Person that is not a Permitted Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trustee,
or the Trust Administrator on behalf of the Trustee shall execute, authenticate
and deliver, in the name of the designated Transferee or Transferees, one or
more new Certificates of the same Class of a like aggregate Percentage Interest.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trust Administrator
maintained for such purpose pursuant to Section 8.11. Whenever any Certificates
are so surrendered for exchange, the Trustee, or the Trust Administrator on
behalf of the Trustee, shall execute, authenticate and deliver, the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trust Administrator) be duly endorsed by, or be accompanied by a
written instrument of transfer in the form satisfactory to the Trust
Administrator duly executed by, the Holder thereof or his attorney duly
authorized in writing. In addition, with respect to each Class R Certificate,
the Holder thereof may exchange, in the manner described above, such Class R
Certificate for two separate Certificates, each representing such Holder's
respective Percentage Interest in the Class R-1 Interest and the Class R-2
Interest, respectively, in each case that was evidenced by the Class R
Certificate being exchanged.

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

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trust Administrator in accordance with
its customary procedures.

                  SECTION 5.03.             Mutilated, Destroyed, Lost or Stolen
                                            Certificates.

                  If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate,

                                      -98-

<PAGE>

and (ii) there is delivered to each of the Trustee and the Trust Administrator
such security or indemnity as may be required by it to save it harmless, then,
in the absence of actual knowledge by the Trust Administrator or the Trustee
that such Certificate has been acquired by a bona fide purchaser, the Trustee,
or the Trust Administrator on behalf of the Trustee shall execute, authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of the same Class and of like
denomination and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trust Administrator 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 and the Trust Administrator) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the applicable REMIC created hereunder, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

                  SECTION 5.04.             Persons Deemed Owners.

                  The Depositor, the Master Servicer, the Trust Administrator,
the Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Master Servicer, the Trust
Administrator, the Trustee or any agent of any of them shall be affected by
notice to the contrary.

                  SECTION 5.05.             Certain Available Information.

                  On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trust Administrator ten copies of any private placement memorandum or other
disclosure document used by the Depositor in connection with the offer and sale
of such Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trust Administrator, the Depositor promptly shall
inform the Trust Administrator of such event and shall deliver to the Trust
Administrator ten copies of the private placement memorandum or disclosure
document, as revised, amended or supplemented. The Trust Administrator shall
maintain at its Corporate Trust Office and shall make available free of charge
during normal business hours for review by any Holder of a Certificate or any
Person identified to the Trust Administrator as a prospective transferee of a
Certificate, originals or copies of the following items: (i) in the case of a
Holder or prospective transferee of a Private Certificate, the related private
placement memorandum or other disclosure document relating to such Class of
Certificates, in the form most recently provided to the Trust Administrator; and
(ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 11.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 10.01(h), (D) any and all Officers' Certificates
delivered to the Trust Administrator by the Master Servicer since the Closing
Date to evidence the Master Servicer's determination that any P&I Advance or
Servicing Advance was, or if made, would be a

                                      -99-

<PAGE>

Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
and (E) any and all Officers' Certificates delivered to the Trust Administrator
by the Master Servicer since the Closing Date pursuant to Section 4.04(a).
Copies and mailing of any and all of the foregoing items will be available from
the Trust Administrator upon request at the expense of the Person requesting the
same.

                                      -100-

<PAGE>

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

                  SECTION 6.01.             Liability of the Depositor and the
                                            Master Servicer.

                  The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and
Master Servicer and undertaken hereunder by the Depositor and the Master
Servicer herein.

                  SECTION 6.02.             Merger or Consolidation of the
                                            Depositor or the Master Servicer.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Master Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation. The Depositor and the Master Servicer each will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.

                  The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agencies'
ratings of the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies).

                  SECTION 6.03.             Limitation on Liability of the
                                            Depositor, the Master Servicer and
                                            Others.

                  None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of

                                     -101-

<PAGE>

willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of
the Depositor or the Master Servicer may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
relating to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. Neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under this Agreement and, in its opinion,
does not involve it in any expense or liability; provided, however, that each of
the Depositor and the Master Servicer may in its discretion undertake any such
action which it may deem necessary or desirable with respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder) shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and the Master Servicer shall be entitled to
be reimbursed therefor from the Collection Account as and to the extent provided
in Section 3.11, any such right of reimbursement being prior to the rights of
the Certificateholders to receive any amount in the Collection Account.

                  SECTION 6.04.             Limitation on Resignation of the
                                            Master Servicer.

                  The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Trust
Administrator. No resignation of the Master Servicer shall become effective
until the Trust Administrator, the Trustee or a successor servicer shall have
assumed the Master Servicer's responsibilities, duties, liabilities (other than
those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.

                  Notwithstanding any other provision in this Agreement to the
contrary, the Master Servicer may assign its rights and obligations hereunder
provided, however, that (i) the Originator have consented to such assignment and
(ii) such assignment would not result in a withdrawal or a downgrading by any
Rating Agency of the rating on any Class of Certificates.

                  Except as expressly provided herein, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, or delegate to or subcontract with, or authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
assignment shall

                                      -102-

<PAGE>

not prohibit the Master Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Master Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Sub-Servicer shall be a
third-party beneficiary hereunder and the parties hereto shall not be required
to recognize any Sub-Servicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor master servicer, the entire amount of the Servicing
Fee and other compensation payable to the Master Servicer pursuant hereto shall
thereafter be payable to such successor master servicer.

                  SECTION 6.05.             Rights of the Depositor in Respect
                                            of the Master Servicer.

                  The Master Servicer shall afford (and any Sub-Servicing
Agreement shall provide that each Sub-Servicer shall afford) the Depositor, the
Trustee and the Trust Administrator, upon reasonable notice, during normal
business hours, access to all records maintained by the Master Servicer (and any
such Sub-Servicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Sub-Servicer) responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Depositor, the Trustee and the Trust Administrator
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's capacity to perform its
obligations under this Agreement as it possesses (and that any such Sub-Servicer
possesses). To the extent such information is not otherwise available to the
public, the Depositor, the Trustee and the Trust Administrator shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor and the Trustee, the Trust Administrator or the Trust Fund, and in any
case, the Depositor, the Trustee or the Trust Administrator as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information. The Depositor may, but is not obligated to,
enforce the obligations of the Master Servicer under this Agreement and may, but
is not obligated to, perform, or cause a designee to perform, any defaulted
obligation of the Master Servicer under this Agreement or exercise the rights of
the Master Servicer under this Agreement; provided that the Master Servicer
shall not be relieved of any of its obligations under this Agreement by virtue
of such performance by the Depositor or its designee. The Depositor shall not
have any responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.

                                      -103-

<PAGE>

                                   ARTICLE VII

                                     DEFAULT

                  SECTION 7.01.             Master Servicer Events of Default.

         (a) "Master Servicer Event of Default," wherever used herein, means any
one of the following events:

                  (i) any failure by the Master Servicer to remit to the Trust
         Administrator for distribution to the Certificateholders any payment
         (other than a P&I Advance required to be made from its own funds on any
         Master Servicer Remittance Date pursuant to Section 4.03) required to
         be made under the terms of the Certificates and this Agreement which
         continues unremedied for a period of one Business Day after the date
         upon which written notice of such failure, requiring the same to be
         remedied, shall have been given to the Master Servicer by the
         Depositor, the Trustee or the Trust Administrator (in which case notice
         shall be provided by telecopy), or to the Master Servicer, the
         Depositor, the Trustee and the Trust Administrator by the Holders of
         Certificates entitled to at least 25% of the Voting Rights; or

                  (ii) any failure on the part of the Master Servicer duly to
         observe or perform in any material respect any other of the covenants
         or agreements on the part of the Master Servicer contained in this
         Agreement, or the breach by the Master Servicer of any representation
         and warranty contained in Section 2.05, which continues unremedied for
         a period of 30 days (or if such failure or breach cannot be remedied
         within 30 days, then such remedy shall have been commenced within 30
         days and diligently pursued thereafter; provided, however, that in no
         event shall such failure or breach be allowed to exist for a period of
         greater than 90 days) after the earlier of (i) the date on which
         written notice of such failure, requiring the same to be remedied,
         shall have been given to the Master Servicer by the Depositor, the
         Trustee, the Trust Administrator or to the Master Servicer, the
         Depositor, the Trustee and the Trust Administrator by the Holders of
         Certificates entitled to at least 25% of the Voting Rights and (ii)
         actual knowledge of such failure by a Servicing Officer of the Master
         Servicer; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator in any insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceeding, or for the winding-up or
         liquidation of its affairs, shall have been entered against the Master
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 90 days; or

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

                                      -104-

<PAGE>

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

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

                  (vii) any failure of the Master Servicer to make any P&I
         Advance on any Master Servicer Remittance Date required to be made from
         its own funds pursuant to Section 4.03 which continues unremedied until
         3:00 p.m. New York time on the second Business Day immediately
         following the Master Servicer Remittance Date.

                  If a Master Servicer Event of Default described in clauses (i)
through (vi) of this Section shall occur, then, and in each and every such case,
so long as such Master Servicer Event of Default shall not have been remedied,
the Depositor or the Trustee may, and at the written direction of the Holders of
Certificates entitled to at least 51% of Voting Rights, the Trustee shall, by
notice in writing to the Master Servicer (and to the Depositor and the Trust
Administrator if given by the Trustee or to the Trustee and the Trust
Administrator if given by the Depositor), terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans and
the proceeds thereof. If a Master Servicer Event of Default described in clause
(vii) hereof shall occur, the Trustee shall, by notice in writing to the Master
Servicer, the Trust Administrator and the Depositor, terminate all of the rights
and obligations of the Master Servicer in its capacity as Master Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer under this Agreement, whether with respect to
the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Trust Administrator
pursuant to and under this Section, and, without limitation, the Trust
Administrator is hereby authorized and empowered, as attorney-in-fact or
otherwise, to execute and deliver, on behalf of and at the expense of the Master
Servicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The Master
Servicer agrees promptly (and in any event no later than ten Business Days
subsequent to such notice) to provide the Trust Administrator with all documents
and records requested by it to enable it to assume the Master Servicer's
functions under this Agreement, and to cooperate with the Trust Administrator
and the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day to the Trust Administrator for
administration by it of all cash amounts which at the time shall be or should
have been credited by the Master Servicer to the Collection Account held by or
on behalf of the Master Servicer, the Distribution Account or any REO Account or
Servicing Account held by or on behalf of the Master Servicer or thereafter be
received with respect to the Mortgage Loans or any REO Property serviced by the
Master Servicer (provided, however, that the Master Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of P&I Advances
or otherwise, and shall continue to be

                                      -105-

<PAGE>

entitled to the benefits of Section 6.03, notwithstanding any such termination,
with respect to events occurring prior to such termination). For purposes of
this Section 7.01, each of the Trustee and the Trust Administrator shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee or the Trust Administrator, as applicable,
assigned to and working in the Trustee's or the Trust Administrator's, as the
case may be, Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a Master Servicer Event of
Default is received by the Trustee or the Trust Administrator, as applicable,
and such notice references the Certificates, the Trust Fund or this Agreement.

                  SECTION 7.02.             Trust Administrator or Trustee to
                                            Act; Appointment of Successor.

                  (a)(1) On and after the time the Master Servicer receives a
notice of termination, the Trust Administrator (and in the event the Trust
Administrator fails in its obligation, the Trustee) shall be the successor in
all respects to the Master Servicer in its capacity as Master Servicer under
this Agreement and the transactions set forth or provided for herein, and all
the responsibilities, duties and liabilities relating thereto and arising
thereafter shall be assumed by the Trust Administrator or the Trustee, as
applicable, (except for any representations or warranties of the Master Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.05 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.12) by the terms and provisions hereof including, without
limitation, the Master Servicer's obligations to make P&I Advances pursuant to
Section 4.03; provided, however, that if the Trust Administrator or the Trustee
is prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Trust Administrator or the
Trustee, as applicable, shall not be obligated to make P&I Advances pursuant to
Section 4.03; and provided further, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trust
Administrator or the Trustee, as applicable, as successor to the Master Servicer
hereunder. As compensation therefor, the Trust Administrator or the Trustee, as
applicable, shall be entitled to the Servicing Fee and all funds relating to the
Mortgage Loans to which the Master Servicer would have been entitled if it had
continued to act hereunder. Notwithstanding the above and subject to Section
7.02(a)(2) below, the Trust Administrator or the Trustee, as applicable, may, if
it shall be unwilling to so act, or shall, if it is unable to so act or if it is
prohibited by law from making advances regarding delinquent mortgage loans or if
the Holders of Certificates entitled to at least 51% of the Voting Rights so
request in writing to the Trust Administrator or Trustee, as applicable,
promptly appoint or petition a court of competent jurisdiction to appoint, an
established mortgage loan servicing institution acceptable to each Rating Agency
and having a net worth of not less than $15,000,000, as the successor to the
Master Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer under this
Agreement.

                           (2) No appointment of a successor to the Master
Servicer under this Agreement shall be effective until the assumption by the
successor of all of the Master Servicer's responsibilities, duties and
liabilities hereunder. In connection with such appointment and assumption
described herein, the Trust Administrator or the Trustee, as applicable, may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that

                                      -106-

<PAGE>

permitted the Master Servicer as such hereunder. The Depositor, the Trustee, the
Trust Administrator and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. Pending
appointment of a successor to the Master Servicer under this Agreement, the
Trust Administrator or the Trustee, as applicable, shall act in such capacity as
hereinabove provided.

                  (b) If the Master Servicer fails to remit to the Trust
Administrator for distribution to the Certificateholders any payment required to
be made under the terms of this Agreement (for purposes of this Section 7.02(b),
a "Remittance") because the Master Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator upon notice
of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator or the deposit thereof in the Distribution Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, right to recover from the Master
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Distribution Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.

                  SECTION 7.03.             Notification to Certificateholders.

                  (a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trust Administrator shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register.

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee or the Trust Administrator becomes aware of
the occurrence of such an event, the Trustee or the Trust Administrator shall
transmit by mail to all Holders of Certificates notice of each such occurrence,
unless such default or Master Servicer Event of Default shall have been cured or
waived.

                  SECTION 7.04.             Waiver of Master Servicer Events of
                                            Default.

                                      -107-

<PAGE>

                  The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Master
Servicer Event of Default hereunder may waive such default or Master Servicer
Event of Default; provided, however, that a default or Master Servicer Event of
Default under clause (i) or (vii) of Section 7.01 may be waived only by all of
the Holders of the Regular Certificates. Upon any such waiver of a default or
Master Servicer Event of Default, such default or Master Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Master Servicer Event of Default or impair any right consequent
thereon except to the extent expressly so waived.

                                      -108-

<PAGE>

                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

                  SECTION 8.01.             Duties of Trustee

                  Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Event of Default and after the curing of all
Master Servicer Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. During a Master Servicer Event of Default, each of the Trustee and
the Trust Administrator shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. Any permissive right of the Trustee or
the Trust Administrator enumerated in this Agreement shall not be construed as a
duty.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it, which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders.

                  No provision of this Agreement shall be construed to relieve
the Trustee or the Trust Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:

                  (i) Prior to the occurrence of a Master Servicer Event of
         Default, and after the curing of all such Master Servicer Events of
         Default which may have occurred, the duties and obligations of each of
         the Trustee and the Trust Administrator shall be determined solely by
         the express provisions of this Agreement, neither the Trustee nor the
         Trust Administrator shall be liable except for the performance of such
         duties and obligations as are specifically set forth in this Agreement,
         no implied covenants or obligations shall be read into this Agreement
         against the Trustee or the Trust Administrator and, in the absence of
         bad faith on the part of the Trustee or the Trust Administrator, as
         applicable, the Trustee or the Trust Administrator, as the case may be,
         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 or the Trust Administrator, as the
         case may be, that conform to the requirements of this Agreement;

                  (ii) Neither the Trustee nor the Trust Administrator shall be
         personally liable for an error of judgment made in good faith by a
         Responsible Officer or Responsible Officers of it unless it shall be
         proved that it was negligent in ascertaining the pertinent facts; and

                  (iii) Neither the Trustee nor the Trust Administrator shall be
         personally liable with respect to any action taken, suffered or omitted
         to be taken by it in good faith in accordance

                                      -109-

<PAGE>

         with the direction of the Holders of Certificates entitled to at least
         25% of the Voting Rights relating to the time, method and place of
         conducting any proceeding for any remedy available to it or exercising
         any trust or power conferred upon it under this Agreement.

                  SECTION 8.02.             Certain Matters Affecting the
                                            Trustee and the Trust Administrator

                  (a)      Except as otherwise provided in Section 8.01:

                           (i) Each of the Trustee and the Trust Administrator
                  may request and rely upon and shall be protected in acting or
                  refraining from acting upon any resolution, Officers'
                  Certificate, certificate of auditors or any other certificate,
                  statement, instrument, opinion, report, notice, request,
                  consent, order, appraisal, bond or other paper or document
                  reasonably believed by it to be genuine and to have been
                  signed or presented by the proper party or parties;

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

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

                           (iv) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any action taken, suffered or
                  omitted by it in good faith and believed by it to be
                  authorized or within the discretion or rights or powers
                  conferred upon it by this Agreement;

                           (v) Prior to the occurrence of a Master Servicer
                  Event of Default hereunder and after the curing of all Master
                  Servicer Events of Default which may have occurred, neither
                  the Trustee nor the Trust Administrator shall be bound to make
                  any investigation into the facts or matters stated in any
                  resolution, certificate, statement, instrument, opinion,
                  report, notice, request, consent, order, approval, bond or
                  other paper or document, unless requested in writing to do so
                  by the Holders of

                                      -110-

<PAGE>

                  Certificates entitled to at least 25% of the Voting Rights;
                  provided, however, that if the payment within a reasonable
                  time to the Trustee or the Trust Administrator, as applicable,
                  of the costs, expenses or liabilities likely to be incurred by
                  it in the making of such investigation is, in the opinion of
                  the Trustee or the Trust Administrator, as applicable, not
                  reasonably assured to the Trustee or Trust Administrator, as
                  applicable, by such Certificateholders, the Trustee or the
                  Trust Administrator, as applicable, may require reasonable
                  indemnity against such expense, or liability from such
                  Certificateholders as a condition to taking any such action;

                           (vi) Each of the Trustee and the Trust Administrator
                  may execute any of the trusts or powers hereunder or perform
                  any duties hereunder either directly or by or through agents
                  or attorneys; and

                           (vii) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any loss resulting from the
                  investment of funds held in the Collection Account at the
                  direction of the Master Servicer pursuant to Section 3.12.

                  (b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

                  SECTION 8.03.             Neither the Trustee nor Trust
                                            Administrator Liable for
                                            Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.12) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator shall assume
any responsibility for their correctness. Neither the Trustee nor the Trust
Administrator shall make any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.12) or of the Certificates (other than the signature of the Trustee, or the
Trust Administrator on behalf of the Trustee, and authentication of the Trustee
or the Trust Administrator on the Certificates) or of any Mortgage Loan or
related document. Neither the Trustee nor the Trust Administrator shall be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer, other than any funds held by or on behalf of the Trustee
or the Trust Administrator in accordance with Section 3.10.

                  SECTION 8.04.             Trustee and Trust Administrator May
                                            Own Certificates.

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<PAGE>

                  Each of the Trustee and the Trust Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee or Trust
Administrator, as applicable.

                  SECTION 8.05.             Trustee's and Trust Administrator's
                                            Fees and Expenses.

                  (a) The Trust Administrator shall withdraw from the
Distribution Account on each Distribution Date and pay to itself the related
portion of the Administration Fee and pay to the Trustee the related portion of
the Administration Fee. Each of the Trustee and the Trust Administrator and any
director, officer, employee or agent of the Trustee or the Trust Administrator,
as applicable, shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense (not including expenses, disbursements and
advances incurred or made by the Trustee or the Trust Administrator, as
applicable, including the compensation and the expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's or Trust
Administrator's, as the case may be, performance in accordance with the
provisions of this Agreement) incurred by the Trustee or the Trust
Administrator, as applicable, in connection with any claim or legal action or
any pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its obligations and duties under this
Agreement, other than any loss, liability or expense (i) resulting from any
breach of the Master Servicer's obligations in connection with this Agreement,
(ii) that constitutes a specific liability of the Trustee or the Trust
Administrator, as applicable, pursuant to Section 10.01(g) or (iii) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder as a result of a breach of the
Trust Administrator's obligations under Article X hereof. The Master Servicer
agrees to indemnify the Trustee and the Trust Administrator, from, and hold it
harmless against, any loss, liability or expense arising in respect of any
breach by the Master Servicer of its obligations in connection with this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Trustee or the Trust
Administrator, as the case may be. Any payment hereunder made by the Master
Servicer to the Trustee or the Trust Administrator shall be from the Master
Servicer's own funds, without reimbursement from REMIC I therefor.

                  (b) The Depositor shall pay any annual rating agency fees of
the Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

                  SECTION 8.06.             Eligibility Requirements for Trustee
                                            and Trust Administrator.

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or an association (other than the Depositor,
the Originator, the Seller, the Master Servicer or any Affiliate of the
foregoing) organized and doing business under the laws of any state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 (or a
member of a bank holding company whose capital and surplus is at least
$50,000,000) and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its

                                      -112-

<PAGE>

most recent report of conditions so published. In case at any time the Trustee
or the Trust Administrator shall cease to be eligible in accordance with the
provisions of this Section, the Trustee or the Trust Administrator, as the case
may be, shall resign immediately in the manner and with the effect specified in
Section 8.07.

                  SECTION 8.07.             Resignation and Removal of the
                                            Trustee and the Trust Administrator.

                  Either the Trustee or the Trust Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, the Master Servicer and to the Certificateholders.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Trustee or Trust Administrator (which may be the same Person in the
event both the Trustee and the Trust Administrator resign or are removed) by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee or Trust Administrator and to the successor Trustee or Trust
Administrator, as applicable. A copy of such instrument shall be delivered to
the Certificateholders, the Trustee or the Trust Administrator, as applicable,
and the Master Servicer by the Depositor. If no successor Trustee or Trust
Administrator shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the resigning Trustee or
Trust Administrator, as applicable, may petition any court of competent
jurisdiction for the appointment of a successor Trustee or Trust Administrator,
as applicable.

                  If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 and shall
fail to resign after written request therefor by the Depositor (or in the case
of the Trust Administrator, the Trustee), or if at any time the Trustee or the
Trust Administrator shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or the Trust Administrator or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor (or in the case of the Trust Administrator, the Trustee) may remove
the Trustee or the Trust Administrator, as applicable, and appoint a successor
Trustee or Trust Administrator (which may be the same Person in the event both
the Trustee and the Trust Administrator resign or are removed) by written
instrument, in duplicate, which instrument shall be delivered to the Trustee or
Trust Administrator, as the case may be, so removed and to the successor Trustee
or Trust Administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or the Trust Administrator, as applicable, and
the Master Servicer by the Depositor.

                  The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Trust Administrator and
appoint a successor Trustee or Trust Administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee or to the Trust Administrator, as the
case may be, so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Master Servicer by the Depositor.

                                      -113-

<PAGE>

                  Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor Trustee or Trust Administrator, as
the case may be, pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee or
Trust Administrator as provided in Section 8.08. Notwithstanding the foregoing,
in the event the Trust Administrator advises the Trustee that it is unable to
continue to perform its obligations pursuant to the terms of this Agreement
prior to the appointment of a successor, the Trustee shall be obligated to
perform such obligations until a new Trust Administrator is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trust Administrator's breach of its
obligations hereunder.

                  Notwithstanding the foregoing, on the Business Day immediately
following the Trustee Transfer Date, U.S. Bank National Association will
automatically replace National City Bank as Trustee. No later than five (5)
Business Days following the Trustee Transfer Date, the Trust Administrator shall
give written notice to the Certificateholders and the Rating Agencies of such
occurrence.

                  SECTION 8.08.             Successor Trustee or Trust
                                            Administrator.

                  Any successor Trustee or Trust Administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Trustee or the Trust Administrator, as applicable, and its
predecessor Trustee or Trust Administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee or Trust Administrator shall become effective and such
successor Trustee or Trust Administrator, 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 or Trust Administrator herein. The predecessor Trustee or Trust
Administrator shall deliver to the successor Trustee or Trust Administrator all
Mortgage Files and related documents and statements to the extent held by it
hereunder, as well as all moneys, held by it hereunder, and the Depositor and
the predecessor Trustee or Trust Administrator 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 or Trust
Administrator all such rights, powers, duties and obligations.

                  No successor Trustee or Trust Administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor Trustee or Trust Administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor Trustee or
Trust Administrator shall not result in a downgrading of any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.

                  Upon acceptance of appointment by a successor Trustee or Trust
Administrator, as provided in this Section, the Depositor shall mail notice of
the succession of such Trustee or Trust Administrator hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee or Trust Administrator, the successor
Trustee or Trust Administrator shall cause such notice to be mailed at the
expense of the Depositor.

                  SECTION 8.09.             Merger or Consolidation of Trustee.

                                      -114-

<PAGE>

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

                  SECTION 8.10.             Appointment of Co-Trustee or
                                            Separate Trustee.

                  Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, such title to REMIC I, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

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

                  Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any

                                      -115-

<PAGE>

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 or co-trustee.

                  SECTION 8.11.             Appointment of Office or Agency.

                  The Trust Administrator will appoint an office or agency in
the City of St. Paul, Minnesota where the Certificates may be surrendered for
registration of transfer or exchange, and presented for final distribution, and
where notices and demands to or upon the Trust Administrator in respect of the
Certificates and this Agreement may be served.

                  SECTION 8.12.             Representations and Warranties.

                  Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Master Servicer, the Depositor and the Trustee or
the Trust Administrator, as applicable, as of the Closing Date, that:

                  (i) it is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States of America.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its articles of association or bylaws or constitute a
         default (or an event which, with notice or lapse of time, or both,
         would constitute a default) under, or result in the breach of, any
         material agreement or other instrument to which it is a party or which
         is applicable to it or any of its assets.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of it, enforceable against it in accordance with the
         terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.

                  (v) It is not in violation of, and its execution and delivery
         of this Agreement and its performance and compliance with the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in its good faith and reasonable judgment, is likely
         to affect materially and adversely either the ability of it to perform
         its obligations under this Agreement or its financial condition.

                                      -116-

<PAGE>

                  (vi) No litigation is pending or, to the best of its
         knowledge, threatened against it, which would prohibit it from entering
         into this Agreement or, in its good faith reasonable judgment, is
         likely to materially and adversely affect either the ability of it to
         perform its obligations under this Agreement or its financial
         condition.

                                      -117-

<PAGE>

                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.01              Termination Upon Repurchase or
                                            Liquidation of All Mortgage Loans.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Trustee and the Trust Administrator (other than the obligations of the Master
Servicer to the Trustee and the Trust Administrator pursuant to Section 8.05 and
of the Master Servicer to make remittances to the Trust Administrator and the
Trust Administrator to make payments in respect of the REMIC I Regular Interests
and the Classes of Certificates as hereinafter set forth) shall terminate upon
payment to the Certificateholders and the deposit of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Terminator (as defined below) of all Mortgage Loans and each REO
Property remaining in REMIC I and (ii) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in REMIC I; provided, however, that in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date hereof. Subject
to Section 3.10 hereof, the purchase by the Terminator of all Mortgage Loans and
each REO Property remaining in REMIC I shall be at a price (the "Termination
Price") equal to the greater of (A) the aggregate Purchase Price of all the
Mortgage Loans included in REMIC I, plus the appraised value of each REO
Property, if any, included in REMIC I, such appraisal to be conducted by an
appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets of REMIC I (as determined by the Terminator and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 9.01).

                  (b) The Master Servicer shall have the right (the party
exercising such right, the "Terminator"), to purchase all of the Mortgage Loans
and each REO Property remaining in REMIC I pursuant to clause (i) of the
preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Terminator may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only if the aggregate Stated Principal Balance of the Mortgage Loans and
each REO Property remaining in the Trust Fund at the time of such election is
reduced to less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date. By acceptance of the Residual
Certificates, the Holder of the Residual Certificates agrees, in connection with
any termination hereunder, to assign and transfer any amounts in excess of par,
and to the extent received in respect of such termination, to pay any such
amounts to the Holders of the Class CE Certificates.

                  (c) Notice of the liquidation of the Certificates shall be
given promptly by the Trust Administrator by letter to Certificateholders mailed
(a) in the event such notice is given in connection with the purchase of the
Mortgage Loans and each REO Property by the Terminator, not

                                      -118-

<PAGE>

earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of the REMIC I Regular Interests and the Certificates will be made upon
presentation and surrender of the related Certificates at the office of the
Trust Administrator therein designated, (ii) the amount of any such final
payment, (iii) that no interest shall accrue in respect of the REMIC I Regular
Interests or the Certificates from and after the Interest Accrual Period
relating to the final Distribution Date therefor and (iv) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trust Administrator. In the event such notice is given in connection with
the purchase of all of the Mortgage Loans and each REO Property remaining in
REMIC I by the Terminator, the Terminator shall deliver to the Trust
Administrator for deposit in the Distribution Account not later than the last
Business Day of the month next preceding the month of the final distribution on
the Certificates an amount in immediately available funds equal to the
above-described purchase price. The Trust Administrator shall remit to the
Master Servicer from such funds deposited in the Distribution Account (i) any
amounts which the Master Servicer would be permitted to withdraw and retain from
the Collection Account pursuant to Section 3.11 and (ii) any other amounts
otherwise payable by the Trust Administrator to the Master Servicer from amounts
on deposit in the Distribution Account pursuant to the terms of this Agreement,
in each case prior to making any final distributions pursuant to Section
10.01(d) below. Upon certification to the Trust Administrator by a Servicing
Officer of the making of such final deposit, the Trust Administrator shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.

                  (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trust Administrator shall
distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 9.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Trust Administrator shall mail a
second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trust Administrator shall pay to Salomon
Smith Barney Inc. all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trust Administrator as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with

                                      -119-

<PAGE>

this Section 9.01. Any such amounts held in trust by the Trust Administrator
shall be held in an Eligible Account and the Trust Administrator may direct any
depository institution maintaining such account to invest the funds in one or
more Permitted Investments. All income and gain realized from the investment of
funds deposited in such accounts held in trust by the Trust Administrator shall
be for the benefit of the Trust Administrator; provided, however, that the Trust
Administrator shall deposit in such account the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon the realization of such loss.

                  Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.

                  SECTION 9.02              Additional Termination Requirements.

                  (a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:

                  (i) The Trustee shall specify the first day in the 90-day
         liquidation period in a statement attached to each Trust REMIC's final
         Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall
         satisfy all requirements of a qualified liquidation under Section 860F
         of the Code and any regulations thereunder, as evidenced by an Opinion
         of Counsel obtained at the expense of the Terminator;

                  (ii) During such 90-day liquidation period and, at or prior to
         the time of making of the final payment on the Certificates, the
         Trustee shall sell all of the assets of REMIC I to the Terminator for
         cash; and

                  (iii) At the time of the making of the final payment on the
         Certificates, the Trust Administrator shall distribute or credit, or
         cause to be distributed or credited, to the Holders of the Residual
         Certificates all cash on hand in the Trust Fund (other than cash
         retained to meet claims), and the Trust Fund shall terminate at that
         time.

                  (b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 9.01, at the expense
of the Trust Administrator without the right of reimbursement from the Trust
Fund), the Trust Administrator shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each Trust REMIC pursuant to this Section 9.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.

                                      -120-

<PAGE>

                                    ARTICLE X

                                REMIC PROVISIONS

                  SECTION 10.01.            REMIC Administration.

                  (a) The Trust Administrator shall elect to treat each Trust
REMIC as a REMIC under the Code and, if necessary, under applicable state law.
Each such election will be made by the Trust Administrator on Form 1066 or other
appropriate federal tax or information return or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interest in REMIC I. The Class A Certificates, each of the Mezzanine
Certificates, the Class CE Certificates and the Class P Certificates (other than
the right to receive amounts from the Net WAC Rate Carryover Reserve Account, if
any) shall be designated as the Regular Interests in REMIC II and the Class R-II
Interest shall be designated as the Residual Interest in REMIC II. Neither the
Trustee nor the Trust Administrator shall permit the creation of any "interests"
in any Trust REMIC (within the meaning of Section 860G of the Code) other than
the REMIC I Regular Interests and the interests represented by the Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

                  (c) The Trust Administrator shall be reimbursed for any and
all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to any Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Trust Administrator, as agent
for each Trust REMIC's tax matters person shall (i) act on behalf of the Trust
Fund in relation to any tax matter or controversy involving any Trust REMIC and
(ii) represent the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The holder of the largest Percentage Interest of each Class of
Residual Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the Trust REMIC's created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Trust Administrator or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.

                  (d) The Trust Administrator shall prepare, the Trustee shall
sign and the Trust Administrator shall file all of the Tax Returns (including
Form 8811, which must be filed within 30 days following the Closing Date) in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trust Administrator without any right of
reimbursement therefor.

                  (e) The Trust Administrator shall perform on behalf of each
Trust REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code,

                                      -121-

<PAGE>

the REMIC Provisions or other compliance guidance issued by the Internal Revenue
Service or any state or local taxing authority. Among its other duties, as
required by the Code, the REMIC Provisions or other such compliance guidance,
the Trust Administrator shall provide (i) to any Transferor of a Residual
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any Person who is not a
Permitted Transferee, (ii) to the Certificateholders such information or reports
as are required by the Code or the REMIC Provisions including reports relating
to interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of each Trust REMIC. The Depositor shall provide or cause to be
provided to the Trust Administrator, within ten (10) days after the Closing
Date, all information or data that the Trust Administrator reasonably determines
to be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) The Trustee and the Trust Administrator shall take such
action and shall cause each REMIC created hereunder to take such action as shall
be necessary to create or maintain the status thereof as a REMIC under the REMIC
Provisions. The Trustee and the Trust Administrator shall not take any action or
cause the Trust Fund to take any action or fail to take (or fail to cause to be
taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could (i) endanger the status of any Trust REMIC as a REMIC or
(ii) result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Trust Administrator have received an Opinion of Counsel, addressed to
the Trustee and the Trust Administrator (at the expense of the party seeking to
take such action but in no event at the expense of the Trust Administrator or
the Trustee) to the effect that the contemplated action will not, with respect
to any Trust REMIC, endanger such status or result in the imposition of such a
tax, nor shall the Master Servicer take or fail to take any action (whether or
not authorized hereunder) as to which the Trustee or the Trust Administrator has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action; provided
that the Master Servicer may conclusively rely on such Opinion of Counsel and
shall incur no liability for its action or failure to act in accordance with
such Opinion of Counsel. In addition, prior to taking any action with respect to
any Trust REMIC or the respective assets of each, or causing any Trust REMIC to
take any action, which is not contemplated under the terms of this Agreement,
the Master Servicer will consult with the Trustee and the Trust Administrator or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any Trust REMIC and the Master
Servicer shall not take any such action or cause any Trust REMIC to take any
such action as to which the Trustee or the Trust Administrator has advised it in
writing that an Adverse REMIC Event could occur; provided that the Master
Servicer may conclusively rely on such writing and shall incur no liability for
its action or failure to act in accordance with such writing. The Trust
Administrator and the Trustee may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement, but in no event shall such cost be an
expense of the Trustee or the Trust Administrator, as applicable. At all times
as may be required by the Code, the Trust Administrator will ensure that
substantially all of the assets of REMIC I will consist of

                                      -122-

<PAGE>

"qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code, to the
extent such obligations are within the Trust Administrator's control and not
otherwise inconsistent with the terms of this Agreement.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trust Administrator pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article X, (ii) to the Master
Servicer pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under Article III
or this Article X, or (iii) against amounts on deposit in the Distribution
Account and shall be paid by withdrawal therefrom.

                  (h) On or before April 15th of each calendar year, commencing
April 15, 2003, the Trust Administrator shall deliver to each Rating Agency an
Officer's Certificate of the Trust Administrator stating the Trust
Administrator's compliance with this Article X.

                  (i) The Trust Administrator shall, for federal income tax
purposes, maintain books and records with respect to each Trust REMIC on a
calendar year and on an accrual basis.

                  (j) Following the Startup Day, neither the Master Servicer nor
the Trustee or the Trust Administrator shall accept any contributions of assets
to any Trust REMIC other than in connection with any Qualified Substitute
Mortgage Loan delivered in accordance with Section 2.03 unless it shall have
received an Opinion of Counsel to the effect that the inclusion of such assets
in the Trust Fund will not cause the related REMIC to fail to qualify as a REMIC
at any time that any Certificates are outstanding or subject such REMIC to any
tax under the REMIC Provisions or other applicable provisions of federal, state
and local law or ordinances.

                  (k) None of the Trustee, the Trust Administrator or the Master
Servicer shall enter into any arrangement by which any Trust REMIC will receive
a fee or other compensation for services nor permit either REMIC to receive any
income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.

                  SECTION 10.02.            Prohibited Transactions and
                                            Activities.

                  None of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, (iii) the termination of REMIC I pursuant to Article IX of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire
any assets for any Trust REMIC (other than REO Property acquired in respect of a
defaulted

                                      -123-

<PAGE>

Mortgage Loan), nor sell or dispose of any investments in the Collection Account
or the Distribution Account for gain, nor accept any contributions to any Trust
REMIC after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03), unless it has received an Opinion of
Counsel, addressed to the Trustee and the Trust Administrator(at the expense of
the party seeking to cause such sale, disposition, substitution, acquisition or
contribution but in no event at the expense of the Trustee or Trust
Administrator) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of any Trust REMIC as a
REMIC or (b) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

                  SECTION 10.03.            Master Servicer and Trustee and
                                            Trust Administrator Indemnification.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer and the Trust Administrator for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trust
Administrator, as a result of a breach of the Trustee's covenants set forth in
this Article X.

                  (b) The Trust Administrator agrees to indemnify the Trust
Fund, the Depositor, the Master Servicer and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trustee,
as a result of a breach of the Trust Administrator's covenants set forth in this
Article X.

                  (c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trust Administrator or the
Trustee, as a result of a breach of the Master Servicer's covenants set forth in
Article III or this Article X.

                                      -124-

<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  SECTION 11.01.            Amendment.

                  This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Trustee and the Trust Administrator without
the consent of any of the Certificateholders, (i) to cure any ambiguity or
defect, (ii) to correct, modify or supplement any provisions herein (including
to give effect to the expectations of Certificateholders), or (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee and the Trust Administrator adversely affect in any
material respect the interests of any Certificateholder. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.

                  This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.

                  Notwithstanding any contrary provision of this Agreement,
neither the Trustee nor the Trust Administrator shall consent to any amendment
to this Agreement unless it shall have first received an Opinion of Counsel to
the effect that such amendment will not result in the imposition of any tax on
any Trust REMIC pursuant to the REMIC Provisions or cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.

                  It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the

                                      -125-

<PAGE>

authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee or the Trust Administrator may
prescribe.

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee or
Trust Administrator.

                  Each of the Trustee and the Trust Administrator may, but shall
not be obligated to enter into any amendment pursuant to this Section that
affects its rights, duties and immunities under this Agreement or otherwise.

                  SECTION 11.02.            Recordation of Agreement;
                                            Counterparts.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Trustee or the Trust Administrator accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.

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

                  SECTION 11.03.            Limitation on Rights of
                                            Certificateholders.

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

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

                  No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Trust Administrator a
written notice of default and of the continuance thereof, as hereinbefore
provided,

                                      -126-

<PAGE>

and unless also the Holders of Certificates entitled to at least 25% of the
Voting Rights shall have made written request upon the Trustee and the Trust
Administrator to institute such action, suit or proceeding in its own name as
Trustee or Trust Administrator hereunder and shall have offered to the Trustee
and the Trust Administrator such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee or the Trust Administrator, for 15 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. It is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee and the Trust Administrator, that no one or
more Holders of Certificates shall have any right in any manner whatsoever by
virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder, the Trustee and the Trust Administrator shall be entitled to
such relief as can be given either at law or in equity.

                  SECTION 11.04.            Governing Law.

                  This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

                  SECTION 11.05.            Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, 390 Greenwich Street, 4 th Floor, New York, New York,
Attention: Mortgage Finance (telecopy number (212) 723-8604), or such other
address or telecopy number as may hereafter be furnished to the Master Servicer,
the Trustee and the Trust Administrator in writing by the Depositor, (b) in the
case of the Master Servicer, 1675 Palm Beach Lakes Blvd., Suite 10A, West Palm
Beach, Florida 33401, Attention: Secretary (telecopy number: (561) 682-8177), or
such other address or telecopy number as may hereafter be furnished to the
Trustee, the Trust Administrator and the Depositor in writing by the Master
Servicer and (c) in the case of the Trust Administrator, 180 East Fifth Street,
St. Paul, Minnesota, 55101, Attention: Structured Finance/NCMSI 2002-1 (telecopy
number (612) 244-0089), or such other address or telecopy number as may
hereafter be furnished to the Servicer, the Depositor and the Trustee in writing
by the Trust Administrator and (d) in the case of the Trustee, National City
Bank, 629 Euclid Avenue, Suite 635, Cleveland, Ohio 44114, Attention: Corporate
Trust Department (telecopy number (216) 575-9326), or such other address or
telecopy number as may hereafter be furnished to the Master Servicer, the Trust
Administrator and the Depositor in writing by the Trustee. Any notice required
or permitted to be given to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed,

                                      -127-

<PAGE>

whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder also shall be mailed to the appropriate
party in the manner set forth above.

                  SECTION 11.06.            Severability of Provisions.

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

                  SECTION 11.07.            Notice to Rating Agencies.

                  The Trust Administrator shall use its best efforts promptly to
provide notice to the Rating Agencies with respect to each of the following of
which it has actual knowledge:

                  1. Any material change or amendment to this Agreement;

                  2. The occurrence of any Master Servicer Event of Default that
         has not been cured or waived;

                  3. The resignation or termination of the Master Servicer or
         the Trustee or the Trust Administrator;

                  4. The repurchase or substitution of Mortgage Loans pursuant
         to or as contemplated by Section 2.03;

                  5. The final payment to the Holders of any Class of
         Certificates;

                  6. Any change in the location of the Collection Account or the
         Distribution Account;

                  7. Any event that would result in the inability of the Trust
         Administrator or the Trustee, as applicable, to make advances regarding
         delinquent Mortgage Loans; and

                  8. The filing of any claim under any Master Servicer's blanket
         bond and errors and omissions insurance policy required by Section 3.14
         or the cancellation or material modification of coverage under any such
         instrument.

                  In addition, the Trust Administrator shall promptly furnish to
each Rating Agency copies of each report to Certificateholders described in
Section 4.02 and the Master Servicer shall promptly furnish to each Rating
Agency copies of the following:

                  1. Each annual statement as to compliance described in Section
         3.20; and

                                      -128-

<PAGE>

                  2. Each annual independent public accountants' servicing
         report described in Section 3.21.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Fitch Ratings, One State Street, 32nd Floor, New York, New York 10004, to
Moody's, 99 Church Street, New York, New York 10007 and to Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10007 or such other addresses as the Rating Agencies
may designate in writing to the parties hereto.

                  SECTION 11.08.            Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 11.09.            Grant of Security Interest.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional

                                      -129-

<PAGE>

sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                                      -130-

<PAGE>

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

                                           NEW CENTURY MORTGAGE SECURITIES INC.,
                                           as Depositor

                                           By: /s/ Patrick Flanagan
                                              ----------------------------------
                                           Name:   Patrick Flanagan
                                           Title:  President

                                           OCWEN FEDERAL BANK FSB,
                                             as Master Servicer

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

                                           NATIONAL CITY BANK,
                                             as Trustee

                                           By: /s/ James E. Schultz
                                              ----------------------------------
                                           Name:   James E. Schultz
                                           Title:  Vice-President

                                           U.S. BANK NATIONAL ASSOCIATION,
                                             as Trust Administrator

                                           By: /s/ Shannon M. Rantz
                                               ---------------------------------
                                           Name:    Shannon M. Rantz
                                           Title:   Assistant Vice President

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the th day of February 2002, before me, a notary public in
and for said State, personally appeared ________________, known to me to be a
___________________ of New Century Mortgage Securities Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                        ______________________
                                                             Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       ) ss.:
COUNTY OF ____________ )

                  On the ____ day of February 2002, before me, a notary public
in and for said State, personally appeared _____________________, known to me to
be __________________ of Ocwen Federal Bank FSB, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                        ______________________
                                                             Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       )ss.:
COUNTY OF ____________ )

                  On the ____ day of February 2002, before me, a notary public
in and for said State, personally appeared _______________, known to me to be a
______________ of National City Bank, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                        ______________________
                                                             Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________)
                       )ss.:
COUNTY OF ____________ )

                  On the ____ day of February 2002, before me, a notary public
in and for said State, personally appeared _______________, known to me to be a
______________ of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                        ______________________
                                                             Notary Public

[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1

                           FORM OF CLASS A CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class A Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
No. __                                                     Trustee: National City Bank

                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-1-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class A Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-1-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-1-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-1-4

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class A Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-1-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-1-6

<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-1-7

<PAGE>

                                   EXHIBIT A-2

                          FORM OF CLASS M-1 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES TO THE
         EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
         HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class M-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-2-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-1 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-1 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-2-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-2-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-2-4

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-2-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-2-6

<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-2-7

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                          FORM OF CLASS M-2 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
         CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class M-2 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-3-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-2 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-2 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-3-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-3-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee , the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-3-4

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-3-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-3-6

<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-3-7

<PAGE>

                                  EXHIBIT A-4
                                  -----------

                          FORM OF CLASS M-3 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED
         IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class M-3 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-4-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-3 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-3 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-3 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-4-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-4-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-4-4

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-4-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-4-6

<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-4-7

<PAGE>

                                   EXHIBIT A-5
                                   -----------

                          FORM OF CLASS M-4 CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3
         CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class M-4 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002

                                                           CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-5-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-4 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-4 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-4 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-4 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-5-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                                      A-5-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-5-4

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-5-5

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-5-6

<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-5-7

<PAGE>

                                   EXHIBIT A-6
                                   -----------

                          FORM OF CLASS CE CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3
         CERTIFICATES AND THE CLASS M-4 CERTIFICATES TO THE EXTENT DESCRIBED IN
         THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

                                      A-6-1

<PAGE>

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class CE Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
Aggregate Notional Amount of the Class                     Association
CE Certificates as of the Issue Date:
$_______                                                   Issue Date: February 26, 2002

Notional Amount: $_________________                        CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class CE Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the

                                      A-6-2

<PAGE>

Agreement), the Master Servicer, the Trustee and the Trust Administrator, a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class CE Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class CE Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders

                                      A-6-3

<PAGE>

of this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Master Servicer in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator, or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be

                                      A-6-4

<PAGE>

made for any such registration of transfer or exchange of Certificates, but the
Trust Administrator may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-6-5

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-6-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-6-7

<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-6-8

<PAGE>

                                   EXHIBIT A-7
                                   -----------

                           FORM OF CLASS P CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Certificate Principal Balance of the
                                                           Class P Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $______________
Servicing Agreement: February 1, 2002
                                                           Master Servicer: Ocwen Federal Bank FSB
First Distribution Date: March 25, 2002
                                                           Trustee: National City Bank
No. __
                                                           Trust Administrator: U.S. Bank National
                                                           Association

                                                           Issue Date: February 26, 2002
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                                      A-7-1

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer,
the Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class P Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class P Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-7-2

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an

                                      A-7-3

<PAGE>

expense of the Trust Fund or of the Depositor, the Trustee, the Trust
Administrator or the Master Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee, or the Trust Administrator is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                                      A-7-4

<PAGE>

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-7-5

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class P Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-7-6

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-7-7

<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-7-8

<PAGE>

                                   EXHIBIT A-8
                                   -----------

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED
         STATES PERSON.

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
         ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
         AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
         POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
         TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
         POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
         FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
         INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
         THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
         FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
         IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
         ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
         PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR

                                      A-8-1

<PAGE>

         (3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION")
         OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
         SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND
         (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING
         TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING
         THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
         OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
         AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE
         DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
         SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
         HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
         ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
         HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
         PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
         DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-1                                              Aggregate Percentage Interest of the Class R
                                                           Certificates as of the Issue Date: 100.00%
Pass-Through Rate: Variable
                                                           Master Servicer: Ocwen Federal Bank FSB
Cut-off Date and date of Pooling and
Servicing Agreement: February 1, 2002                      Trustee: National City Bank

First Distribution Date: March 25, 2002                    Trust Administrator: U.S. Bank National
                                                           Association
No. __
                                                           Issue Date: February 26, 2002
</TABLE>

                                      A-8-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                      NEW CENTURY MORTGAGE SECURITIES, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW
         CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE TRUSTEE,
         THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
         THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
         ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC I created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class R Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class R Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such

                                      A-8-3

<PAGE>

distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee and the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Trust
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an

                                      A-8-4

<PAGE>

expense of the Trust Fund or of the Depositor, the Trustee, the Trust
Administrator or the Master Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trust Administrator (i) an affidavit to the effect that such transferee is any
Person other than a Disqualified Organization or the agent (including a broker,
nominee or middleman) of a Disqualified Organization, and (ii) a certificate
that acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                                      A-8-5

<PAGE>

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Master Servicer, the Trustee
or the Trust Administrator may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trustee, the Trust Administrator nor any such agent
shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trust Administrator and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor, the Trustee and the Trust Administrator assume no responsibility
for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-8-6

<PAGE>

                  IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: February __, 2002

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                              U.S. BANK NATIONAL ASSOCIATION
                                              as Trust Administrator

                                              By:______________________________
                                                     Authorized Signatory

                                      A-8-7

<PAGE>

                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT - Custodian
                                                              ---------

TEN ENT - as tenants by the entireties                      (Cust) (Minor) under
                                                            Uniform Gifts
JT TEN - as joint tenants with right                        to Minors Act
         if survivorship and not as                          _______________
          tenants in common                                      (State)

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
 (Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.

         I (we) further direct the Trust Administrator to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.

Dated:

                                         -------------------------------
                                         Signature by or on behalf of assignor

                                         -------------------------------
                                         Signature Guaranteed

                                      A-8-8

<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-8-9

<PAGE>

                                    EXHIBIT B

                                   [Reserved]

                                       B-1

<PAGE>

                                   EXHIBIT C-1
                                   -----------

               FORM OF TRUST ADMINISTRATOR'S INITIAL CERTIFICATION

                                               [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

Ocwen Federal Bank FSB
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 55402-1498

                  Re:      Pooling and Servicing Agreement, dated as of February
                           1, 2002, among New Century Mortgage Securities, Inc.,
                           Ocwen Federal Bank FSB, National City Bank and U.S.
                           Bank National Association, Asset Backed Pass-Through
                           Certificates, Series 2002-1
                           -----------------------------------------------------

Ladies and Gentlemen:

                  Attached is the Trust Administrator's preliminary exceptions
in accordance with Section 2.02 of the referenced Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"). Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Pooling and Servicing Agreement.

                  The Trust Administrator 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 Trust Administrator makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File of any of the Mortgage Loans identified
on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan, or (iii) whether any
Mortgage File included any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION

                                             By:______________________________
                                             Name:
                                             Title:

                                      C-1-1

<PAGE>

                                   EXHIBIT C-2
                                   -----------

                FORM OF TRUST ADMINISTRATOR'S FINAL CERTIFICATION

                                                      [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

Ocwen Federal Bank FSB
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 55402-1498

                  Re:      Pooling and Servicing Agreement, dated as of February
                           1, 2002, among New Century Mortgage Securities, Inc.,
                           Ocwen Federal Bank FSB, National City Bank and U.S.
                           Bank National Association, Asset Backed Pass-Through
                           Certificates, Series 2002-1
                           -----------------------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trust Administrator, hereby
certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or listed on the attachment hereto),
it or a Custodian on its behalf has received:

                  (i) the original recorded Mortgage, and the original recorded
         power of attorney, if the Mortgage was executed pursuant to a power of
         attorney, or a certified copy thereof in those instances where the
         public recording office retains the original or where the original has
         been lost; and

                  (ii) an original Assignment in recordable form or a recorded
         Assignment to the Trust Administrator together with the original
         recorded Assignment or Assignments showing a complete chain of
         assignment from the originator, or a certified copy of such Assignments
         in those instances where the public recording retains the original or
         where original has been lost; and

                  (iii) the original lender's title insurance policy.

                  The Trust Administrator has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
the Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.

                                      C-2-1

<PAGE>

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.

                                            U.S. BANK NATIONAL ASSOCIATION

                                            By:________________________________
                                            Name:
                                            Title:

                                      C-2-2

<PAGE>

                                    EXHIBIT D
                                    ---------

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                                       D-1

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

         This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated
February 22, 2002, among NC Capital Corporation, a California corporation (the
"Seller"), New Century Mortgage Securities, Inc., a Delaware corporation (the
"Purchaser") and New Century Mortgage Corporation, a California corporation (the
"Originator").

                              Preliminary Statement
                              ---------------------

         The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Purchaser intends to deposit the Mortgage Loans
into a mortgage pool comprising the Trust Fund. The Trust Fund will be evidenced
by a single series of mortgage pass-through certificates designated as Series
2002-1 (the "Certificates"). The Certificates will consist of eight classes of
certificates. The Class CE Certificates, the Class P Certificates and the Class
R Certificates (collectively, the "NC Residual Certificates") will be delivered
to NC Residual II Corporation ("NC Residual"), a wholly-owned bankruptcy remote
entity of the Seller, as partial consideration for the Mortgage Loans as further
described below. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement for Series 2002-1, dated as of February 1, 2002 (the
"Pooling and Servicing Agreement"), among the Depositor as depositor, Ocwen
Federal Bank FSB as master servicer (the "Master Servicer"), National City Bank
as trustee (the "Trustee") and U.S. Bank National Association as trust
administrator (the "Trust Administrator"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.

         The parties hereto agree as follows:

         SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell and the
Purchaser agrees to purchase, on or before February 26, 2002 (the "Closing
Date"), certain fixed-rate and adjustable-rate conventional, one- to
four-family, residential mortgage loans (the "Mortgage Loans"), having an
aggregate principal balance as of the close of business on February 1, 2002,
(the "Cut-off Date") of approximately $198,644,095.79 (the "Closing Balance"),
after giving effect to all payments due on the Mortgage Loans on or before the
Cut-off Date, whether or not received including the right to any Prepayment
Charges payable by the related Mortgagors in connection with any Principal
Prepayments on the Mortgage Loans.

         SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the Seller have
agreed upon which of the mortgage loans owned by the Seller are to be purchased
by the Purchaser pursuant to this Agreement and the Seller will prepare or cause
to be prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement, including the Prepayment
Charges. The Closing Schedule will conform to the requirements set forth in this
Agreement and to the definition of "Mortgage Loan Schedule" under the Pooling
and Servicing Agreement. The Closing Schedule shall be used as the Mortgage Loan
Schedule under the Pooling and Servicing Agreement.

         SECTION 3. CONSIDERATION.

<PAGE>

         (a) In consideration for the Mortgage Loans to be purchased hereunder,
the Purchaser shall, as described in Section 8, (i) pay to or upon the order of
the Seller in immediately available funds an amount (the "Purchase Price") equal
to the net sale proceeds of the Class A Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class M-3 Certificates and the
Class M-4 Certificates and (ii) will have delivered to NC Residual, upon the
order of the Seller, the NC Residual Certificates.

         (b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.

         (c) Pursuant to the Pooling and Servicing Agreement, the Purchaser will
assign all of its right, title and interest in and to the Mortgage Loans,
together with its rights under this Agreement, to the Trustee for the benefit of
the Certificateholders.

         SECTION 4.        TRANSFER OF THE MORTGAGE LOANS.

         (a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell, and in
connection therewith hereby assigns to the Purchaser, effective as of the
Closing Date, without recourse but subject to the terms of this Agreement, all
of its right, title and interest in, to and under the Mortgage Loans, including
the related Prepayment Charges. The contents of each Mortgage File not delivered
to the Purchaser or to any assignee, transferee or designee of the Purchaser on
or prior to the Closing Date are and shall be held in trust by the Seller for
the benefit of the Purchaser or any assignee, transferee or designee of the
Purchaser. Upon the sale of the Mortgage Loans, the ownership of each Mortgage
Note, the related Mortgage and the other contents of the related Mortgage File
is vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or that come into the
possession of the Seller on or after the Closing Date shall immediately vest in
the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser.

         (b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on or prior
to the Closing Date, deliver or cause to be delivered to the Purchaser or any
assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed to _________________,
         as Trustee under the applicable agreement, without recourse," with all
         prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

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

                  (iii) an original Assignment in blank;

                                      -2-

<PAGE>

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

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

                  (vi) the original lender's title insurance policy, together
         with all endorsements or riders that were issued with or subsequent to
         the issuance of such policy, insuring the priority of the Mortgage as a
         first lien on the Mortgaged Property represented therein as a fee
         interest vested in the Mortgagor, or in the event such original title
         policy is unavailable, a written commitment or uniform binder or
         preliminary report of title issued by the title insurance or escrow
         company.

         Promptly following the Trustee Transfer Date, the Seller shall cause
each Mortgage Note to be endorsed as follows: "Pay to the order of U.S. Bank
National Association, as Trustee, without recourse."

         The Seller promptly shall (within sixty Business Days following the
later of the Closing Date and the date of the receipt by the Seller of the
recording information for a Mortgage but in no event later than ninety days
following the Closing Date) submit or cause to be submitted for recording, at no
expense to the Purchaser (or the Trust Fund, the Trust Administrator or the
Trustee under the Pooling and Servicing Agreement), in the appropriate public
office for real property records, each Assignment referred to in clauses
(b)(iii) and (b)(iv) of this Section 4 and promptly following the Trustee
Transfer Date, shall execute each original Assignment in the following form:
"U.S. Bank National Association, as Trustee under the applicable agreement." In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Seller promptly shall prepare a substitute Assignment or
cure such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded.

         Notwithstanding the foregoing, the Seller need not cause to be recorded
any Assignment which relates to a Mortgage Loan in any jurisdiction where the
Rating Agencies do not require recordation in order to receive the ratings on
the Certificates at the time of their initial issuance; PROVIDED, HOWEVER, each
Assignment shall be submitted for recording by the Seller in the manner
described above, at no expense to the Purchaser, upon the earliest to occur of:
(i) reasonable direction by Holders of Certificates entitled to at least 25% of
the Voting Rights, (ii) the occurrence of a Master Servicer Event of
Termination, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Master Servicer, (iv) the occurrence of a servicing transfer as
described in Section 7.02 of the Pooling and Servicing Agreement, (v) with
respect to any one Assignment, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage and (vi) any
Mortgage Loan that is 90 days or more Delinquent. Upon (a) receipt of written
notice that recording of the Assignments is required pursuant to one or more of
the conditions (excluding (vi) above) set forth in the preceding sentence or (b)
upon the occurrence of condition (vi) in the preceding sentence, the Seller
shall be required to deliver such Assignments within 30 days following receipt
of such notice.

                                       -3-

<PAGE>

         With respect to a maximum of approximately 2.0% of the Mortgage Loans,
by outstanding principal balance of the Mortgage Loans as of the Cut-off Date,
if any original Mortgage Note referred to in Section 4(b)(i) above cannot be
located, the obligations of the Seller to deliver such documents shall be deemed
to be satisfied upon delivery to the Purchaser of a photocopy of such Mortgage
Note, if available, with a lost note affidavit substantially in the form of
Exhibit I to the Pooling and Servicing Agreement. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser within three Business Days.

         If any of the documents referred to in Sections 4(b)(ii), (iii) or (iv)
above has, as of the Closing Date, been submitted for recording but either (x)
has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Purchaser of a copy of each such
document certified by the Originator in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Originator, delivery to the Purchaser promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee, the Trust Administrator and
the Rating Agencies by the Originator if delivery pursuant to clause (2) above
will be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 4(b)(vi) above, the
Seller shall deliver or cause to be delivered to the Purchaser, promptly after
receipt thereof, the original lender's title insurance policy. The Seller shall
deliver or cause to be delivered to the Purchaser promptly upon receipt thereof
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.

         Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.

         (c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered pursuant to
Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before or after the Closing
Date (and with respect to each document permitted to be delivered after the
Closing Date, within seven days of its delivery) to ascertain that all required
documents have been executed and received and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule.

         (d) TRANSFER OF INTEREST IN AGREEMENT. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part, to the Trustee,
as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller, and the assignee shall succeed to
the rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser, the Trust Administrator or the
Trustee in connection with enforcing any obligations of the Seller under this
Agreement will be promptly reimbursed by the Originator.

                                       -4-

<PAGE>

         (e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser, or to any assignee,
transferee or designee of the Purchaser for examination, the Mortgage File
pertaining to each Mortgage Loan or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser, the Trust
Administrator or the Trustee, and their respective designees, upon reasonable
notice to the Seller during normal business hours before the Closing Date and
within 60 days after the Closing Date. If any such person makes such examination
prior to the Closing Date and identifies any Mortgage Loans that do not conform
to the requirements of the Purchaser as described in this Agreement, such
Mortgage Loans shall be deleted from the Closing Schedule. The Purchaser may, at
its option and without notice to the Seller, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination. The fact
that the Purchaser or any person has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect the
rights of the Purchaser or any assignee, transferee or designee of the Purchaser
to demand repurchase or other relief as provided herein or under the Pooling and
Servicing Agreement.

         SECTION 5.                 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
                                    THE SELLER AND THE ORIGINATOR.

         (a) The Seller hereby represents and warrants to the Originator and the
Purchaser, as of the date hereof and as of the Closing Date, and covenants,
that:

                  (i) The Seller is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California with full
corporate power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions contemplated
herein. The Seller has the full corporate power and authority to own the
Mortgage Loans and to transfer and convey the Mortgage Loans to the Purchaser
and has the full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms and
conditions of this Agreement.

                  (ii) The Seller has duly authorized the execution, delivery
and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Originator and the Purchaser, constitutes a legal, valid and
binding obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity.

                  (iii) The execution, delivery and performance of this
Agreement by the Seller (x) does not conflict and will not conflict with, does
not breach and will not result in a breach of and does not constitute and will
not constitute a default (or an event, which with notice or lapse of time or
both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Seller, (B) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or by which the Seller or any of its property is bound or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Seller or any of its
property and (y) does not create or impose and will not result in the creation
or imposition of any lien, charge or encumbrance which would

                                       -5-

<PAGE>

have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans.

                  (iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Seller of, or compliance by the Seller with, this Agreement or the consummation
by the Seller of any other transaction contemplated hereby and by the Pooling
and Servicing Agreement; provided, however, that the Seller makes no
representation or warranty regarding federal or state securities laws in
connection with the sale or distribution of the Certificates.

                  (v) This Agreement does not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statements
contained herein not misleading. The written statements, reports and other
documents prepared and furnished or to be prepared and furnished by the Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby taken in the aggregate do not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements contained
therein not misleading.

                  (vi) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder.

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

                  (viii) Immediately prior to the sale of the Mortgage Loans to
the Purchaser as herein contemplated, the Seller will be the owner of the
related Mortgage and the indebtedness evidenced by the related Mortgage Note,
and, upon the payment to the Seller of the Purchase Price, in the event that the
Seller retains or has retained record title, the Seller shall retain such record
title to each Mortgage, each related Mortgage Note and the related Mortgage
Files with respect thereto in trust for the Purchaser as the owner thereof from
and after the date hereof.

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

                  (x) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the

                                       -6-

<PAGE>

Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or any similar statutory provisions.

                  (xi) [intentionally omitted]

                  (xii) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Seller's ownership of the Mortgage Loans may be entitled to a fee
to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).

                  (xiii) There is no litigation currently pending or, to the
best of the Seller's knowledge without independent investigation, threatened
against the Seller that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or that
would result in a material adverse change in the financial condition of the
Seller.

         (b) The Originator hereby represents and warrants to the Seller and the
Purchaser, as of the date hereof and as of the Closing Date, and covenants,
that:

                  (i) The Originator is duly organized, validly existing and in
good standing as a corporation under the laws of the State of California with
full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Originator had the full corporate power and authority
to own the Mortgage Loans and to transfer and convey the Mortgage Loans to the
Seller and has the full corporate power and authority to execute and deliver,
engage in the transactions contemplated by, and perform and observe the terms
and conditions of this Agreement.

                  (ii) The Originator has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Seller and the Purchaser, constitutes a legal, valid and binding
obligation of the Originator, enforceable against it in accordance with its
terms except as enforceability thereof may be limited by bankruptcy, insolvency
or reorganization or by general principles of equity.

                  (iii) The execution, delivery and performance of this
Agreement by the Originator (x) does not conflict and will not conflict with,
does not breach and will not result in a breach of and does not constitute and
will not constitute a default (or an event, which with notice or lapse of time
or both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Originator, (B) any term or
provision of any material agreement, contract, instrument or indenture, to which
the Originator is a party or by which the Originator or any of its property is
bound or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Originator or any of its property and (y) does not create or impose and will not
result in the creation or imposition of any lien, charge or

                                       -7-

<PAGE>

encumbrance which would have a material adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loans.

                  (iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Originator to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates.

                  (v) In this Agreement the Originator has not made any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained herein not misleading. The written statements, reports
and other documents prepared and furnished or to be prepared and furnished by
the Originator pursuant to this Agreement or in connection with the transactions
contemplated hereby taken in the aggregate do not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements contained therein not misleading.

                  (vi) The Originator is not in violation of, and the execution
and delivery of this Agreement by the Originator and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.

                  (vii) The Originator is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act. No event has occurred,
including but not limited to a change in insurance coverage, that would make the
Originator unable to comply with HUD eligibility requirements or that would
require notification to HUD.

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

                  (ix) Immediately prior to the sale of the Mortgage Loans to
the Seller, the Originator will be the owner of the related Mortgage and the
indebtedness evidenced by the related Mortgage Note, and, upon the payment to
the Originator of the Purchase Price, in the event that the Originator retains
or has retained record title, the Originator shall retain such record title to
each Mortgage, each related Mortgage Note and the related Mortgage Files with
respect thereto in trust for the Seller as the owner thereof from and after the
date hereof.

                  (x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Originator or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or

                                       -8-

<PAGE>

materially and adversely affect the performance by the Originator of its
obligations under, or validity or enforceability of, this Agreement.

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

                  (xii) The information delivered by the Originator to the
Seller with respect to the Originator's loan loss, foreclosure and delinquency
experience on mortgage loans is true and correct in all material respects.

                  (xiii) The Originator has not dealt with any broker,
investment banker, agent or other person, except for the Seller or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Originator's ownership of the Mortgage Loans may be entitled to a
fee to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).

                  (xiv) There is no litigation currently pending or, to the best
of the Originator's knowledge without independent investigation, threatened
against the Originator that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or that
would result in a material adverse change in the financial condition of the
Originator.

         SECTION 6.                 REPRESENTATIONS AND WARRANTIES OF THE
                                    ORIGINATOR RELATING TO THE MORTGAGE LOANS.

         REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE LOANS. The
Originator hereby represents and warrants to the Purchaser that as to each
Mortgage Loan as of the Closing Date:

                  (i) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is complete, true
and correct as of the Cut-off Date;

                  (ii) The Mortgage Loan is in compliance with all requirements
set forth on Exhibit 1, and the characteristics of the Mortgage Loans as set
forth on Exhibit 1 are true and correct;

                  (iii) Except with respect to ____% of the Mortgage Loans, by
aggregate principal balance of the mortgage loans as of the Cut-off Date, (a)
all payments required to be made on or before the first day of the month prior
to the month of the Closing Date, with respect to such Mortgage Loan under the
terms of the Mortgage Note have been made; (b) the Originator has not advanced
funds, or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Note or
Mortgage and (c) as of January 31, 2002, the payment required under any Mortgage
Loan will not and has not been 30 or more days delinquent more than once during
the last twelve months;

                                       -9-

<PAGE>

                  (iv) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments,
including assessments payable in future installments or other outstanding
charges affecting the related Mortgaged Property;

                  (v) To the best knowledge of the Originator, the terms of the
Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien priority of
the Mortgage; the substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required by the related
policy, and is reflected on the Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed by the Originator or the Seller or
any other person in the chain of title from the Originator to the Seller, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by
the policy, and the terms of which are reflected in the Mortgage Loan Schedule;

                  (vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;

                  (vii) All buildings upon the Mortgaged Property are insured by
a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to insurance policies conforming to the
requirements of the Pooling and Servicing Agreement. All such insurance policies
contain a standard mortgagee clause naming the Originator, its successors and
assigns as mortgagee and all premiums thereon have been paid. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of Fannie Mae and Freddie
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;

                  (viii) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the origination and servicing of the Mortgage Loan
have been complied with. Any and all statements or acknowledgments required to
be made by the Mortgagor relating to such requirements are and will remain in
the Mortgage File;

                  (ix) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage,

                                      -10-

<PAGE>

in whole or in part, nor has any instrument been executed that would effect any
such satisfaction, cancellation, subordination, rescission or release;

                  (x) The Mortgage is a valid, existing and enforceable first
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property subject only to (a) the lien of current real property taxes and
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not adversely affect the appraised
value of the Mortgaged Property and (c) other matters to which like properties
are commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, existing and enforceable first
lien and first priority security interest on the property described therein and,
the Originator had full right to contribute and assign the same to the Seller.
The Mortgaged Property was not, as of the date of origination of the Mortgage
Loan, subject to a mortgage, deed of trust, deed to secure debt or other
security instrument creating a lien subordinate to the lien of the Mortgage;

                  (xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;

                  (xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person
who is a party to the Mortgage Note and the Mortgage is in an individual
capacity or family trust that is guaranteed by a natural person;

                  (xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;

                  (xiv) As of the Closing Date and prior to the sale of the
Mortgage Loan to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;

                  (xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;

                                      -11-

<PAGE>

                  (xvi) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, and with respect to each adjustable-rate Mortgage Loan, an
adjustable rate mortgage endorsement in an amount at least equal to the balance
of the Mortgage Loan as of the Cut-off Date, such endorsement substantially in
the form of ALTA Form 6.0 or 6.1, acceptable to Fannie Mae or Freddie Mac,
issued by a title insurer acceptable to Fannie Mae and Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring (subject to the exceptions contained in (x)(a) and (b) above) the
Originator, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan and against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment in the Mortgage Rate and
monthly payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The Originator is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will be in
full force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no prior holder of the related Mortgage, including the Originator,
has done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy;

                  (xvii) Other than as specified in paragraph (iii) above, there
is no default, breach, violation or event of acceleration existing under the
Mortgage or the Mortgage Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration, and the Originator has not
waived any default, breach, violation or event of acceleration;

                  (xviii) There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;

                  (xix) All improvements which were considered in determining
the appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;

                  (xx) The Mortgage Loan was (i) originated by the Originator or
by a savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD or (ii)
acquired by the Originator directly through loan brokers or correspondents such
that (a) the Mortgage Loan was originated in conformity with the Originator's
underwriting guidelines, (b) the Originator approved the Mortgage Loan prior to
funding and (c) the Originator provided the funds used to originate the Mortgage
Loan and acquired the Mortgage Loan on the date of origination thereof;

                  (xxi) Principal payments on the Mortgage Loan commenced no
more than two months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the

                                      -12-

<PAGE>

Mortgage Rate. With respect to the adjustable-rate Mortgage Loans, the Mortgage
Note is payable on the first day of each month in Monthly Payments which are
changed on each Adjustment Date to an amount which will amortize the Stated
Principal Balance of the Mortgage Loan over its remaining term at the Mortgage
Rate. Interest on the Mortgage Loan is calculated on the basis of a 360-day year
consisting of twelve 30-day months. The Mortgage Note does not permit negative
amortization. The Mortgage Loan does not permit the Mortgagor to convert the
Mortgage Loan to a fixed rate Mortgage Loan;

                  (xxii) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced in accordance with the
terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments,
if any, all such payments are in the possession of, or under the control of, the
Originator and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. No escrow
deposits or Escrow Payments or other charges or payments due the Originator have
been capitalized under any Mortgage or the related Mortgage Note;

                  (xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation thereof;

                  (xxiv) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale and (b)
otherwise by judicial foreclosure. Since the date of origination of the Mortgage
Loan, the Mortgaged Property has not been subject to any bankruptcy proceeding
or foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. [The
Mortgagor has not notified the Originator and the Originator has no knowledge of
any relief requested or allowed to the Mortgagor under the Soldiers and Sailors
Civil Relief Act of 1940];

                  (xxv) The related Mortgaged Property is not a leasehold estate
or, if such Mortgaged Property is a leasehold estate, the remaining term of such
lease is at least ten (10) years greater than the remaining term of the related
Mortgage Note;

                  (xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;

                  (xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser, approved by the Originator, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, whose compensation is not affected by the approval or

                                      -13-

<PAGE>

disapproval of the Mortgage Loan and who met the minimum qualifications of
Fannie Mae and Freddie Mac;

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

                  (xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Originator, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loans are not graduated payment mortgage loans and the
Mortgage Loans do not have shared appreciation or other contingent interest
features;

                  (xxx) With respect to the adjustable-rate Mortgage Loans, the
Mortgagor has executed a statement to the effect that the Mortgagor has received
all disclosure materials required by applicable law with respect to the making
of adjustable rate mortgage loans; and if the Mortgage Loan is a Refinanced
Mortgage Loan, the Mortgagor has received all disclosure and rescission
materials required by applicable law with respect to the making of a Refinanced
Mortgage Loan, and evidence of such receipt is and will remain in the Mortgage
File;

                  (xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;

                  (xxxii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to the Pooling and Servicing Agreement, have been
delivered to the Trustee all in compliance with the specific requirements of the
Pooling and Servicing Agreement;

                  (xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;

                  (xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person, including, without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;

                  (xxxv) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;

                                      -14-

<PAGE>

                  (xxxvi) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title evidence acceptable to
Fannie Mae and Freddie Mac. The consolidated principal amount does not exceed
the original principal amount of the Mortgage Loan;

                  (xxxvii) No Mortgage Loan has a balloon payment feature;

                  (xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development (other
than a de minimis planned unit development) such condominium or planned unit
development project meets the Fannie Mae's eligibility requirements;

                  (xxxix) Neither the Originator nor any affiliate of the
Originator has made a mortgage on any Mortgaged Property other than the Mortgage
Loan;

                  (xl) Any Mortgage Loan subject to the provisions of the
Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160 was
originated in compliance therewith;

                  (xli) The Mortgage Loan was not intentionally selected by the
Originator in a manner intended to adversely affect the interest of the
Purchaser;

                  (xlii) The Originator has not dealt with any broker or agent
or other Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement other than the
Purchaser except as set forth in the parenthetical in Section 5(xiii) hereof;

                  (xliii) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a single family residence erected
thereon, or a two to four-family dwelling, or an individual condominium unit in
a low-rise or high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is improved with a Residential
Dwelling. Without limiting the foregoing, the Mortgaged Property does NOT
consist of any of the following property types: (a) co-operative units, (b) log
homes, (c) earthen homes, (d) underground homes, (e) mobile homes and (f)
manufactured homes (as defined in the Fannie Mae Originator-Servicer's Guide),
except when the appraisal indicates that the home is of comparable construction
to a stick or beam construction home, is readily marketable, has been
permanently affixed to the site and is not in a mobile home "park." The
Mortgaged Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential lease, unless
otherwise specifically disclosed in the Mortgage Loan Schedule, (A) the terms of
such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent (or the lessor's consent
has been obtained and such consent is the Mortgage File) and the acquisition by
the holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protection; (B) the terms of such lease do not (x) allow
the termination thereof upon the lessee's default without the holder of

                                      -15-

<PAGE>

the Mortgage being entitled to receive written notice of, and opportunity to
cure, such default or (y) prohibit the holder of the Mortgage from being insured
under the hazard insurance policy relating to the Mortgaged Property; (C) the
original term of such lease is not less than 15 years; (D) the term of such
lease does not terminate earlier than ten years after the maturity date of the
Mortgage Note; and (E) the Mortgaged Property is located in a jurisdiction in
which the use of leasehold estates for residential properties is an accepted
practice;

                  (xliv) At the time of origination, the Loan-To-Value Ratio of
the Mortgage Loan will not be greater than [95.00]%;

                  (xlv) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the Mortgagee, at the option of the Mortgagee;

                  (xlvi) The Mortgage Loan either contains a customary
due-on-sale clause or may be assumed by a creditworthy purchaser of the related
Mortgaged Property;

                  (xlvii) As of any Adjustment Date for such adjustable-rate
Mortgage Loan, the Index applicable to the determination of the Mortgage Rate on
such Mortgage Loan will be the average of the interbank offered rates for
six-month United States dollar deposits in the London market, generally as
published in THE WALL STREET JOURNAL and as most recently available as of either
(i) the first business day 45 days prior to such Adjustment Date or (ii) the
first business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note;

                  (xlviii) Each Mortgage Loan is an obligation that is
principally secured by real property;

                  (xvlix) None of the Mortgage Loans are "high cost mortgages"
pursuant to Section 226.32 of the Truth-in-Lending Act, as amended; and

                  (l) The information set forth in the Prepayment Charge
Schedule (including the prepayment charge summary attached thereto) is complete,
true and correct in all material respects on the date or dates when such
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally or
the collectability thereof may be limited due to acceleration in connection with
a foreclosure) under applicable state law.

         SECTION 7.                 REPURCHASE OBLIGATION FOR DEFECTIVE
                                    DOCUMENTATION AND FOR BREACH OF
                                    REPRESENTATION AND WARRANTY.

         (a) The representations and warranties contained in Section 6 shall not
be impaired by any review and examination of loan files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Seller or the Purchaser to review or examine such documents and shall inure to
the benefit of any assignee, transferee or designee of the Purchaser, including
the

                                      -16-

<PAGE>

Trustee for the benefit of holders of the Certificates. With respect to the
representations and warranties contained herein as to which the Originator has
no knowledge, if it is discovered that the substance of any such representation
and warranty was inaccurate as of the date such representation and warranty was
made or deemed to be made, and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan or the interest therein of the Purchaser
or the Purchaser's assignee, transferee or designee, then notwithstanding the
lack of knowledge by the Originator with respect to the substance of such
representation and warranty being inaccurate at the time the representation and
warranty was made, the Originator shall take such action described in the
following paragraph in respect of such Mortgage Loan.

         Upon discovery by the Seller or the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that a document was not transferred by the Seller (as listed on the Trustee's
preliminary exception report) as part of any Mortgage File, or of a breach of
any of the representations and warranties contained in Section 6 that materially
and adversely affects the value of any Mortgage Loan or the interest therein of
the Certificateholders, the Purchaser or the Purchaser's assignee, transferee or
designee, the party discovering such breach shall give prompt written notice to
the Originator. Within sixty (60) days of its discovery or its receipt of notice
of any such missing documentation that was not transferred by the Seller as
described above, or of materially defective documentation, or of any such breach
of a representation and warranty, the Originator promptly shall deliver such
missing document or cure such defect or breach in all material respects or, in
the event the Originator cannot deliver such missing document or cannot cure
such defect or breach, the Originator shall, within ninety (90) days of its
discovery or receipt of notice, either (i) repurchase the affected Mortgage Loan
at the Purchase Price (as such term is defined in the Pooling and Servicing
Agreement) or (ii) pursuant to the provisions of the Pooling and Servicing
Agreement, cause the removal of such Mortgage Loan from the Trust Fund and
substitute one or more Qualified Substitute Mortgage Loans. The Originator shall
amend the Closing Schedule to reflect the withdrawal of such Mortgage Loan from
the terms of this Agreement and the Pooling and Servicing Agreement. The
Originator shall deliver to the Purchaser such amended Closing Schedule and
shall deliver such other documents as are required by this Agreement or the
Pooling and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by transfer to an
account designated by the Purchaser of the amount of the Purchase Price in
accordance with Section 2.03 of the Pooling and Servicing Agreement. Any
repurchase required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement.

         Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the Originator or receipt of notice by the Originator of the breach
of the representation or covenant of the Originator set forth in Section 6(l)
above which materially and adversely affects the interests of the Holders of the
Class P Certificates in any Prepayment Charge, the Originator shall remedy such
breach as follows: the Originator must pay the amount of the scheduled
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by remitting such amount to the Master Servicer for deposit into the Collection
Account, net of any amount previously collected by the Master Servicer or paid
by the Master Servicer, for the benefit of the Holders of the Class P
Certificates, in respect of such Prepayment Charge.

                                      -17-

<PAGE>

         Upon discovery by the Originator, the Purchaser or the Seller that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
(2) Business Days give written notice thereof to the other parties. In
connection therewith, the Originator shall repurchase or, subject to the
limitations set forth in Section 2.03(b) of the Pooling and Servicing Agreement,
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a) of
the Pooling and Servicing Agreement.

         (b) It is understood and agreed that the obligations of the Originator
set forth in this Section 7 to cure or repurchase a defective Mortgage Loan
constitute the sole remedies of the Purchaser against the Originator respecting
a missing document or a breach of the representations and warranties contained
in Section 6.

         SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing of the
purchase and sale of the Mortgage Loans shall be held at the New York City
office of Thacher Proffitt & Wood at 10:00 a.m. New York City time on the
Closing Date.

                  The closing shall be subject to each of the following
conditions:

                  (a)      All of the representations and warranties of the
                           Seller under this Agreement shall be true and correct
                           in all material respects as of the date as of which
                           they are made and no event shall have occurred which,
                           with notice or the passage of time, would constitute
                           a default under this Agreement;

                  (b)      All of the representations and warranties of the
                           Originator under this Agreement shall be true and
                           correct in all material respects as of the date as of
                           which they are made and no event shall have occurred
                           which, with notice or the passage of time, would
                           constitute a default under this Agreement;

                  (c)      The Purchaser shall have received, or the attorneys
                           of the Purchaser shall have received in escrow (to be
                           released from escrow at the time of closing), all
                           Closing Documents as specified in Section 9 of this
                           Agreement, in such forms as are agreed upon and
                           acceptable to the Purchaser, duly executed by all
                           signatories other than the Purchaser as required
                           pursuant to the respective terms thereof;

                  (d)      The Seller shall have delivered or caused to be
                           delivered and released to the Purchaser or to its
                           designee, all documents (including without
                           limitation, the Mortgage Loans) required to be so
                           delivered by the Purchaser pursuant to Section 2.01
                           of the Pooling and Servicing Agreement; and

                  (e)      All other terms and conditions of this Agreement and
                           the Pooling and Servicing Agreement shall have been
                           complied with.

                                      -18-

<PAGE>

         Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds and delivery of the NC Residual
Certificates to NC Residual.

         SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:

                  (a)      An Officer's Certificate of the Seller, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Originator, the Purchaser and Salomon Smith
                           Barney Inc. and Morgan Stanley & Co. Incorporated
                           (the "Underwriters") may rely, and attached thereto
                           copies of the certificate of incorporation, by-laws
                           and certificate of good standing of the Seller under
                           the laws of California;

                  (b)      An Officer's Certificate of the Seller, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Originator, the Purchaser and the Underwriters
                           may rely, with respect to certain facts regarding the
                           sale of the Mortgage Loans by the Seller to the
                           Purchaser;

                  (c)      An Opinion of Counsel of the Seller, dated the
                           Closing Date, in form satisfactory to and addressed
                           to the Originator, the Purchaser and the
                           Underwriters;

                  (d)      An Officer's Certificate of the Originator, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Seller, the Purchaser and the Underwriters may
                           rely, and attached thereto copies of the certificate
                           of incorporation, by- laws and certificate of good
                           standing of the Originator under the laws of its
                           state of incorporation;

                  (e)      An opinion of Counsel of the Originator, dated the
                           Closing Date, in form satisfactory to and addressed
                           to the Seller, the Purchaser and the Underwriters;

                  (f)      Such opinions of counsel as the Rating Agencies or
                           the Trustee may request in connection with the sale
                           of the Mortgage Loans by the Seller to the Purchaser
                           or the Seller's execution and delivery of, or
                           performance under, this Agreement;

                  (g)      An Officer's Certificate of the Master Servicer,
                           dated the Closing Date, in form satisfactory to and
                           upon which the Originator, the Purchaser and the
                           Underwriters may rely, and attached thereto copies of
                           the certificate of incorporation, by-laws and
                           certificate of good standing of the Master Servicer
                           issued by the Office of Thrift Supervision;

                                      -19-

<PAGE>

                  (h)      An Officer's Certificate of the Master Servicer,
                           dated the Closing Date, in form satisfactory to and
                           upon which the Originator, the Purchaser and the
                           Underwriters may rely, stating that on the Closing
                           Date the representations and warranties of the Master
                           Servicer contained in the Pooling and Servicing
                           Agreement will be true and correct and no event has
                           occurred with respect to the Master Servicer that
                           would constitute an Event of Default thereunder;

                  (i)      An Opinion of Counsel of the Master Servicer, dated
                           the Closing Date, in form satisfactory to and
                           addressed to the Originator, the Purchaser and the
                           Underwriters;

                  (j)      A letter from PricewaterhouseCoopers L.L.P.,
                           certified public accountants, to the effect that they
                           have performed certain specified procedures as a
                           result of which they determined that certain
                           information of an accounting, financial or
                           statistical nature set forth the Depositor's
                           prospectus supplement for Series 2002-1, dated
                           February 22, 2002 (the "Prospectus Supplement")
                           relating to the Offered Certificates contained under
                           the caption "Pooling and Servicing Agreement--The
                           Master Servicer" agrees with the records of the
                           Master Servicer;

                  (k)      (i) A letter from KPMG L.L.P., certified public
                           accountants, to the effect that they have performed
                           certain specified procedures as a result of which
                           they determined that certain information of an
                           accounting, financial or statistical nature set forth
                           in the Prospectus Supplement relating to the Offered
                           Certificates contained under the captions
                           "Summary--The Mortgage Loans," "Risk Factors," (to
                           the extent of information concerning the Mortgage
                           Loans contained therein) "The Mortgage Pool" agrees
                           with the records of the Seller and the information
                           contained under the caption "The Originator" agrees
                           with the records of the Originator; and

                  (l)      Such further information, certificates, opinions and
                           documents as the Purchaser or the Underwriters may
                           reasonably request.

         SECTION 10. COSTS. The Seller shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the fees and expenses of the Seller's
accountants and attorneys, the costs and expenses incurred in connection with
producing the Master Servicer's or any Subservicer's loan loss, foreclosure and
delinquency experience, and the costs and expenses incurred in connection with
obtaining the documents referred to in Sections 9, the costs and expenses of
printing (or otherwise reproducing) and delivering this Agreement, the Pooling
and Servicing Agreement, the Certificates, the prospectus and Prospectus
Supplement, and any private placement memorandum relating to the Certificates
and other related documents, the initial fees, costs and expenses of the
Trustee, the fees and expenses of the Purchaser's counsel in connection with the
preparation of all documents relating to the securitization of the Mortgage
Loans, the filing fee charged by the Securities and Exchange

                                      -20-

<PAGE>

Commission for registration of the Certificates and the fees charged by any
rating agency to rate the Certificates. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense.

         SECTION 11.        [RESERVED].

         SECTION 12. INDEMNIFICATION. The Originator shall indemnify and hold
harmless each of (i) the Purchaser, (ii) the Underwriters, (iii) the Person, if
any, to which the Purchaser assigns its rights in and to a Mortgage Loan and
each of their respective successors and assigns and (iv) each person, if any,
who controls the Purchaser within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "1933 Act") ((i) through (iv) collectively, the
"Indemnified Party") against any and all losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement or any private placement memorandum relating to the
offering by the Purchaser or an affiliate thereof, of the Class CE Certificates
or the Class P Certificates, or the omission or the alleged omission to state
therein the material fact necessary in order to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with (i) information furnished in writing to
the Purchaser or any of its affiliates by the Originator or any of its
affiliates specifically for use therein, which shall include, with respect to
the Prospectus Supplement, the information set forth under the caption"The
Originator" and, with respect to any private placement memorandum, any
information of a comparable nature, or (ii) the data files containing
information with respect to the Mortgage Loans as transmitted by modem to the
Purchaser by the Originator or any of its affiliates (as such transmitted
information may have been amended in writing by the Originator or any of its
affiliates with the written consent of the Purchaser subsequent to such
transmission), (b) any representation, warranty or covenant made by the
Originator or any affiliate of the Originator herein or in the Pooling and
Servicing Agreement, on which the Purchaser has relied, being, or alleged to be,
untrue or incorrect or (c) any updated collateral information provided by any
Underwriter to a purchaser of the Certificates derived from the data contained
in clause (ii) and the Remittance Report or a current collateral tape obtained
from the Originator or an affiliate of the Originator, including the current
loan balances of the Mortgage Loans; provided, however, that to the extent that
any such losses, claims, expenses, damages or liabilities to which the
Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.

                  The Seller shall indemnify and hold harmless each of (i) the
Purchaser, (ii) the Underwriters, (iii) the Person, if any, to which the
Purchaser assigns its rights in and to a Mortgage Loan and each of their
respective successors and assigns and (iv) each person, if any, who controls the
Purchaser within the meaning of Section 15 of the 1933 Act, as amended (the
"1933 Act") ((i)

                                      -21-

<PAGE>

through (iv) collectively, the "Indemnified Party") against any and all losses,
claims, expenses, damages or liabilities to which the Indemnified Party may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or any private placement
memorandum relating to the offering by the Purchaser or an affiliate thereof, of
the Class CE Certificates or the Class P Certificates, or the omission or the
alleged omission to state therein the material fact necessary in order to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with (i)
information furnished in writing to the Purchaser or any of its affiliates by
the Originator or any of its affiliates specifically for use therein, which
shall include, with respect to the Prospectus Supplement, the information set
forth under the captions "Summary--The Mortgage Loans," "Risk Factors" (to the
extent of information concerning the Mortgage Loans contained therein) and "The
Mortgage Pool" and, with respect to any private placement memorandum, any
information of a comparable nature, or (ii) the data files containing
information with respect to the Mortgage Loans as transmitted by modem to the
Purchaser by the Seller or any of its affiliates (as such transmitted
information may have been amended in writing by the Seller or any of its
affiliates with the written consent of the Purchaser subsequent to such
transmission), (b) any representation, warranty or covenant made by the Seller
or any affiliate of the Seller herein or in the Pooling and Servicing Agreement,
on which the Purchaser has relied, being, or alleged to be, untrue or incorrect
or (c) any updated collateral information provided by any Underwriter to a
purchaser of the Certificates derived from the data contained in clause (ii) and
the Remittance Report or a current collateral tape obtained from the Seller or
an affiliate of the Seller, including the current loan balances of the Mortgage
Loans; provided, however, that to the extent that any such losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject arise out of or are based upon both (1) statements, omissions,
representations, warranties or covenants of the Seller described in clause (a),
(b) or (c) above and (2) any other factual basis, the Seller shall indemnify and
hold harmless the Indemnified Party only to the extent that the losses, claims,
expenses, damages, or liabilities of the person or persons asserting the claim
are determined to rise from or be based upon matters set forth in clause (1)
above and do not result from the gross negligence or willful misconduct of such
Indemnified Party. This indemnity shall be in addition to any liability that the
Seller may otherwise have.

         SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is specifically understood and agreed that each Mortgage Loan is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a continuing security interest in the Seller's interest
in each Mortgage Loan and each document and instrument evidencing each such
Mortgage Loan to secure the performance by the Seller of its obligation
hereunder, and the Seller agrees that it holds such Mortgage Loans in custody
for the Purchaser, subject to the Purchaser's (i) right, prior to the Closing
Date, to reject any Mortgage Loan to the extent permitted by this Agreement, and
(ii) obligation to deliver or cause to be delivered the consideration for the
Mortgage Loans pursuant to Section 8 hereof. Any Mortgage Loans rejected by the
Purchaser shall

                                      -22-

<PAGE>

concurrently therewith be released from the security interest created hereby.
All rights and remedies of the Purchaser under this Agreement are distinct from,
and cumulative with, any other rights or remedies under this Agreement or
afforded by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively.

         Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.

         SECTION 14. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
fax and, receipt of which is confirmed by telephone, if to the Purchaser,
addressed to the Purchaser at 18400 Von Karman, Suite 1000, Irvine, California
92612, fax (949) 440-7033, or such other address as may hereafter be furnished
to the Seller and the Originator in writing by the Purchaser; if to the Seller,
addressed to the Seller at 18400 Von Karman, Suite 1000, Irvine, California
92612, fax (949) 440-7033, or to such other address as the Seller may designate
in writing to the Purchaser and the Originator; and if to the Originator,
addressed to the Originator at 18400 Von Karman, Suite 1000, Irvine, California
92612, fax (949) 440-7033, or such other address as may hereafter be furnished
to the Seller and the Purchaser in writing by the Originator.

         SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

         SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller and the
Purchaser each agree to execute and deliver such instruments and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.

         SECTION 17. SURVIVAL. (a) The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to be relied upon by the
Purchaser, notwithstanding any investigation heretofore or hereafter made by the
Purchaser or on its behalf, and that the representations, warranties and
agreements made by the Seller herein or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans and
shall continue in full force and effect,

                                      -23-

<PAGE>

notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement, the Pooling and
Servicing Agreement or the Trust Fund.

         (b) The Originator agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.

         SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.

         SECTION 19. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Mortgage Loans by the Seller to
the Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession" by the secured party for purposes of

                                      -24-

<PAGE>

perfecting the security interest pursuant to the New York Uniform Commercial
Code; and (4) notifications to persons holding such property and
acknowledgments, receipts or confirmations from persons holding such property
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to Section 4(d)
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.

                                      -25-

<PAGE>

         IN WITNESS WHEREOF, the Purchaser, the Seller and the Originator have
caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.

                                   NEW CENTURY MORTGAGE SECURITIES, INC.

                                   By:________________________________
                                   Name:
                                   Title:

                                   NC CAPITAL CORPORATION

                                   By:________________________________
                                   Name:
                                   Title:

                                   NEW CENTURY MORTGAGE CORPORATION

                                   By:________________________________
                                   Name:
                                   Title:

                                      -26-

<PAGE>

                                                                       EXHIBIT 1

         References to percentage of the Mortgage Loans as set forth in this
Exhibit 1, unless otherwise noted, are calculated based on the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

         On the Cut-off Date, the Mortgage Loans will comply with the following
conditions:

         (i) no less than 61.21% of the Mortgage Loans have a risk grade of A+
or A+MO; no less than 14.27% of the Mortgage Loans will have a risk category of
A-; no less than 13.10% of the Mortgage Loans will have a risk category of B;
and no more than 9.6% of such loans have a risk grade of C, C- or C-HS;

         (ii) any Mortgage Loan with a risk grade of A+, A+MO, A-, A-MO or B has
a loan-to-value ratio between ___% and ___% ;

         (iii) the weighted average loan-to-value ratio for the Mortgage Loans
at origination will not exceed 95% ; provided, however, the weighted average
loan-to-value ratio for each of the Delayed First Adjustment Mortgage Loans at
origination will not exceed ___% ;

         (iv) the maximum percentage concentration of Mortgage Loans secured by
mortgaged properties in any one zip code will be ___% ;

         (v) not less than ___% of the Mortgage Loans provide for payment by the
mortgagor of a prepayment charge within a specified period as provided in the
related Mortgage Note not in excess of 5 years; provided, however, not less than
___% of the Delayed First Adjustment Mortgage Loans provide for payment by the
mortgagor of a prepayment charge within a specified period as provided in the
related Mortgage Note not in excess of 5 years;

         (vi) the Mortgage Loans will have a weighted average Mortgage Rate
equal to ___% per annum and a weighted average Gross Margin equal to ___% per
annum, provided, however, the Delayed First Adjustment Mortgage Loans to be
purchased will have a weighted average Mortgage Rate equal to ___% per annum and
a weighted average Gross Margin equal to ___% per annum. The Mortgage Loans are
payable on the first day of each month and with respect to the Adjustable-Rate
Mortgage Loans, interest on the Mortgage Loans and the monthly payments are
subject to adjustment on each Adjustment Date to equal the sum of the Index and
the Gross Margin, rounded to the next highest multiple of 0.125%, subject to the
Periodic Rate Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate. The
Mortgage Loans are not subject to negative amortization and do not provide for
graduated payments. None of the Adjustable Rate Mortgage Loans are convertible
to a fixed Mortgage Rate. None of the Mortgage Loans is subject to temporary
buydown agreements. Each of the Mortgage Loans is fully-amortizing and none of
the Mortgage Loans provide for the payment of a balloon payment.

                                      -27-

<PAGE>

                                   EXHIBIT E-1
                                   -----------

                               REQUEST FOR RELEASE
                       (for Trust Administrator/Custodian)

Loan Information
----------------

         Name of Mortgagor:          __________________________________

         Master Servicer
         Loan No.:                   __________________________________

Trustee/Custodian
-----------------

         Name:                       __________________________________

         Address:                    __________________________________

         Trustee/Custodian
         Mortgage File No.:          __________________________________

Trust Administrator
-------------------

         Name:                      __________________________________

         Address:                   __________________________________

Depositor
---------

         Name:             NEW CENTURY MORTGAGE
                           SECURITIES, INC.

         Address:          __________________________________
                           __________________________________

         Certificates:     Asset Backed Pass-Through Certificates, Series 2002-1

                  The undersigned Master Servicer hereby acknowledges that it
has received from _______________________, as Trust Administrator for the
Holders of Asset Backed Pass-Through Certificates, Series 2002-1 the documents
referred to below (the "Documents"). All capitalized terms not otherwise defined
in this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement, dated as of February 1, 2002, among the Trustee, the
Trust Administrator, the Depositor and the Master Servicer (the "Pooling and
Servicing Agreement").

                                      E-1-1

<PAGE>

                  ( ) Promissory Note dated _______________, 20__, in the
original principal sum of $__________, made by _____________________, payable
to, or endorsed to the order of, the Trust Administrator.

                  ( ) Mortgage recorded on _________________________ as
instrument no. ____________________ in the County Recorder's Office of the
County of _________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.

                  ( ) Deed of Trust recorded on ___________________ as
instrument no. ________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.

                  ( ) Assignment of Mortgage or Deed of Trust to the Trust
Administrator, recorded on ___________________ as instrument no. _________ in
the County Recorder's Office of the County of _______________, State of
_______________________ in book/reel/docket ____________ of official records at
page/image ____________.

                  ( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  The undersigned Master Servicer hereby acknowledges and agrees
as follows:

                  (1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee and the Trust
Administrator, solely for the purposes provided in the Agreement.

                  (2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the Master
Servicer assert or seek to assert any claims or rights of setoff to or against
the Documents or any proceeds thereof.

                  (3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trust Administrator when the
need therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted to the
Collection Account and except as expressly provided in the Agreement.

                                      E-1-2

<PAGE>

                  (4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trust
Administrator, and the Master Servicer shall keep the Documents and any proceeds
separate and distinct from all other property in the Master Servicer's
possession, custody or control.

Dated:

                                                OCWEN FEDERAL BANK FSB

                                                By:__________________________
                                                Name:
                                                Title:

                                      E-1-3

<PAGE>

                                   EXHIBIT E-2
                                   -----------

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
                     ASSET BACKED PASS-THROUGH CERTIFICATES
                                  SERIES 2002-1

___________________________________________________ HEREBY CERTIFIES THAT HE/SHE
IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH
HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER: _________________ BORROWER'S NAME:______________________

COUNTY: ______________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

______________________________                  DATED:______________________

/ / VICE PRESIDENT

/ / ASSISTANT VICE PRESIDENT

                                      E-2-1

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                       [Date]

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101

                  Re:      New Century Home Equity Loan Trust, Series 2002-1,
                           Asset Backed Mortgage Pass-Through Certificates,
                           Class ___, representing a ___% Class ___ Percentage
                           Interest
                           ---------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
February 1, 2002, among New Century Mortgage Securities, Inc. as Depositor,
Ocwen Federal Bank FSB as Master Servicer, National City Bank as Trustee and
U.S. Bank National Association as Trust Administrator (the "Pooling and
Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.

                                      F-1-1

<PAGE>

                  Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.

                                              Very truly yours,

                                              [Transferor]

                                              By:___________________________
                                              Name:
                                              Title:

                                      F-1-2

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                   [Date]

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101

                  Re:      New Century Home Equity Loan Trust, Series 2002-1,
                           Asset Backed Mortgage Pass-Through Certificates,
                           Class ___, representing a ___% Percentage Interest
                           --------------------------------------------------

Ladies and Gentlemen:

                  In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
"1933 Act") and has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that the
sale to it is being made in reliance on Rule 144A. The Transferee is acquiring
the Certificates for its own account or for the account of a qualified
institutional buyer, and understands that such Certificate may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.

                  2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement referred to below, and (d) any credit enhancement mechanism associated
with the Certificates, that it has requested.

                  All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of February 1, 2002, among New Century Mortgage Securities,
Inc. as Depositor, Ocwen Federal Bank FSB as Master Servicer, National City Bank
as Trustee and U.S. Bank National Association as Trust Administrator, pursuant
to which the Certificates were issued.

                                                   [TRANSFEREE]

                                                   By:__________________________
                                                   Name:
                                                   Title:

                                      F-1-3

<PAGE>

                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and U.S. Bank National Association, as Trust
Administrator, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.

         ___ CORPORATION, ETC. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.

         ___ BANK. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised by
the State or territorial banking commission or similar official or is a foreign
bank or equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements, a copy of
which is attached hereto.

         ___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a State
or Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b) has an
audited net worth of at least

--------

         1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities. $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.

                                      F-1-4

<PAGE>

         ___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.

         ___ INSURANCE COMPANY. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is subject to
supervision by the insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.

         ___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit of
its employees.

         ___ ERISA PLAN. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974.

         ___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.

                  3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

                  4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.

                  5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.

         ___      ___      Will the Transferee be purchasing the Certificates
         Yes      No       only for the Transferee's own account?

                                      F-1-5

<PAGE>

                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

                  7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

Dated:

                                          ------------------------------------
                                          Print Name of Transferee

                                          By:_________________________________
                                          Name:
                                          Title:

                                      F-1-6

<PAGE>

                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and U.S. Bank National Association, as Trust
Administrator, with respect to the mortgage pass- through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

         ____              The Transferee owned $___________________ in
                           securities (other than the excluded securities
                           referred to below) as of the end of the Transferee's
                           most recent fiscal year (such amount being calculated
                           in accordance with Rule 144A).

         ____              The Transferee is part of a Family of Investment
                           Companies which owned in the aggregate
                           $______________ in securities (other than the
                           excluded securities referred to below) as of the end
                           of the Transferee's most recent fiscal year (such
                           amount being calculated in accordance with Rule
                           144A).

                  3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

                                      F-1-7

<PAGE>

                  5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

                  6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                     -----------------------------------
                                     Print Name of Transferee or Advisor

                                     By:________________________________
                                     Name:
                                     Title:

                                     IF AN ADVISER:

                                     -----------------------------------
                                     Print Name of Transferee

                                      F-1-8

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER
                    ----------------------------------------

                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                  1.  I am an executive officer of the Purchaser.

                  2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933, as
amended.

                  3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.

                                                   Name of Purchaser

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

                                                   By:_______________________
                                                   Name:
                                                   Title:

Date of this certificate:

Date of information provided in paragraph 3

                                      F-1-9

<PAGE>

                                   EXHIBIT F-2

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK           )
COUNTY OF NEW YORK          )

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ______________________ of
____________________________ (the "Owner") a corporation duly organized and
existing under the laws of ______________, the record owner of New Century Home
Equity Loan Trust, Series 2002-1, Asset Backed Mortgage Pass-Through
Certificates, Series 2002-1, Class R Certificates, (the "Class R Certificates"),
on behalf of whom I make this affidavit and agreement. Capitalized terms used
but not defined herein have the respective meanings assigned thereto in the
Pooling and Servicing Agreement pursuant to which the Class R Certificates were
issued.

                  2. The Owner (i) is and will be a "Permitted Transferee" as of
____________, 20__ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.

                  3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection of tax.

                                      F-2-1

<PAGE>

                  4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time during the taxable year
of the pass-through entity, a non-Permitted Transferee is the record holder of
an interest in such entity. (For this purpose, a "pass-through entity" includes
a regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

                  5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

                  6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.

                  7. The Owner's taxpayer identification number is
_________________.

                  8. The Owner has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trust Administrator to deliver payments to a person other than the Owner and
negotiate a mandatory sale by the Trust Administrator in the event that the
Owner holds such Certificate in violation of Section 5.02(d)); and that the
Owner expressly agrees to be bound by and to comply with such restrictions and
provisions.

                  9. The Owner is not acquiring and will not transfer the Class
R Certificates in order to impede the assessment or collection of any tax.

                  10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.

                  11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.

                  12. The Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.

                  13. The Owner is not acquiring the Class R Certificates with
the intent to transfer the Class R Certificates to any person or entity that
will not have sufficient assets to pay any taxes

                                      F-2-2

<PAGE>

owed by the holder of such Class R Certificates, or that may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remain outstanding.

                  14. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R Certificate were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.

                  15. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trust Administrator an
affidavit, which represents and warrants that it is not transferring the Class R
Certificates to impede the assessment or collection of any tax and that it has
no actual knowledge that the proposed transferee: (i) has insufficient assets to
pay any taxes owed by such transferee as holder of the Class R Certificates;
(ii) may become insolvent or subject to a bankruptcy proceeding for so long as
the Class R Certificates remains outstanding; and (iii) is not a "Permitted
Transferee".

                  16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

                  17. The Owner of the Class R Certificate, hereby agrees that
in the event that the Trust Fund created by the Pooling and Servicing Agreement
is terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the event of
such termination, the Trust Administrator is hereby authorized to withhold any
such amounts in excess of par and to pay such amounts directly to the Holders of
the Class CE Certificates. This agreement shall bind and be enforceable against
any successor, transferee or assigned of the undersigned in the Class R
Certificate. In connection with any transfer of the Class R Certificate, the
Owner shall obtain an agreement substantially similar to this clause from any
subsequent owner.

                                     F-2-3

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                               [OWNER]

                                               By:__________________________
                                               Name:
                                               Title:    [Vice] President

ATTEST:

By:_________________________________
Name:
Title:    [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.

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

                                                    County of __________________
                                                    State of ___________________

                                                    My Commission expires:

                                      F-2-4

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT
                          ----------------------------

STATE OF NEW YORK       )

COUNTY OF NEW YORK      )

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ____________________ of ____________________________
(the "Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.

                  2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

                  3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

                  4. The Owner understands that the Purchaser has delivered to
the Trustee a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.

                  5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.

                  6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.

                                      F-2-5

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                             [OWNER]

                                             By:_____________________________
                                             Name:
                                             Title:    [Vice] President

ATTEST:

By:______________________________
Name:
Title:   [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.

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

                                              County of __________________
                                              State of ___________________

                                              My Commission expires:

                                      F-2-6

<PAGE>

                   EXHIBIT G
                                    ---------

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                               _____________, 20__

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101

Ocwen Federal Bank FSB
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33401

                  Re:      New Century Home Equity Loan Trust, Series 2002-1,
                           Asset Backed Mortgage Pass-Through Certificates,
                           Class ___
                           --------------------------------------------------

Dear Sirs:

                  _______________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of New Century Home Equity Loan Trust, Series 2002-1, Asset
Backed Pass-Through Certificates, Class [CE] [P] [R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of February 1, 2002 among New Century Mortgage Securities,
Inc. as depositor (the "Depositor"), Ocwen Federal Bank FSB as master servicer
(the "Master Servicer"), National City Bank as trustee (the "Trustee") and U.S.
Bank National Association as trust administrator (the "Trust Administrator").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Pooling and Servicing Agreement. The Transferee hereby
certifies, represents and warrants to, and covenants with the Depositor, the
Trustee, the Trust Administrator and the Master Servicer the following:

                  The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R.ss.2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29 C.F.R.ss.
2510.3-101.

                                       G-1

<PAGE>

                                                Very truly yours,

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

                                                By:____________________________
                                                Name:
                                                Title:

                                       G-2

<PAGE>

                                    EXHIBIT H

                     FORM OF REPORT PURSUANT TO SECTION 4.06

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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

                                  Annual Report

                     Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 (Fee Required)

                     For fiscal year ended ________________

                       Commission file number: 333-_______

                      NEW CENTURY MORTGAGE SECURITIES, INC.
            (as depositor under the Pooling and Servicing Agreement,
           dated as of February 1, 2002, providing for the issuance of
             Asset Backed Pass-Through Certificates, Series 2002-1)

                      New Century Mortgage Securities, Inc.
                      -------------------------------------

             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------

           Delaware                                             33-0852169
 ----------------------------------                       ----------------------
(State or Other Jurisdiction                              (I.R.S. Employer
of Incorporation)                                         Identification Number)

18400 Von Karman, Suite 1000
Irvine, California                                                 92612
------------------------------------                               -----
(Address of Principal Executive Offices)                         (Zip Code)

Registrant's telephone number, including area code:  (949) 863-7243
                                                     --------------

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

                                       H-1

<PAGE>

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                                          X  YES        No
                                                         ---        ---
Item 1.  Business:

Not applicable

Item 2.  Properties:

Not applicable

Item 3.  Legal Proceedings:

None

Item 4.  Submission of Matters to a Vote of Security-Holders

None

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

To the best knowledge of the registrant there is no established public trading
market for the certificates.

There are approximately _____ holders of record as of the end of the reporting
year.

Item 6.  Selected Financial Data.

Not applicable.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Not applicable

                                       H-2

<PAGE>

Item 8.  Financial Statements and Supplementary Data.

Not applicable.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

None

Item 10.

Not applicable

Item 11.  Executive Compensation

Not applicable

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Not applicable

Item 13.  Certain Relationships and Related Transactions

Not applicable

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)       The company filed on Form 8-K, separately for each
                  distribution date, the distribution of funds related to the
                  trust for each of the following distribution dates:

                           Distribution Date          Form 8-K Filing Date
                           -----------------          --------------------
                           __________________         _____________________
                           __________________         _____________________
                           __________________         _____________________

         b)       99.1     Annual Report of Independent Public Accountants' as
                           to master servicing activities or servicing
                           activities, as applicable

                           (a) Ocwen Federal Bank FSB, as master servicer

                  99.2     Annual Statement of Compliance with obligations under
                           the Pooling and Servicing Agreement or servicing
                           agreement, as applicable, of:

                           (a) Ocwen Federal Bank FSB, as master servicer

                                       H-3

<PAGE>

Such document (i) is not filed herewith since such document was not received by
the Reporting Person at least three business days prior to the due date of this
report; and (ii) will be included in an amendment to this report on Form 10-K/A
to be filed within 30 days of the Reporting Person's receipt of such document.

                                   Signatures

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

Date: ___________

                                       New Century Mortgage Securities, Inc., by
                                       U.S. Bank National Association as Trust
                                       Administrator for New Century Home Equity
                                       Loan Trust, Series 2002-1, Asset Backed
                                       Pass-Through Certificates.

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

                                       H-4

<PAGE>

                                    EXHIBIT I

                           FORM OF LOST NOTE AFFIDAVIT

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT

                  I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of New Century Mortgage Securities, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:

         1.       The Seller's address is:  _____________________

         2.       The Seller previously delivered to the Purchaser a signed
                  Initial Certification with respect to such Mortgage and/or
                  Assignment of Mortgage;

         3.       Such Mortgage Note and/or Assignment of Mortgage was assigned
                  or sold to the Purchaser by ________________________, a
                  ____________ corporation pursuant to the terms and provisions
                  of a Mortgage Loan Purchase Agreement dated as of __________
                  __, _____;

         4.       Such Mortgage Note and/or Assignment of Mortgage is not
                  outstanding pursuant to a request for release of Documents;

         5.       Aforesaid Mortgage Note and/or Assignment of Mortgage (the
                  "Original") has been lost;

         6.       Deponent has made or caused to be made a diligent search for
                  the Original and has been unable to find or recover same;

         7.       The Seller was the Seller of the Original at the time of the
                  loss; and

         8.       Deponent agrees that, if said Original should ever come into
                  Seller's possession, custody or power, Seller will immediately
                  and without consideration surrender the Original to the
                  Purchaser.

         9.       Attached hereto is a true and correct copy of (i) the Note,
                  endorsed in blank by the Mortgagee and (ii) the Mortgage or
                  Deed of Trust (strike one) which

                                       I-1

<PAGE>

                  secures the Note, which Mortgage or Deed of Trust is recorded
                  in the county where the property is located.

         10.      Deponent hereby agrees that the Seller (a) shall indemnify and
                  hold harmless the Purchaser, its successors and assigns,
                  against any loss, liability or damage, including reasonable
                  attorney's fees, resulting from the unavailability of any
                  Notes, including but not limited to any loss, liability or
                  damage arising from (i) any false statement contained in this
                  Affidavit, (ii) any claim of any party that has already
                  purchased a mortgage loan evidenced by the Lost Note or any
                  interest in such mortgage loan, (iii) any claim of any
                  borrower with respect to the existence of terms of a mortgage
                  loan evidenced by the Lost Note on the related property to the
                  fact that the mortgage loan is not evidenced by an original
                  note and (iv) the issuance of a new instrument in lieu thereof
                  (items (i) through (iv) above hereinafter referred to as the
                  "Losses") and (b) if required by any Rating Agency in
                  connection with placing such Lost Note into a Pass-Through
                  Transfer, shall obtain a surety from an insurer acceptable to
                  the applicable Rating Agency to cover any Losses with respect
                  to such Lost Note.

         11.      This Affidavit is intended to be relied upon by the Purchaser,
                  its successors and assigns. _____________________, a
                  ______________ corporation represents and warrants that is has
                  the authority to perform its obligations under this Affidavit
                  of Lost Note.

Executed this ____ day, of ___________ ______.

                                                     SELLER

                                                     By:______________________
                                                     Name:
                                                     Title:

                  On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

                                             Signature:

                                             [Seal]

                                       I-2

<PAGE>

                                   Schedule 1

                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]

                                  Schedule 1-1

<PAGE>

                                   Schedule 2

                         SCHEDULE OF PREPAYMENT CHARGES

                             AVAILABLE UPON REQUEST

                                  Schedule 3-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]