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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made and entered into this 11th day of September, 2001,
by and between SPEEDFAM-IPEC, INC., an Illinois corporation (hereinafter
referred to as the "Company") and Robert Carey (hereinafter referred to as the
"Executive").

                              W I T N E S S E T H:

      WHEREAS, the Company desires to retain the services of the Executive in
the capacities set forth herein, and the Executive desires to be employed by the
Company in such capacities:

      NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Company and the Executive hereby agree as follows:

             1. Employment. The Company hereby employs the Executive and the
      Executive hereby accepts employment with the Company upon the terms and
      conditions hereinafter set forth and subject to the policies as published
      in the Company's Employee Handbook, Annual Incentive Compensation Plan,
      and the 1995 Stock Option Plan, each as from time to time amended.

             2.   Term.  Subject to the provisions for extension hereinafter
      set forth in Section 3 and for earlier termination hereinafter set
      forth in Section 12 of this Agreement, the term of employment hereunder
      shall commence on the date hereof and end on September 11, 2003.

             3.   Extension.  The conditions of employment beyond the term of
      this agreement will be those of employment at will.

             4.   Compensation.  The Company agrees to provide the Executive
      with the following compensation for all services rendered under this
      Agreement:

                 4.1. Salary. During the term hereof, the Company shall pay to
            the Executive a Base Annual Salary of TWO HUNDRED FIFTY THOUSAND
            DOLLARS ($250,000.00), payable in accordance with the standard
            payroll practices of the Company (including any salary-reduction
            contributions to plans or programs maintained by the Company).
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                 4.2.   Annual Incentive Opportunity.  During the term of
            this Agreement, the Executive shall participate in the annual
            incentive plan maintained by the Company for its executives.  For
            Fiscal Year 2003, The Executive's annual bonus shall be targeted
            at 40% of base pay.

                 4.3. Sign On Bonus/Relocation Benefits. The Company shall pay
            the Executive a bonus in the amount of Twenty-eight Thousand Dollars
            ($28,000.00), payable upon execution of this agreement. This bonus
            is to cover relocation expenses. In addition, the Company will pay
            for up to three (3) house hunting trips for the Executive and his
            spouse.

                 4.4. Other Benefits. To the extent that the Executive is
            eligible under appropriate laws and regulations, the Executive shall
            be entitled to participate in and receive benefits under any and all
            pension, profit-sharing, health, disability and insurance plans, if
            any, which the Company may maintain.

                 4.5. Equity Incentive. The Company shall grant the Executive
            options to purchase a total of 80,000 shares of common stock of the
            Company; 40,000 shares to be vested after one (1) year of service
            with the Company, and 40,000 shares to be vested after the second
            year of service with the Company. With respect to such options:

                     4.5.1. The exercise price for such options shall be as of
                  the Executive's employment date. The options will be
                  non-qualified options, subject to all terms and conditions of
                  the Company's 1995 Stock Option Plan. Subject to the Stock
                  Option Plan and this Agreement, vested options may be
                  exercised for ten years from the date of grant. In the event
                  of the death of the Executive, vested options may be exercised
                  for one year from the date of death. In all other events,
                  vested options must be exercised within 90 days of
                  termination. Subject to the obligation of the Executive under
                  the Company's 1995 Stock Plan, the Company will cooperate in
                  any same day exercise and sale (or if same is not available, a
                  cashless exercise) associated with such options.

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                     4.5.2. Upon termination of the Executive's employment,
                  option vesting will cease; provided, however, that if any
                  termination severance payment is due in connection therewith
                  pursuant to Section 12.3, the Executive will receive an
                  additional one year of vesting as of the date of termination.
                  Payment of all amounts and benefits hereunder and additional
                  vesting of stock shall be subject to compliance with the
                  provisions of this Agreement and specifically the restrictive
                  covenants set forth in Section 13 hereof.

             5. Duties. The Executive shall, subject to the right of the Company
      in its sole discretion to terminate Executive's employment pursuant to
      Section 12.3 and thereby terminate his employment and/or officer position,
      serve as Vice President of Research, Development and Engineering of the
      CMP group. As such, the Executive's duties and responsibilities shall
      include, but shall not be limited to, overseeing all functions relating to
      Research, Development and Engineering operations. The Executive shall also
      be responsible for the performance of such other duties and
      responsibilities as may be prescribed from time to time by the Chief
      Executive Officer and/or the Board of Directors of the Company.

             6. Extent of Service. The Executive shall devote the Executive's
      full business time, attention, and energies to the business of the Company
      and its Affiliates and shall not, during the term of this Agreement, be
      engaged in any other business activity, whether or not such activity is
      pursued for gain, profit, or other pecuniary advantage, unless written
      approval is first secured from the Board of Directors of the Company, with
      such approval not unreasonably being withheld.

             7.   Working Facilities.  The Executive shall be furnished with
      office space, furnishings, secretarial support and such other
      facilities and services which are reasonably necessary for the
      performance of the Executive's duties.

             8. Expenses. The Company will reimburse the Executive for all
      reasonable business expenses which are incurred by the Executive in the
      promoting of the interests of the Company. In addition, the Company shall
      indemnify the Executive as an officer, director and employee to the
      maximum extent permitted under law and the Company's corporate documents.

             9.   Vacation.  The Executive shall be entitled to paid vacation
      in accordance with Company policy.  All vacation time shall be taken by
      the Executive at such times as

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      shall be mutually agreed upon by the Executive and the Chief Executive
      Officer of the Company.

            10.   Disability.  If, as a result of sickness or other
      disability, the Executive is not able to perform the Executive's
      duties, this Section 10 shall apply as follows:

                10.1. For the first ninety (90) consecutive days of sickness or
            other disability the Company shall continue to pay the Executive
            full Base Annual Salary (reduced by any payments from any short-term
            disability plan which may be maintained by the Company), and shall
            continue to pay premiums on then existing group life, health,
            disability and other insurance plans with respect to which the
            Executive participates, provided the Executive remains eligible to
            participate thereunder.

                10.2. If the disability or other sickness continues past ninety
            (90) consecutive days, the Company, in its sole discretion, may
            elect to place the Executive on Disability Leave of Absence. During
            such period, the Company shall, for the remainder of the contract
            term, or until the Executive returns from such Disability Leave of
            Absence, continue to pay premiums on then existing group life,
            health, disability and other insurance plans with respect to which
            the Executive participates, provided the Executive remains eligible
            to participate thereunder. Further, the Company shall pay to the
            Executive, two-thirds (2/3) of the Executive's Base Annual Salary,
            reduced by any payments for which the Executive is eligible from any
            disability insurance programs maintained by the Company.

            11. Death. If the Executive dies during the term of this Agreement,
      the Company shall pay to the Executive's Beneficiary (or if there is no
      named Beneficiary, the estate of the Executive), the compensation as set
      forth in Section 4 of this Agreement, for the period up to the date of the
      Executive's death, and the Executive's annual incentive award prorated
      through the date of death, payable at fiscal year end if and to the same
      extent bonuses are paid for that fiscal year to other executives
      generally. In no event shall the Company be obligated to pay to any person
      any other compensation with respect to any period following the date of
      the Executive's death.

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            12.   Termination of Employment.

                12.1.   Termination for Cause.  The Company may terminate the
            Executive's employment under this Section of the Agreement for
            Cause.  Cause shall be defined as:

                    12.1.1. The Executive's Material Breach of this Agreement
                  based on the Executive's willful or grossly negligent failure
                  to perform his duties hereunder, which breach is not cured
                  within ten (10) business days after written notice from the
                  Company specifying such breach has been delivered to the
                  Executive;

                    12.1.2.   Commission by the Executive of any fraudulent
                  or dishonest act in the performance of the Executive's
                  duties hereunder; or,

                    12.1.3. Arrest (unless the charges are dropped within 45
                  days) for any felony or crime involving moral turpitude.
                  Executive agrees that as soon as practical following any such
                  arrest he shall provide notice of the arrest and during the
                  subsequent 45-day period he may, at the direction of the Board
                  of Directors, be placed on unpaid leave of absence.

                    12.1.4. Following a Termination for Cause, the Company shall
                  pay to the Executive the Base Annual Salary provided in
                  Section 4.1 accrued up to the date of termination. In no event
                  shall the Company be obligated to pay any other compensation
                  with respect to any period before or after the date of such
                  termination.

                12.2. Termination Following a Change of Control. If in
            anticipation of and within 90 days of, or during a period of one (1)
            year following, a Change of Control (as hereinafter defined), the
            employment of the Executive is terminated by the Company for any
            reason other than Cause, or if the Executive is subject to
            Constructive Termination (as hereinafter defined), benefits shall be
            payable under this Section 12.2.

                    12.2.1. The Executive shall receive all Base Annual Salary
                  accrued up to the date of termination and, within thirty (30)
                  days of termination, a single payment equal to the sum of (i)
                  the Executive's base pay for the remainder of this Agreement
                  period, and (ii) the Executive's target annual

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                  incentive award, pro-rated through the date of termination and
                  payable at fiscal year end if and to the same extent bonuses
                  are paid for that fiscal year to other executives generally.

                    12.2.2. All unvested stock options awarded to the Executive
                  pursuant to the Company's stock option plans shall immediately
                  vest in full to the Executive; provided that such stock
                  options shall be exercisable only within ninety (90) days from
                  such vesting.

                12.3. Other Termination at the Election of the Company. Except
            as otherwise provided in Section 4.5.2, the Company may elect to
            terminate the employment of the Executive for any reason other than
            Cause or following a Change of Control, accompanied by payment in a
            lump sum (except pursuant to Sections 12.3.2 and 12.3.3) of:

                    12.3.1.   All compensation accrued up to the date of
                  termination; plus

                    12.3.2. An amount equal to one (1) times the Executive's
                  Base Annual Salary of record on the date of termination OR an
                  amount equal to the Executive's base salary for the remainder
                  of this Agreement, whichever is less, payable pro rata monthly
                  over the one year following termination; plus

                    12.3.3. The Executive's target annual incentive award,
                  pro-rated through the date of termination and payable at
                  fiscal year end if and to the same extent bonuses are paid for
                  that fiscal year to other executives generally.

                12.4. Benefit Payments. Following the termination of the
            Executive's employment for any reason, the Company shall pay to the
            Executive, under the terms of the Company's benefit plans, an amount
            equal to the vested benefits of the Executive in any pension or
            other benefit plan as of the termination date. If elected by the
            Executive, the Company shall, instead of direct payment to the
            Employer, transfer such funds to such other benefit plans as
            designated by the Executive.

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            13.   Restrictive Covenants.

                13.1. Executive understands that the Company's business involves
            the design, improvement, development, testing, manufacturing,
            marketing and sale of products, and that this business requires
            substantial investments in capital and substantial commitments of
            time and effort by the Company's employees. The Executive further
            understands that, as a result, certain of the Company's personnel,
            including the Executive, acquire information with respect to
            customer goodwill, trade secrets and Confidential Information (as
            hereinafter defined), which, of itself and apart from the
            Executive's abilities, could be of great value to a competitor of
            the Company, potential competitors of the Company, and to others.

                13.2. The Executive further understands that employment with the
            Company is conditioned upon the Company's being able to place
            complete trust and confidence in the Executive and to rely on the
            Executive's doing everything possible to avoid the disclosure or use
            of Confidential Information to persons, corporations, organizations
            and others outside the Company, which may become known to, or
            subject to the control of the Executive during the term of
            employment hereunder. The Executive also understands that
            competition in the manufacture, sale, and development of products is
            not local in nature or scope, but involves various corporations,
            organizations and others located within the United States and
            throughout the world.

                13.3. In recognition of these circumstances and for the purpose
            of inducing the Company to employ the Executive (or continue the
            employment of the Executive with appropriate compensation reviews),
            to repose trust and confidence in the Executive, and to make
            Confidential Information available to the Executive, the Executive
            agrees that the following restrictive covenants are necessary and
            proper for the protection of the Company.

                13.4. Subject to Section 13.6 below, the Executive will promptly
            disclose and assign to the Company, without the right to any form of
            compensation therefore, every invention that the Executive,
            individually or jointly with others, during the term of the
            Executive's employment with the Company and for a period of one (1)
            year following termination of such employment for any reason, may
            discover, invent, conceive or originate, relating in any way to the
            present or contemplated scope of the Company's business with regard
            to any of its

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            clients, customers or vendors or to any Product (as hereinafter
            defined), Technology (as hereinafter defined), process, or device
            dealt in, used or under development or manufacture by the Company
            for itself or others that results from or may be suggested by any
            work the Executive may do for the Company or at the Company's
            request and (in respect to the period of one (1) year following
            termination of such Executive) which involves Confidential
            Information. The Executive will fully cooperate with the Company in
            applying for and securing in the name of the Company or its designee
            patents or copyrights with respect to said Inventions (as
            hereinafter defined) in each country in which the Company may desire
            to secure patent or copyright protection. The Executive will
            promptly execute all proper documents presented to the Executive for
            signature by the Company to enable the Company or its designee to
            secure such patent or copyright protection and to transfer legal
            title therein, together with any patents or copyrights that may be
            issued thereon or in connection therewith, to the Company or its
            designee. The Executive will give such true information and
            testimony as may be requested of the Executive by the Company
            relative to any of said Inventions.

                13.5. Subject to Section 13.6 below, the Company shall have the
            exclusive right to use in its business, and to make, use and sell
            products, processes, and/or services arising out of any Invention,
            whether or not patentable, which is assignable by the Executive to
            the Company pursuant to Section 13.4 above.

                13.6. The Executive is hereby notified that Sections 13.4 and
            13.5 above do not apply to an Invention for which no equipment,
            supplies, facility, technology, confidential information, or trade
            secret information of the Company was used and which was developed
            entirely on the Executive's own time, unless:

                    13.6.1.   The Invention was related:

                        13.6.1.1.   To the business of the Company; or

                        13.6.1.2.   To the Company's actual or demonstrably
                        anticipated research or development;

                        or;

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                    13.6.2.   The Invention results from any work performed
                  by the Executive for the Company.

                13.7. The Executive agrees that all financial data, customer
            lists, plans, contracts, agreements, literature, manuals,
            catalogues, brochures, books, records, computer files or
            applications, maps, correspondence, and other materials furnished or
            made available to the Executive by the Company or an Affiliate (as
            hereinafter defined), or any of its clients, or created, prepared or
            secured through the efforts of the Executive, relating to the
            business conducted by the Company or an Affiliate, whether or not
            containing any Confidential Information, are and shall remain the
            property of the Company, and the Executive agrees to deliver all
            such materials, including all copies thereof, to the Company upon
            termination of the Executive's employment hereunder, or at any other
            time at the Company's request.

                13.8. Other than as expressly directed by the Company and in the
            performance of duties to the Company or with the expressed written
            permission of the Company, the Executive shall never, during or
            following the Executive's employment with the Company, directly or
            indirectly, sell, use, disclose, lecture upon, or publish data or
            information containing or relating to any Confidential Information
            or Technology of the Company or its Affiliates or any Invention
            assignable to the Company pursuant to the terms of Section 13.4
            above.

                13.9. During the term of the Executive's employment with the
            Company and for a period of two (2) years after the termination
            thereof, unless a court finds that a two-year restriction is
            unenforceable, in which case a period of restriction shall be one
            (1) year, the Executive agrees that the Executive shall not:

                    13.9.1. Own or have any interest in, directly or indirectly,
                  except through stock traded on a national stock exchange where
                  the Executive owns less than one percent (1%) of the total
                  issued and outstanding shares of such stock, or act as an
                  officer, director, agent, employee, or consultant of, or
                  assist in any way or in any capacity, any person, firm,
                  association, partnership, corporation or other entity which
                  sells or provides products or services in direct competition
                  with the products or services of the Company or its Affiliates
                  anywhere within the world where any Confidential Information
                  acquired by the Executive would reasonably be considered
                  advantageous to such other competing entity, or

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                    13.9.2. Directly or indirectly entice, induce or in any
                  manner influence any person who is, or shall be, in the
                  service of the Company or its Affiliates to leave such service
                  for the purpose of engaging in business or being employed by
                  or associated with any person, firm, association, partnership,
                  corporation or other entity which sells or provides products
                  or services in competition with the Company or its Affiliates
                  anywhere in the world.

            If any court shall finally hold that the time, territory or any
            other provision of this Section 13.9 constitutes an unreasonable
            restriction against the Executive, the Executive agrees that the
            provisions hereof shall not be rendered null and void, but shall
            apply as to such time, territory, and other extent as such court may
            determine to be a reasonable restriction under the circumstances
            involved.

               13.10. The Executive understands that if there is a breach by the
            Executive of any duty to the Company with respect to any
            Confidential Information or Invention, the Company may suffer
            irreparable injury and may not have adequate remedy at law. As a
            result, the Executive agrees that if a breach of this Agreement
            occurs, the Company may, in addition to any other remedies available
            to it, bring an action or actions for injunction, specific
            performance, or both, and have entered into a temporary restraining
            order, preliminary or permanent injunction, or other action
            compelling specific performance.

            14.   Definitions.

                14.1. "Affiliate" means any entity in which the Company, or any
            entity that owns, directly or indirectly, a majority ownership
            interest in the Company, owns, directly or indirectly, at least a
            twenty percent (20%) interest in such entity.

                14.2.   "Base Annual Salary" means the annualized value of
            the Executive's salary, based on the most recent pay period.

                14.3.   "Board" means the Board of Directors of the Company.

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                14.4.   "Change in Duties" means:

                    14.4.1.   A significant reduction in the nature or scope
                  of the Executive's authority or duties from those
                  immediately prior to the date on which a Change of Control
                  occurs;

                    14.4.2.   A reduction in the Executive's Base Annual
                  Salary, other than as provided in Section 4.1;

                    14.4.3.   Exclusion from any incentive or benefit program
                  from which the Executive was previously eligible, and which
                  other executives with comparable duties participate in; or

                    14.4.4.   A change in location of the Executive's
                  principal place of employment by more than fifty (50) miles.

                14.5.   "Change of Control" shall be deemed to have occurred
            upon:

                    14.5.1. A business combination, including a merger or
                  consolidation, of the Company as a result of which the
                  shareholders of the Company prior to the combination do not
                  continue to own, directly or indirectly, more than fifty-one
                  percent (51%) of the equity of the combined entity;

                    14.5.2. A sale, transfer, or other disposition in one or
                  more transactions (other than in transactions in the ordinary
                  course of business or in the nature of a financing) of the
                  assets or earning power aggregating more than forty-five
                  percent (45%) of the assets or operating revenues of the
                  Company to any person or affiliated or associated group of
                  persons (as defined by Rule 12b-2 of the Exchange Act in
                  effect as of the date hereof);

                    14.5.3.   The liquidation of the Company;

                    14.5.4. One or more transactions which result in the
                  acquisition by any person or associated group of persons
                  (other than the Company, any Executive benefit plan whose
                  beneficiaries are Executives of the Company or any of its
                  subsidiaries) of the beneficial ownership (as defined in Rule
                  13d-3 of the Exchange Act, in effect as of the date hereof) of
                  forty percent (40%) or more of the Common Stock of the Company
                  or securities representing forty percent

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                  (40%) or more of the combined voting power of the voting
                  securities of the Company, provided such affiliated persons
                  owned less than forty percent (40%) prior to such transaction
                  or transactions; or

                    14.5.5. The election or appointment, within a twelve (12)
                  month period, of any person or affiliated or associated group,
                  or its or their nominees, to the Board of Directors of the
                  Company, such that such persons or nominees, when elected or
                  appointed, constitute a majority of the Board of Directors of
                  the Company and whose appointment or election was not approved
                  by a majority of those persons who were directors at the
                  beginning of such period or whose election or appointment was
                  made at the request of an Acquiring Person. An "Acquiring
                  Person" is any person who, or which, together with all
                  affiliates or associates of such person, is the beneficial
                  owner of twenty percent (20%) or more of the Common Stock of
                  the Company then outstanding, except that an Acquiring Person
                  does not include the Company or any Executive benefit plan of
                  the Company or any of its subsidiaries or any person holding
                  Common Stock of the Company for or pursuant to such plan. For
                  the purpose of determining who is an Acquiring Person, the
                  percentage of the outstanding shares of the Common Stock of
                  which a person is a beneficial owner shall be calculated in
                  accordance with Rule 13d-e of the Exchange Act.

                14.6.   "Code" means the Internal Revenue Code of 1986, as
            from time to time amended.

                14.7.   "Company" means SpeedFam-IPEC, Inc., an Illinois
            corporation.

                14.8.   "Confidential Information" means any and all
            Technology and/or information which:

                    14.8.1.   Is provided to the Executive by the Company;

                    14.8.2.   Is created, developed, or otherwise generated
                  by or on behalf of the Company;

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                    14.8.3. Concerns or relates to any aspect of the Company's
                  business; or

                    14.8.4. Is, for any reason, identified by the Company as
                  confidential.

                    14.8.5. Notwithstanding the foregoing provisions of this
                  Section 14.8, Confidential Information shall not include such
                  information that the Executive can show, clearly and
                  convincingly:

                        14.8.5.1. Is publicly and openly known and in the public
                        domain;

                        14.8.5.2. Becomes publicly and openly known and in the
                        public domain through no fault of the Executive; or

                        14.8.5.3. Is in the Executive's possession and
                        documented prior to this Agreement, lawfully obtained
                        from a source other than from the Company, and not
                        subject to any obligation of confidentiality or
                        restricted use.

                14.9. "Constructive Termination" means the voluntary termination
            of employment by the Executive following a Change in Duties
            following a Change of Control.

               14.10. "Exchange Act" means the Securities Exchange Act of 1934,
            as from time to time amended.

               14.11. "Invention" means any new or useful art, discovery, or
            improvement (including any technologies, tests, programs, products,
            concepts, ideas, apparatus, equipment, machinery, processes,
            methods, formulae, designs or techniques), whether or not related to
            a Product and whether or not patentable, and all the know-how
            related thereto.

               14.12. "Material Breach" means a willful or grossly negligent
            failure to perform the Executive's duties as set forth in this
            Agreement.

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               14.13. "Product" means any product or service which is, or may in
            the reasonable future be, manufactured, sold, designed, developed,
            considered by, or of interest to the Company or an Affiliate
            (including, but not limited to, any product or service involving CMP
            planarization technology, such as CMP-V tools or any free-abrasive
            machining, lapping, polishing and grinding).

               14.14. "Technology" means prototypes, models, concepts,
            inventions, circuit designs, drawings, hardware, technological
            developments and improvements, methods, techniques, systems,
            documentation, data, works of authorship, products, and related
            information whether or not patentable, copyrightable, and whether or
            not presently used or used in the future.

               14.15. "Voting Securities" mean any securities which ordinarily
            possess the power to vote in the election of directors without the
            happening of any precondition or contingency.

            15.   Miscellaneous.

                15.1. This Agreement supersedes all prior agreements and
            understandings by and between the Executive and the Company and any
            of its Affiliates or their respective directors, officers,
            shareholders, employees, attorneys, agents, or representatives,
            including any Severance Agreement, Employment Letter, Employment
            Terms, Non-Disclosure Agreement and/or Employment Agreement
            (including change of control provisions) and constitutes the entire
            agreement between the parties, respecting the subject matter hereof,
            and there are no representations, warranties or other commitments
            other than those expressed herein.

                15.2. The Executive represents and warrants to the Company that
            the Executive is not a party to or bound by, and the employment of
            the Executive by the Company or the Executive's disclosure of any
            information to the Company or its use of such information will not
            violate or breach any employment, retainer, consulting, license,
            non-competition, non-disclosure, trade secrets or other agreement
            between the Executive and any other person, partnership,
            corporation, joint venture, association or other entity.

                15.3. No modification or amendment of, or waiver under, this
            Agreement shall be valid unless signed in writing and signed by the
            Executive and

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            an appropriate officer of the Company, pursuant to expressed
            authority of the Board of Directors of the Company.

                15.4. The Executive agrees to indemnify the Company and its
            Affiliates against, and to hold the Company and its Affiliates
            harmless from, any and all claims, lawsuits, losses, damages,
            expenses, costs and liabilities, including, without limitation,
            court costs and attorney's fees, which the Company or any of its
            Affiliates may sustain as a result of, or in connection with, either
            directly or indirectly, the Executive's breach or violation of any
            of the provisions of this Agreement.

                15.5. The Company agrees to indemnify the Executive against, and
            to hold the Executive harmless from, any and all claims, lawsuits,
            losses, damages, expenses, costs and liabilities, including, without
            limitation, court costs and attorney's fees, which the Executive may
            sustain as a result of, or in connection with, either directly or
            indirectly, the breach or violation by the Company or its Affiliates
            of any of the provisions of this Agreement or any applicable law or
            regulations.

                15.6. The Executive hereby agrees that if the Executive violates
            any provision of this Agreement, the Company will be entitled, if it
            so elects, to institute and prosecute proceedings at law or in
            equity to obtain damages with respect to such violation or to
            enforce the specific performance of this Agreement by the Executive
            or to enjoin the Executive from engaging in any activity in
            violation hereof.

                15.7. The waiver by either party to this Agreement of a breach
            of any provision of this Agreement by the other shall not operate or
            be construed as a waiver of any subsequent breach.

                15.8. Any communication which may be required under this
            Agreement shall be deemed to have been properly given when delivered
            personally at the address set forth below for the intended party
            during normal business hours, when sent by facsimile or other
            electronic transmission to the respective facsimile transmission
            numbers of the parties set forth below with telephone confirmation
            of receipt, or when sent by U.S. registered or certified mail,
            return receipt requested, postage prepaid as follows:

                                      -15-
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            If to the Company:      SpeedFam-IPEC, Inc.
                                    305 N. 54th Street
                                    Chandler, AZ  85226-2416
                                    Attention:  Chief Executive Officer
                                    Facsimile:  602-705-2122
                                    Confirm:  602-705-2500

            If to the Executive:    Robert Carey
                                    13 Douglas Road
                                    Chelmsford, MA  01824-3812

            Notices shall be given to such other addressee or address, or both,
            or by way of such other facsimile transmission number, as a
            particular party may from time to time request by written notice to
            the other party to the Agreement. Each notice, request, demand,
            approval or other communication which is sent in accordance with
            this Section shall be deemed to be delivered, given and received for
            all purposes of this Agreement as of two (2) business days after the
            date of deposit thereof for mailing in a duly constituted U.S. post
            office or branch thereof, one (1) business day after deposit with a
            recognized overnight courier service or upon written confirmation of
            receipt of any facsimile transmission. Notice given to a party
            hereto by any other method shall only be deemed to be delivered,
            given and received when actually received in writing by such party.

                15.9. This Agreement shall inure to the benefit of and be
            binding upon the Company and the Executive and their respective
            heirs, personal representatives, successors and assigns.

               15.10. All claims, disputes and other matters in question arising
            out of, or relating to this Agreement, or the breach thereof, shall
            be decided by arbitration, pursuant to the Commercial rules
            established by the American Arbitration Association for the
            arbitration of such disputes, and such arbitration shall occur in
            Chandler, Arizona.

               15.11. This Agreement may be signed in multiple counterparts
            which when taken together shall constitute the entire Agreement.

               15.12.   This Agreement shall be governed and construed in
            accordance with the laws of the State of Arizona.

                                      -16-
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                             SPEEDFAM-IPEC, INC. an Illinois
                                                Corporation

                                             By /s/ Richard Faubert
                                                --------------------------------
                                                Richard Faubert, Chief
                                                Executive Officer

                                             Executive

                                             /s/ Robert Carey
                                             -----------------------------------
                                             Robert Carey

                                      -17-EXHIBIT 4.1

                                                                  EXECUTION COPY

                         POOLING AND SERVICING AGREEMENT
                          Dated as of November 30, 2001

                                 CITIBANK, N.A.
                                   as Trustee,

                              RAFC TRANSFEROR TRUST
                                 as Transferor,

                      RESIDENTIAL ASSET FUNDING CORPORATION
                                  as Depositor,

                           HOMEQ SERVICING CORPORATION
                                  as Servicer,

                                       and

                            FIRST UNION NATIONAL BANK
                   as Custodian and Certificate Administrator

        RAFC Trust 2001-1, RAFC Asset-Backed Certificates, Series 2001-1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Section                                                                                                         Page

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

ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND.................................................................26
   Section 2.01       Sale and Conveyance of Trust Fund;.........................................................26
   Section 2.02       Possession of Mortgage Files...............................................................26
   Section 2.03       Books and Records..........................................................................26
   Section 2.04       Delivery of Mortgage Loan Documents........................................................26
   Section 2.05       Acceptance of the Trust Fund; Certain Substitutions;
                      Certification by the Custodian.............................................................28
   Section 2.06       [Reserved].................................................................................30
   Section 2.07       Authentication of Certificates.............................................................30
   Section 2.08       Fees and Expenses of the Trustee, Certificate Administrator
                      and the Custodian..........................................................................30
   Section 2.09       Assignment Event...........................................................................31

ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................31
   Section 3.01       Representations of the Servicer, the Transferor and the Depositor..........................31
   Section 3.02       Purchase and Substitution..................................................................37

ARTICLE IV THE CERTIFICATES......................................................................................38
   Section 4.01       The Certificates...........................................................................38
   Section 4.02       Registration of Transfer and Exchange of Certificates......................................39
   Section 4.03       Mutilated, Destroyed, Lost or Stolen Certificates..........................................43
   Section 4.04       Persons Deemed Owners......................................................................43

ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.........................................................43
   Section 5.01       Duties of the Servicer.....................................................................43
   Section 5.02       Liquidation of Mortgage Loans..............................................................47
   Section 5.03       Establishment of Principal and Interest Account; Deposits in Principal
                      and Interest Account.......................................................................48
   Section 5.04       Permitted Withdrawals From the Principal and Interest Account..............................49
   Section 5.05       Payment of Taxes, Insurance and Other Charges..............................................50
   Section 5.06       Transfer of Principal and Interest Account.................................................51
   Section 5.07       Maintenance of Hazard Insurance............................................................51
   Section 5.08       Maintenance of Mortgage Impairment Insurance Policy........................................52
   Section 5.09       Fidelity Bond..............................................................................52
   Section 5.10       Title, Management and Disposition of REO Property..........................................53
   Section 5.11       Certain Tax Information....................................................................54
   Section 5.12       Collection of Certain Mortgage Loan Payments...............................................54
   Section 5.13       Access to Certain Documentation and Information Regarding the Mortgage
                      Loans......................................................................................54

</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                              <C>

   Section 5.14       Superior Liens.............................................................................54

ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS....................................................................55
   Section 6.01       Certificate Account........................................................................55
   Section 6.02       Expense Account............................................................................56
   Section 6.03       Investment of Accounts.....................................................................57
   Section 6.04       Flow of Funds..............................................................................58
   Section 6.05       Allocation of Realized Losses..............................................................61
   Section 6.06       Statements.................................................................................62
   Section 6.07       Advances by the Servicer...................................................................66
   Section 6.08       Compensating Interest......................................................................66
   Section 6.09       Reports of Foreclosure and Abandonment of Mortgaged Property...............................67
   Section 6.10       Supplemental Interest Account..............................................................67
   Section 6.11       Establishment of Servicing Account; Collection of Taxes, Assessments and
                      Similar Items..............................................................................68

ARTICLE VII GENERAL SERVICING PROCEDURE..........................................................................68
   Section 7.01       Assumption Agreements......................................................................68
   Section 7.02       Satisfaction of Mortgages and Release of Mortgage Files....................................69
   Section 7.03       Servicing Compensation.....................................................................71
   Section 7.04       Annual Statement as to Compliance..........................................................71
   Section 7.05       Annual Independent Public Accountants' Servicing Report....................................71
   Section 7.06       Trustee's and Certificate Administrator's Right to Examine Servicer
                      Records and Audit Operations...............................................................72
   Section 7.07       Reports to the Trustee; Principal and Interest Account Statements..........................72
   Section 7.08       Administration of Cap Agreement............................................................72

ARTICLE VIII [RESERVED]..........................................................................................73

ARTICLE IX THE SERVICER..........................................................................................73
   Section 9.01       Indemnification; Third Party Claims........................................................73
   Section 9.02       Merger or Consolidation of the Servicer....................................................73
   Section 9.03       Limitation on Liability of the Servicer and Others.........................................74
   Section 9.04       Servicer Not to Resign.....................................................................74
   Section 9.05       Appointment of Certificate Administrator...................................................74
   Section 9.06       Appointment of Special Servicer............................................................74

ARTICLE X DEFAULT................................................................................................75
   Section 10.01      Events of Default..........................................................................75
   Section 10.02      Certificate Administrator to Act; Appointment of Successor.................................76
   Section 10.03      Waiver of Defaults.........................................................................78
   Section 10.04      Control by Majority Certificateholders.....................................................78

ARTICLE XI TERMINATION...........................................................................................79
   Section 11.01      Termination................................................................................79
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                              <C>
   Section 11.02      Termination Upon Loss of REMIC Status......................................................80
   Section 11.03      Additional Termination Requirements........................................................81
   Section 11.04      Accounting Upon Termination of Servicer....................................................82

ARTICLE XII THE TRUSTEE..........................................................................................82
   Section 12.01      Duties of the Trustee......................................................................82
   Section 12.02      Certain Matters Affecting the Trustee......................................................83
   Section 12.03      Trustee Not Liable for Certificates or Mortgage Loans......................................85
   Section 12.04      Trustee May Own Certificates...............................................................85
   Section 12.05      Seller to Pay Trustee's, Certificate Administrator's and Custodian's Fees
                      and Expenses...............................................................................85
   Section 12.06      Eligibility Requirements for Trustee.......................................................86
   Section 12.07      Resignation and Removal of the Trustee.....................................................86
   Section 12.08      Successor Trustee..........................................................................87
   Section 12.09      Merger or Consolidation of the Trustee.....................................................87
   Section 12.10      Appointment of Co-Trustee or Separate Trustee..............................................88
   Section 12.11      Authenticating Agent.......................................................................89
   Section 12.12      Tax Returns and Reports....................................................................89
   Section 12.13      Appointment of Custodian...................................................................90
   Section 12.14      Protection of Trust Fund...................................................................91
   Section 12.15      Calculation of LIBOR.......................................................................92

ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................93
   Section 13.01      Acts of Certificateholders.................................................................93
   Section 13.02      Amendment..................................................................................93
   Section 13.03      Recordation of Agreement...................................................................94
   Section 13.04      Duration of Agreement......................................................................94
   Section 13.05      Governing Law..............................................................................94
   Section 13.06      Notices....................................................................................94
   Section 13.07      Severability of Provisions.................................................................95
   Section 13.08      No Partnership.............................................................................95
   Section 13.09      Counterparts...............................................................................95
   Section 13.10      Successors and Assigns.....................................................................95
   Section 13.11      Headings...................................................................................95
   Section 13.12      Paying Agent...............................................................................95
   Section 13.13      Notification to Rating Agencies............................................................96
   Section 13.14      Third Party Rights.........................................................................96

</TABLE>

EXHIBIT A                  Contents of Mortgage File
EXHIBIT B                  Forms of Certificates
EXHIBIT C                  Resale Certification
EXHIBIT D-1                Form of Custodian Initial Certification
EXHIBIT D-2                Form of Custodian Interim Certification
EXHIBIT D-3                Form of Custodian Final Certification
EXHIBIT E                  Mortgage Loan Schedule
EXHIBIT F                  Request for Release of Documents

                                      iii

<PAGE>

EXHIBIT G                  Transfer Affidavit
EXHIBIT H                  Form of Liquidation Report
EXHIBIT I                  Form of Delinquency Report
EXHIBIT J                  Servicer's Monthly Computer Tape Format
EXHIBIT K                  Form of SI Trust Certificate

                                       iv

<PAGE>

         Pooling and Servicing Agreement dated as of November 30, 2001 among
Citibank, N.A., as Trustee (the "Trustee"), First Union National Bank, as
Custodian and Certificate Administrator (the "Custodian" and the "Certificate
Administrator"), RAFC Transferor Trust, as Transferor (the "Transferor"),
Residential Asset Funding Corporation, as Depositor (the "Depositor") and HomEq
Servicing Corporation, as Servicer (the "Servicer").

                              PRELIMINARY STATEMENT

         The Trustee shall elect that two segregated asset pools within the
Trust Fund be treated for federal income tax purposes as comprising two REMICs
(each a "REMIC" or, in the alternative, the Lower Tier REMIC and the Upper Tier
REMIC, respectively). Each Certificate, other than the Class R Certificates,
represents ownership of a regular interest in the Upper Tier REMIC for purposes
of the REMIC Provisions. The Class R Certificate represents ownership of the
sole class of residual interest in each of the Lower Tier REMIC and the Upper
Tier REMIC for purposes of the REMIC Provisions. The Startup Day for each REMIC
described herein is the Closing Date. The latest possible maturity date for each
Certificate is the Final Scheduled Distribution Date. The Upper Tier REMIC shall
hold as assets the several classes of uncertificated Lower Tier Regular
Interests, set out below. Each such Lower Tier Regular Interest is hereby
designated as a regular interest in the Lower Tier REMIC. Class LT-A1, Class
LT-A2, Class LT-A3, Class LT-M1, Class LT-M2, Class LT-B1 and Class LT-B2 are
hereby designated the LT Accretion Directed Classes.

<TABLE>
<CAPTION>
                                                                                                   CORRESPONDING
        LOWER TIER              LOWER TIER                   INITIAL LOWER TIER                      UPPER TIER
    CLASS DESIGNATION         INTEREST RATE                   PRINCIPAL AMOUNT                      REMIC CLASS
    -----------------         -------------                  ------------------                    -------------
<S>                                <C>          <C>                                                     <C>
Class LT-A1                        (1)          1/2 initial Corresponding Upper Tier REMIC              A-1
                                                initial principal balance
Class LT-A2                        (1)          1/2 initial Corresponding Upper Tier REMIC              A-2
                                                initial principal balance
Class LT-A3                        (1)          1/2 initial Corresponding Upper Tier REMIC              A-3
                                                initial principal balance
Class LT-M1                        (1)          1/2 initial Corresponding Upper Tier REMIC              M-1
                                                initial principal balance
Class LT-M2                        (1)          1/2 initial Corresponding Upper Tier REMIC              M-2
                                                initial principal balance
Class LT-B1                        (1)          1/2 initial Corresponding Upper Tier REMIC              B-1
                                                initial principal balance
 Class LT-B2                       (1)          1/2 initial Corresponding Upper Tier REMIC              B-2
                                                initial principal balance
Class LT-Accrual                   (1)          1/2 Pool Balance plus1/2Subordinated Amount
Class LT-R                         (2)          (2)

</TABLE>

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

<PAGE>

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

         The Lower Tier REMIC shall hold as assets all of the assets included in
the Trust Fund, the Supplemental Interest Account, and the Lower Tier Regular
Interests.

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

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

<TABLE>
<CAPTION>

          UPPER TIER                UPPER TIER INTEREST          INITIAL UPPER TIER      CORRESPONDING
      CLASS DESIGNATION                    RATE                   PRINCIPAL AMOUNT        CERTIFICATE
      -----------------             -------------------          ------------------      -------------
<S>                                         <C>                  <C>                     <C>
Class A-1                                   (1)                  $     53,351,000        Class A-1
Class A-2                                   (2)                  $     85,000,000        Class A-2(10)
Class A-3                                   (3)                  $    564,106,000        Class A-3
Class M-1                                   (4)                  $     55,574,000        Class M-1
Class M-2                                   (5)                  $     44,459,000        Class M-2
Class B-1                                   (6)                  $     35,567,000        Class B-1
Class B-2                                   (7)                  $     42,236,000        Class B-2
Class X                                     (8)                               (8)        Class X(8)
Class UT-R                                  (9)                                          Class R
</TABLE>

<PAGE>

         (1) The Class A-1 Interests will bear interest during each Interest
Accrual Period at 1.96563% per annum.

         (2) The Class A-2 Interests will bear interest during each Interest
Accrual Period thereafter at a per annum rate equal to the least of (i) LIBOR
plus the Margin, (ii) the Pool Cap and (iii) 10.700%.

         (3) The Class A-3 Interests will bear interest at the lesser of (i)
5.115% per annum (or 5.615% per annum for each distribution date occurring after
the Optional Servicer Termination Date) and (ii) the Pool Cap.

         (4) The Class M-1 Interests will bear interest at the lesser of (i)
6.695% per annum (or 7.195% per annum for each distribution date occurring after
the Optional Servicer Termination Date) and (ii) the Pool Cap.

         (5) The Class M-2 Interests will bear interest at the lesser of (i)
7.050% per annum (or 7.550% per annum for each distribution date occurring after
the Optional Servicer Termination Date) and (ii) the Pool Cap.

         (6) The Class B-1 Interests will bear interest at the lesser of (i)
7.425% per annum (or 7.925% per annum for each distribution date occurring after
the Optional Servicer Termination Date) and (ii) the Pool Cap.

         (7) The Class B-2 Interests will bear interest at the lesser of (i)
8.500% per annum (or 9.000% per annum for each distribution date occurring after
the Optional Servicer Termination Date) and (ii) the Pool Cap.

         (8) The Class X Interest has an initial principal balance of
$8,892,900.18, but it will not accrue interest on such balance but will accrue
interest on a notional principal balance. As of any Distribution Date, the Class
X Interest shall have a notional principal balance equal to the aggregate of the
principal balances of the Lower Tier Regular Interests as of the first day of
the related Interest Accrual Period. With respect to any Interest Accrual
Period, the Class X Interest shall bear interest at a rate equal to the excess,
if any, of the WAC Cap over the product of (i) 2 and (ii) the weighted average
Pass-Through Rate of the Lower Tier REMIC Interests, where the LT Accrual Class
is subject to a cap equal to zero and each LT Accretion Directed Class is
subject to a cap equal to the Pass-Through Rate on its Corresponding Class. With
respect to any Distribution Date, interest that so accrues on the notional
principal balance of the Class X Interest shall be deferred in an amount equal
to any increase in the Subordinated Amount on such Distribution Date. Such
deferred interest shall not itself bear interest.

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

         (10) The Class A-2 Certificates will represent not only the ownership
of the Corresponding Class of Upper Tier Regular Interest but also the right to
receive payments from the Supplemental Interest Account as set forth in Section
6.06 hereof. For federal income tax purposes, the Trustee will treat a Class A-2
Certificateholder's right to receive payments from the Supplemental Interest
Account as payments made pursuant to an interest rate cap contract written by
the Holder of the SI Trust Certificate.

<PAGE>

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

                      The parties hereto agree as follows:

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

               Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings. This Agreement
relates to a Trust Fund evidenced by RAFC Trust 2001-1 Asset-Backed
Certificates, Series 2001-1, Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class B-1, Class B-2, Class X, and Class R Certificates. Unless otherwise
provided, all calculations of interest pursuant to this Agreement are based on a
360-day year and twelve 30-day months.

               ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, the lesser of:

               (1) the Overcollateralization Deficiency Amount for the
       Distribution Date, calculated for this purpose without giving effect to
       payment of the Accelerated Principal Distribution Amount and prior to
       taking into account the Applied Realized Loss Amount for the applicable
       Distribution Date; and

               (2) the remaining Interest Remittance Amount set forth in
       Section 6.04(a)(vii).

               ACCOUNTS: The Certificate Account, Expense Account, Supplemental
Interest Account or Servicing Accounts, established and held in trust by the
Certificate Administrator for the Certificateholders. The obligation to
establish and maintain the Accounts is not delegable.

               ACTUARIAL LOANS: Those Mortgage Loans that employ the actuarial
method of calculating interest thereon. The Mortgage Loan Schedule shall
identify which Mortgage Loans are Actuarial Loans.

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

               ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of
(i) 0.018% per annum, and (ii) the aggregate Class Principal Balances of the
Class A, Class M and Class B Certificates as of January 1 of each year, which is
computed and payable on a monthly basis and represents the estimated annual
Certificate Administrator Fee, Custodian Fee and the expenses of the Trust Fund.

               APPLIED REALIZED LOSS AMOUNT: For each Distribution Date, an
amount equal to the excess, if any, of:

               (A) the aggregate Certificate Balance of the Certificates after
all distributions of principal are made on such Distribution Date, over

               (B) the aggregate Principal Balance of the Loans as of the end of
the related Collection Period.

                                       1

<PAGE>

               ASSIGNMENT EVENT: The occurrence of any of the following: (i) an
Event of Default occurs and continues for 30 days; (ii) FUNB's long-term
unsecured debt rating is reduced below "A3" by Moody's, or "A-" by S&P; (iii)
the suspension, termination or withdrawal of FUNB's long-term unsecured debt
rating by Moody's; or (iv) FUNB is no longer acting as Custodian.

               ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
transfer or equivalent instrument sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the sale
of the Mortgage to the Trustee for the benefit of the Certificateholders.

               AUTHENTICATING AGENT: Initially, the Certificate Administrator,
and thereafter, any successor appointed pursuant to Section 12.11.

               AVAILABLE FUNDS: As to any Distribution Date, an amount equal to
the excess of (i) the sum of (a) the aggregate of the Monthly Payments due on
the related Due Date and received by the Trustee during the related Collection
Period, (b) Net Liquidation Proceeds, Insurance Proceeds, Principal Prepayments,
Substitution Adjustments, Compensating Interest, the purchase price for any
repurchased Mortgage Loan, the Termination Price with respect to the termination
of the Trust pursuant to Section 11.01 hereof and other unscheduled recoveries
of principal and interest (excluding prepayment penalties and amounts received
in respect of Arrearages) in respect of the Mortgage Loans during the related
Prepayment Period, (c) the aggregate of any amounts received in respect of an
REO Property and deposited in the Certificate Account for such Distribution
Date, and (d) the aggregate of any Advances made by the Servicer for such
Distribution Date over (ii) the sum of (a) amounts reimbursable or payable to
the Servicer pursuant to Section 6.07, (b) the Servicing Fee, and (c) amounts
deposited in the Principal and Interest Account or the Certificate Account, as
the case may be, in error.

               BIF: The Bank Insurance Fund, or any successor thereto.

               BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the States of California, Maryland,
New York or North Carolina are authorized or obligated by law or executive order
to be closed. When used with respect to an Interest Determination Date,
"Business Day" shall also mean a day on which banks are open for dealing in
foreign currency and exchange in London and New York City.

               CAP AGREEMENT: The Confirmation of Interest Rate Straddle
Transaction effective December 27, 2001, between Rabobank International New York
and the Trust.

               CERTIFICATE: Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class B-1, Class B-2, Class X or Class R Certificate executed by the
Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the forms annexed hereto in Exhibit B.

               CERTIFICATE ACCOUNT: As described in Section 6.01.

               CERTIFICATE ADMINISTRATOR: First Union National Bank, or its
successor in interest.

                                       2

<PAGE>

               CERTIFICATE ADMINISTRATOR FEE: As to each Mortgage Loan, the
annual fee payable to the Certificate Administrator. Such fee shall be
calculated and payable monthly and shall accrue at the rate of 0.01% per annum,
and shall be computed on the basis of the same principal amount and for the
period respecting which any related interest payment on such Mortgage Loan is
computed.

               CERTIFICATE ADMINISTRATOR'S REPORT: The report as defined in
Section 6.06.

               CERTIFICATE REGISTER: As described in Section 4.02.

               CERTIFICATE REGISTRAR: Initially, the Certificate Administrator,
and thereafter, any successor appointed pursuant to Section 4.02.

               CERTIFICATEHOLDER or HOLDER: Each Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Servicer, any
Subservicer, the Depositor or the Certificate Administrator or any affiliate of
any of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. When used with respect to
any Class of Certificates, a Certificateholder or Holder of such Class of
Certificates, as the case may be.

               CLASS: Collectively, Certificates having the same priority of
payment and bearing the same designation.

               CLASS A CERTIFICATE: A Certificate denominated as a Class A-1,
Class A-2 or Class A-3 Certificate.

               CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date and the Class A Certificates on or after the Stepdown Date on
which a Trigger Event is not in effect, the excess, if any, of (1) the aggregate
Class Principal Balance of the Class A Certificates immediately prior to such
Distribution Date, over (2) the lesser of (A) 58.00% of the outstanding
principal balance of the Mortgage Loans as of the last day of the related
Collection Period and (B) the outstanding principal balance of the Mortgage
Loans as of the last day of the related Collection Period minus 0.50% of the
aggregate principal balance of the Mortgage Loans as of the Cut-Off Date.

               CLASS A-1 CERTIFICATE: A Certificate denominated as a Class A-1
Certificate.

               CLASS A-1 PASS-THROUGH RATE: The Class A-1 Pass-Through Rate
shall be equal to the lesser of (i) 1.96563% per annum and (ii) the Pool Cap.

               CLASS A-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, the lesser of (x) the Class A Principal Distribution Amount and (y) the
related Class Principal Balance immediately prior to such Distribution Date.

                                       3

<PAGE>

               CLASS A-2 CERTIFICATE: A Certificate denominated as a Class A-2
Certificate.

               CLASS A-2 PASS-THROUGH RATE: The annual rate of interest payable
to the Class A-2 Certificateholders which shall be equal to the least of (i)
LIBOR plus the Margin, (ii) the Pool Cap and (iii) the Fixed Cap.

               CLASS A-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, until the Class Principal Balance of the Class A-1 Certificates have been
reduced to zero, zero, and thereafter, the lesser of (1) the product of (x) the
Class A Principal Distribution Amount and (y) the ratio of the Class A-2 Class
Principal Balance to the sum of the Class Principal Balances of the Class A-2
and Class A-3 Certificates (immediately prior to such Distribution Date) and (2)
the related Class Principal Balance immediately prior to such Distribution Date.

               CLASS A-3 CERTIFICATE: A Certificate denominated as a Class A-3
Certificate.

               CLASS A-3 PASS-THROUGH RATE: The annual rate of interest payable
to the Class A-3 Certificateholders which shall be equal to the lesser of (i)
5.115% (or 5.615% for each Distribution Date occurring after the Optional
Servicer Termination Date) and (ii) the Pool Cap.

               CLASS A-3 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, until the Class Principal Balance of the Class A-1 Certificates has been
reduced to zero, zero, and thereafter, the lesser of (1) the product of (x) the
Class A Principal Distribution Amount and (y) the ratio of the Class A-3
Principal Balance to the sum of the Class Principal Balances of the Class A-2
and Class A-3 Certificates (immediately prior to such Distribution Date) and (2)
the related Class Principal Balance immediately prior to such Distribution Date.

               CLASS B CERTIFICATE: A Certificate denominated as a Class B-1 or
Class B-2 Certificates.

               CLASS B-1 CERTIFICATE: A Certificate denominated as a Class B-1
Certificate.

               CLASS B-1 PASS-THROUGH RATE: The annual rate of interest payable
to the Class B-1 Certificateholders, which shall be equal to the lesser of (i)
7.425% (or 7.925% for each Distribution Date occurring after the Optional
Servicer Termination Date) and (ii) the Pool Cap.

               CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date on or after the Stepdown Date on which a Trigger Event is not in effect,
the lesser of (1) the excess, if any, of: (i) the sum of (A) the aggregate Class
Principal Balance of the Class A Certificates after giving effect to the payment
of the Class A Principal Distribution Amount on such Distribution Date, (B) the
aggregate Class Principal Balance of the Class M Certificates after given effect
to the payment of the Class M Principal Distribution Amount on such Distribution
Date, and (C) the Class Principal Balance of the Class B-1 Certificates
immediately prior to such Distribution Date, over (ii) the lesser of (A) 88.50%
of the outstanding principal balance of the Mortgage Loans as of the last day of
the related Collection Period, and (B) the outstanding principal balance of the

                                       4

<PAGE>

Mortgage Loans of the as of the last day of the related Collection Period minus
0.50% of the aggregate principal balance of the Mortgage Loans as of the Cut-Off
Date and (2) the related Class Principal Balance immediately prior to such
Distribution Date.

               CLASS B-2 CERTIFICATE: A Certificate denominated as a Class B-2
Certificate.

               CLASS B-2 PASS-THROUGH RATE: The annual rate of interest payable
to the Class B-2 Certificateholders, which shall be equal to the lesser of (i)
8.50% (or 9.00% for each Distribution Date occurring after the Optional Servicer
Termination Date) and (ii) the Pool Cap.

               CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date on or after the Stepdown Date on which a Trigger Event is not in effect,
the lesser of (1) the excess, if any, of: (i) the sum of (A) the aggregate Class
Principal Balance of the Class A Certificates after giving effect to the payment
of the Class A Principal Distribution Amount on such Distribution Date, (B) the
aggregate Class Principal Balance of the Class M Certificates after giving
effect to the payment of the Class M Principal Distribution Amount on such
Distribution Date, (C) the Class Principal Balance of the Class B-1 Certificates
after giving effect to the Class B-1 Principal Distribution Amount on such
Distribution Date, and (D) the Class Principal Balance of the Class B-1
Certificates immediately prior to such Distribution Date, over (ii) the lesser
of (A) 98.00% of the outstanding principal balance of the Mortgage Loans as of
the last day of the related Collection Period, and (B) the outstanding principal
balance of the Mortgage Loans of the as of the last day of the related
Collection Period minus 0.50% of the aggregate principal balance of the Mortgage
Loans as of the Cut-Off Date and (2) the related Class Principal Balance
immediately prior to such Distribution Date.

               CLASS M CERTIFICATE: A Certificate denominated as a Class M-1 or
Class M-2 Certificate.

               CLASS M-1 CERTIFICATE: A Certificate denominated as a Class M-1
Certificate.

               CLASS M-1 PASS-THROUGH RATE: The annual rate of interest payable
to the Class M-1 Certificateholders, which shall be equal to the lesser of (i)
6.695% (or 7.195%for each Distribution Date occurring after the Optional
Servicer Termination Date) and (ii) the Pool Cap.

               CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date on or after the Stepdown Date on which a Trigger Event is not in effect,
the lesser of (1) the excess, if any, of (i) the sum of (A) the Class Principal
Balance of the Class A Certificates after giving effect to the payment of Class
A Principal Distribution Amount on such Distribution Date and (B) the Class
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date, over (ii) the lesser of (A) 70.50% of the outstanding
principal balance of the Mortgage Loans as of the last day of the related
Collection Period, and (B) the outstanding principal balance of the Mortgage
Loans as of the last day of the related Collection Period minus 0.50% of the
aggregate principal balance of the Mortgage Loans, as of the Cut-Off Date and
(2) the related Class Principal Balance immediately prior to such Distribution
Date.

                                       5

<PAGE>
               CLASS M-2 CERTIFICATE: A Certificate denominated as a Class M-2
Certificate.

               CLASS M-2 PASS-THROUGH RATE: The annual rate of interest payable
to the Class M-2 Certificateholders, which shall be equal to the lesser of (i)
7.050% (or 7.550% plus 0.50% for each Distribution Date occurring after the
Optional Servicer Termination Date) and (ii) the Pool Cap.

               CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date on or after the Stepdown Date on which a Trigger Event is not in effect,
the lesser of (1) the excess, if any, of (i) the sum of (A) the Class Principal
Balance of the Class A Certificates after giving effect to the payment of the
Class A Principal Distribution Amount on such Distribution Date, (B) the Class
Principal Balance of the Class M-1 Certificates after giving effect to the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date, and (C) the Class Principal Balance of the Class M-2 Certificates
immediately prior to the such Distribution Date, over (ii) the lesser of (A)
80.50% of the outstanding principal balance of the Mortgage Loans as of the last
day of the related Collection Period and (B) the outstanding principal balance
of the Mortgage Loans as of the last day of the related Collection Period minus
0.50% of the aggregate principal balance of the Mortgage Loans as of the Cut-Off
Date and (2) the related Class Principal Balance immediately prior to such
Distribution Date.

               CLASS PRINCIPAL BALANCE: With respect to each Class of
Certificates, as of any date of determination, the Original Principal Balance of
such Class less (i) the sum of all amounts previously distributed to the
Certificateholders of such Class in respect of principal and (ii) the amount, if
any, of Applied Realized Loss Amounts previously allocated to such Class. For
purposes of determining the Class Principal Balance of each Class of
Certificates, with respect to any Distribution Date, no effect shall be given to
any principal to be distributed or Applied Realized Loss Amounts, to each such
Class on such Distribution Date.

               CLASS R CERTIFICATE: A Certificate denominated as a Class R
Certificate, representing a residual interest in the REMIC.

               CLASS X CERTIFICATE: A Certificate denominated as a Class X
Certificate.

               CLOSING DATE: December 27, 2001.

               CODE: The Internal Revenue Code of 1986, as amended, or any
successor legislation thereto.

               COLLECTION PERIOD: With respect to each Distribution Date, the
period from the second day of the calendar month preceding the month in which
such Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.

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

                                       6
<PAGE>

              LOWER TIER                UPPER TIER              CORRESPONDING
           CLASS DESIGNATION             INTEREST                CERTIFICATE
           -----------------            ----------              -------------
              Class LT-A1                Class A-1                Class A-1
              Class LT-A2                Class A-2                Class A-2
              Class LT-A3                Class A-3                Class A-3
              Class LT-M1                Class M-1                Class M-1
              Class LT-M2                Class M-2                Class M-2
              Class LT-B1                Class B-1                Class B-1
              Class LT-B2                Class B-2                Class B-2

               COMPENSATING INTEREST: As defined in Section 6.08.

               CUMULATIVE REALIZED LOSSES: As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans since the
Startup Day.

               CURRENT INTEREST: For each Class of Certificates and with respect
to each Distribution Date, the amount equal to interest during the related
Interest Accrual Period at the related Class Pass-Through Rate, on the Class
Principal Balance for such Class outstanding immediately prior to such
Distribution Date. The Current Interest for any Class of Certificates shall not
include any Supplemental Interest Amount.

               CURTAILMENT: With respect to a Mortgage Loan, any payment of
principal received during a Collection Period as part of a payment that is in
excess of five times the amount of the Monthly Payment due for such Collection
Period and which is not intended to satisfy the Mortgage Loan in full, nor is
intended to cure a delinquency.

               CUSTODIAN: First Union National Bank, and any successor thereto.

               CUSTODIAN FEE: As to each Mortgage Loan, the annual fee payable
to the Custodian. Such fee shall be calculated and payable monthly and shall
accrue at the rate of 0.008 % per annum, and shall be computed on the basis of
the same principal amount and for the period respecting which any related
interest payment on such Mortgage Loan is computed.

               CUT-OFF DATE: November 30, 2001.

               DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the
related Mortgagor has failed to pay in full three or more consecutive Monthly
Payments.

               DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code, as amended from time to time (11 U.S.C.).

               DELETED MORTGAGE LOAN: A Mortgage Loan replaced by a Qualified
Substitute Mortgage Loan.

                                       7

<PAGE>

               DEPOSITORY: The Depository Trust Company and any successor
Depository hereafter named.

               DESIGNATED DEPOSITORY INSTITUTION: With respect to the Principal
and Interest Account, an entity which is an institution whose deposits are
insured by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "AA-" or
better by S&P and "A2" or better by Moody's, and in the highest short-term
ratings by S&P and Moody's, and which is either (i) a federal savings
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, or (iv) a principal subsidiary of a
bank holding company, in each case acting or designated by the Servicer as the
depository institution for a Principal and Interest Account.

               DETERMINATION DATE: That day of each month which is the later of
(i) the third Business Day prior to the 25th day of such month and (ii) the
seventh Business Day of such month.

               DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class A, Class M or Class B
Certificates from time to time as a securities depository.

               DISTRIBUTION DATE: The 25th day of any month or if such 25th day
is not a Business Day, the first Business Day immediately following, commencing
in January 2002.

               DUE DATE: The day of the month on which the Monthly Payment is
due from the Mortgagor on a Mortgage Loan.

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

               EVENT OF DEFAULT: As described in Section 10.01.

               EXCESS PAYMENTS: With respect to a Collection Period, any amounts
received on a Mortgage Loan in excess of the Monthly Payment due on the Due Date
relating to such Collection Period which does not constitute either a
Curtailment or a Principal Prepayment or payment with respect to an overdue
amount. Excess Payments are payments of principal for purposes of this
Agreement.

               EXCESS PROCEEDS: As of any Distribution Date, with respect to any
Liquidated Mortgage Loan, the excess, if any, of (a) the total Net Liquidation
Proceeds, over (b) the Principal Balance of such Mortgage Loan as of the date
such Mortgage Loan became a Liquidated Mortgage Loan plus 30 days interest
thereon at the applicable Mortgage Interest Rate.

               EXCESS SPREAD: With respect to any Distribution Date, an amount
equal to the excess of (A) the product of (i) the aggregate Principal Balances
of Mortgage Loans as of the first day of

                                       8

<PAGE>

the immediately preceding Collection Period and (ii) one-twelfth of the weighted
average Mortgage Interest Rate for the Mortgage Loans, as the case may be, as of
the first day of the related Collection Period over (B) the sum of (i) the
Current Interest for the Certificates for such Distribution Date, (ii) amounts
to be deposited into the Expense Account on such Distribution Date pursuant to
Section 6.02(a)(i) and (iii) the Servicing Fee for the Mortgage Loans with
respect to such Distribution Date.

               EXPENSE ACCOUNT: The expense account established and maintained
by the Trustee in accordance with Section 6.02 hereof.

               FANNIE MAE: Fannie Mae (formerly, the Federal National Mortgage
Association) and any successor thereto.

               FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.

               FHA: The Federal Housing Administration, and its successors in
interest.

               FIDELITY BOND: As described in Section 5.09.

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

<TABLE>
<CAPTION>

                                                                                              FINAL SCHEDULED
                                                                                             DISTRIBUTION DATE
                                                                                             -----------------
<S>                                                                                           <C>
Class A-1 Certificates..........................................................              December 25, 2002
Class A-2 Certificates..........................................................              November 25, 2029
Class A-3 Certificates......................................................                  November 25, 2029
Class M-1 Certificates..........................................................                  June 25, 2032
Class M-2 Certificates..........................................................                  June 25, 2032
Class B-1 Certificates..........................................................                  June 25, 2032
Class B-2 Certificates......................................................                      June 25, 2032
Class X Certificates............................................................                  June 25, 2032
Class R Certificates............................................................                  June 25, 2032

</TABLE>

               FIXED CAP: With respect to the Class A-2 Certificates, 10.70% per
annum.

               FREDDIE MAC: Freddie Mac (formerly, the Federal Home Loan
Mortgage Corporation) and any successor thereto.

               FUNB: First Union National Bank, a national banking association
headquartered in Charlotte, North Carolina, and any successor thereto.

               HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories
or more in which individual fee title is held to the interior space only and all
other elements of the structure and land are held in undivided common ownership.

                                       9

<PAGE>

               HOMEQ: HomEq Servicing Corporation (formerly known as TMS
Mortgage, Inc.), and any successors thereto.

               HUD: The United States Department of Housing and Urban
Development, and its successor in interest.

               INDEX: Either the LIBOR Index or the Treasury Index, as the case
may be.

               INDIRECT PARTICIPANT: Any financial institution for whom any
Direct Participant holds an interest in any Certificate.

               INSURANCE PROCEEDS: With respect to any Mortgage Loan, proceeds
paid (i) to the Trustee or the Servicer by any insurer pursuant to any insurance
policy covering a Mortgage Loan, Mortgaged Property, or REO Property, including
but not limited to title, hazard, life, health and/or accident insurance
policies, and/or (ii) by the Servicer pursuant to Section 5.08, in either case,
net of any expenses which are incurred by the Servicer in connection with the
collection of such proceeds and not otherwise reimbursed to the Servicer.

               INTEREST ACCRUAL PERIOD: With respect to the Class A-1 and Class
A-2 Certificates, initially, the period commencing on the Closing Date and
ending on the day immediately preceding the first Distribution Date, and
thereafter, the period commencing on a Distribution Date and ending on the day
immediately preceding the next Distribution Date. With respect to all other
Classes of Certificates, initially, the period commencing on the Closing Date
and ending on the last day of the prior calendar month, and thereafter, the
calendar month prior to the related Distribution Date. Interest accrued on the
Class A-1 and Class A-2 Certificates shall be calculated on the basis of the
actual number of days in the accrual period and a 360 day year. Accrued interest
on all other Classes will be determined on the basis of a 30-day month in a 360
day year.

               INTEREST DETERMINATION DATE: The second LIBOR Determination Date
prior to any Interest Accrual Period (other than the first Interest Accrual
Period for which the LIBOR Determination Date shall be two Business Days prior
to the Closing Date).

               INTEREST REMITTANCE AMOUNT: For any Distribution Date, that
portion of Available Funds allocable to interest collected or advanced during
the related Collection Period.

               INTEREST SHORTFALL CARRYFORWARD AMOUNT: As of any Distribution
Date, the sum of (i) the amount, if any, by which (X) the sum of (a) the Current
Interest for such Class for such Distribution Date plus (b) the Interest
Shortfall Carryforward Amount for such Class as of the immediately preceding
Distribution Date exceeds (Y) the amount paid to the Certificateholders of such
Class on such Distribution Date with respect to interest and (ii) interest on
the amount determined pursuant to clause (i)(b) at the applicable Class
Pass-Through Rate calculated (x) with respect to the offered certificates (other
than with respect to the Class A-1 and Class A-2 Certificates) on the basis of a
360-day year consisting of twelve 30-day months and (y) with respect to the
Class A-1 and Class A-2 certificates, on the basis of the actual number of days
elapsed since the prior distribution date.

                                       10

<PAGE>

               LIBOR: The London Interbank Offered Rate for one-month U.S.
dollar deposits, determined on each Interest Determination Date as provided in
Section 12.15 hereof.

               LIBOR DETERMINATION DATE: A date which is both a Business Day and
a London Banking Day immediately prior to the commencement of each related
Interest Accrual Period.

               LIBOR INDEX: The London Interbank Offered Rate for one-month U.S.
dollar deposits.

               LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan or REO
Property as to which the Servicer has determined that all amounts which it
reasonably and in good faith expects to recover have been recovered from or on
account of such Mortgage Loan.

               LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds,
proceeds of any REO Disposition, amounts required to be deposited in the
Principal and Interest Account pursuant to Section 5.10 hereof, and any other
amounts received in connection with the liquidation of defaulted Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise.

               LOAN: A Mortgage Loan.

               LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, (i) the
sum of (a) the original principal balance of such Mortgage Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Mortgage Loan, minus (ii) that portion of the principal balance equal to the
amount of the premium for credit life insurance, if any, collected by the
Depositors, divided by (iii) the sum of (x) the lesser of (a) the value of the
related Mortgaged Property, based upon the appraisal made at the time of
origination of the Mortgage Loan, or (b) the purchase price of such Mortgaged
Property if the proceeds from such Mortgage Loan are used to acquire such
Mortgaged Property plus (y) in the case of a home improvement loan, the cost of
the home improvement up to 100% of such cost.

               LONDON BANKING DAY: Any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.

               LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or
less in which individual fee title is held to the interior space only and all
other elements of the structure and land are held in undivided common ownership.

               LOWER TIER REGULAR INTEREST: Each of the Class LT-A1, Class
LT-A2, Class LT-A3, Class LT-M1, Class LT-M-2, Class LT-B1, Class LT-B2 and
Class LT-Accrual Interests as described in the Preliminary Statement.

               LOWER TIER REMIC: As described in the Preliminary Statement

               MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of
Certificates evidencing in excess of 50% of the outstanding aggregate Class
Principal Balances of the Class A, Class M and Class B Certificates; provided,
however, that with respect to any action or event affecting fewer than all

                                       11

<PAGE>

Classes of Class A, Class M and Class B Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of such affected
Classes of Class A, Class M and Class B Certificates.

               MARGIN: For the Class A-2 Certificates, 0.390% per annum, or for
each Distribution Date occurring after the Optional Servicer Termination Date,
0.780% per annum.

               MIXED USE BUILDING: A building containing both residential
dwelling units and commercial use units, e.g., retail stores or office space.

               MONTHLY ADVANCE: An advance made by the Servicer pursuant to
Section 6.07 hereof.

               MONTHLY PAYMENT: The scheduled monthly payment of principal
and/or interest required to be made by a Mortgagor on the related Mortgage Loan,
as set forth in the related Mortgage Note.

               MOODY'S: Moody's Investors Service, Inc., or any successor
thereto.

               MORTGAGE: The mortgage, deed of trust or other instrument
creating a lien on the Mortgaged Property.

               MORTGAGE FILE: As described in Exhibit A.

               MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section
5.08.

               MORTGAGE INTEREST RATE: The fixed rate of interest borne by a
Mortgage Note, as shown on the Mortgage Loan Schedule.

               MORTGAGE LOAN: An individual mortgage loan which is transferred
pursuant to this Agreement to the Trustee, together with the rights and
obligations of a holder thereof and payments thereon and proceeds therefrom, the
Mortgage Loans subject to this Agreement being identified on the Mortgage Loan
Schedule delivered to the Custodian on behalf of the Trustee, and attached
hereto as Exhibit E.

               MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans delivered
to the Custodian on behalf of the Trustee, and attached hereto as Exhibit E,
such schedule identifying each Mortgage Loan by address of the Mortgaged
Property and the name of the Mortgagor and setting forth as to each Mortgage
Loan the following information: (i) the Principal Balance as of the close of
business on the Cut-Off Date, (ii) the account number, (iii) the original
principal amount, (iv) the Loan-to-Value Ratio as of the date of the origination
of the related Mortgage Loan, (v) the Due Date, (vi) the Mortgage Interest Rate,
(vii) the first Due Date, (viii) the Monthly Payment, (ix) the maturity date of
the Mortgage Note and (x) the remaining number of months to maturity as of the
Cut-Off Date.

                                       12

<PAGE>

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

               MORTGAGED PROPERTY: The underlying property securing a Mortgage
Loan, consisting of a fee simple estate in a single contiguous parcel of land
improved by a Residential Dwelling.

               MORTGAGED PROPERTY STATES: Any one of the 50 states and the
District of Columbia and Puerto Rico, where the Mortgaged Properties are
located.

               MORTGAGOR: The obligor on a Mortgage Note.

               MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily
Properties.

               MULTIFAMILY PROPERTY: A residential or mixed-use property, such
as rental apartment buildings or projects containing five or more units.

               NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.

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

               90 DAY DELINQUENT LOAN: With respect to any Distribution Date, a
Mortgage Loan with respect to which four consecutive Monthly Payments have not
been received by the Servicer as of the last day of the related Collection
Period unless, on or prior to the last day of the Collection Period in which the
fourth Monthly Payment is due, the Servicer has received from the related
Mortgagor an amount at least equal to one unpaid Monthly Payment.

               NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan, (i)
any Monthly Advance previously made and not reimbursed pursuant to Section 5.04
or 6.07, or (ii) a Servicing Advance or Monthly Advance proposed to be made in
respect of a Mortgage Loan or REO Property which, in the good faith business
judgment of the Servicer, will not or, in the case of a proposed advance, would
not be ultimately recoverable with respect to such Mortgage Loan pursuant to
Sections 5.04 or 6.07.

               OFFICER'S CERTIFICATE: A certificate delivered to the Trustee,
signed by the Chairman of the Board, the President, a Vice President or
Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant
Secretaries of an Depositor, the Servicer or the Seller, as required by this
Agreement.

               OPINION OF COUNSEL: A written opinion of counsel, who may,
without limitation, be counsel for the Seller or the Servicer, reasonably
acceptable to the Trustee of the Certificate Administrator, as the case may be,
and experienced in matters relating thereto; except that any opinion of counsel
relating to (a) the qualification of REMIC I as a REMIC or (b) compliance with
the REMIC Provisions, must be an opinion of counsel who (i) is in fact
independent of the Seller or the Servicer, (ii) does not have any direct

                                       13

<PAGE>

financial interest or any material indirect financial interest in the Seller or
the Servicer or in an affiliate thereof and (iii) is not connected with the
Seller or the Servicer as an officer, employee, director or person performing
similar functions.

               OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01
hereof.

               ORIGINAL CLASS A-1 PRINCIPAL BALANCE: $53,351,000.

               ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $85,000,000.

               ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $564,106,000.

               ORIGINAL CLASS B-1 PRINCIPAL BALANCE: $35,567,000.

               ORIGINAL CLASS B-2 PRINCIPAL BALANCE: $42,236,000.

               ORIGINAL CLASS M-1 PRINCIPAL BALANCE: $55,574,000.

               ORIGINAL CLASS M-2 PRINCIPAL BALANCE: $44,459,000.

               ORIGINAL PRINCIPAL BALANCE: With respect to each Class of
Certificates, the amount set forth for such Class under the definitions of
Original Class A-1 through and including Original Class M-2 Principal Balances
above.

               ORIGINATOR: First Union Home Equity Bank, N.A.

               OVERCOLLATERALIZATION AMOUNT: For any Distribution Date, the
excess, if any, of:

               (1) the aggregate Principal Balance of the Loans as of the last
day of the related Collection Period, over

               (2) the aggregate Class Principal Balances of the Certificates,
after taking into account all distributions of principal on that Distribution
Date.

               OVERCOLLATERALIZATION DEFICIENCY AMOUNT: For any Distribution
Date, the excess, if any, of:

               (1) the Targeted Overcollateralization Amount for that
Distribution Date, over

               (2) the then current Overcollateralization Amount after giving
effect to all payments previously made to the Certificates on that Distribution
Date.

               OVERCOLLATERALIZATION RELEASE AMOUNT: With respect to any
Distribution Date on or after the Stepdown Date on which a Trigger Event is not
in effect, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralization
Amount for such Distribution Date, assuming that 100% of the Principal
Remittance Amount is applied as a principal payment on the Certificates on such
Distribution Date, over (ii) the Targeted Overcollateralization Amount for such
Distribution Date. With respect to any Distribution Date on which a Trigger
Event is in effect or prior to the Stepdown Date, the Overcollateralization
Release Amount will be zero.

                                       14
<PAGE>

               OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to
which the related Mortgagor represented at the time of the origination of the
Mortgage Loan an intent to occupy as such Mortgagor's primary, secondary or
vacation residence.

               OWNER TRUSTEE: Wilmington Trust Company.

               PAYING AGENT: Initially, the Certificate Administrator, or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 13.12 hereof and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.

               PASS-THROUGH RATES: The collective reference to the Class A-1,
Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and Class B-2 Pass-Through
Rates.

               PERCENTAGE INTEREST: With respect to a Certificate other than a
Class X or Class R Certificate, the portion of the respective Class evidenced by
such Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Certificate and the denominator of which is the
Original Principal Balance of such Class. With respect to the Class X
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, which shall equal 100%. With respect to the Class R Certificates,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, which shall be 100%. The Certificates are
issuable only in the minimum Percentage Interest corresponding to a minimum
denomination of $25,000.00 and integral multiples of $1,000.00 in excess
thereof, except that one Certificate of each Class may be issued in a different
denomination.

               PERMITTED INSTRUMENTS: As used herein, Permitted Instruments
shall include the following:

               (a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the 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, FHA
debentures, Freddie Mac senior debt obligations, Federal Home Loan Bank
consolidated senior debt obligations, and Fannie Mae senior debt obligations,
but excluding any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;

               (b) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365 days) of
any bank or trust company incorporated under the laws of the United States or
any state thereof, provided that the short-term debt obligations of such bank or
trust company at the date of acquisition thereof have been rated "A-1" or better
by S&P and "P-1" or better by Moody's;

               (c) deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least $3,000,000 which

                                       15

<PAGE>

deposits are held only up to the limits insured by the BIF or SAIF administered
by the FDIC, provided that the unsecured long-term debt obligations of such bank
or savings and loan association have been rated "BBB" or better by S&P and
"Baa3" or better by Moody's;

               (d) commercial paper (having original maturities of not more than
365 days) rated "A-1" or better by S&P and "P-1" or better by Moody's;

               (e) debt obligations rated "AAA" by S&P and "Aaa" by Moody's
(other than any such obligations that do not have a fixed par value and/or whose
terms do not promise a fixed dollar amount at maturity or call date);

               (f) investments in money market funds (including those funds
managed or advised by the Trustee or an affiliate thereof) rated "AAA" or better
by S&P, or "Aaa" or better by Moody's the assets of which are invested solely in
instruments described in clauses (a)-(e) above;

               (g) guaranteed investment contracts or surety bonds issued by or
reasonably acceptable to the Rating Agencies providing for the investment of
funds in an account or insuring a minimum rate of return on investments of such
funds, which contract or surety bond shall:

                   (i) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial strength or claims
paying ability are rated "AAA" by S&P and "Aaa" by Moody's; and

                   (ii) provide that the Trustee may exercise all of the rights
under such contract or surety bond without the necessity of the taking of any
action by the Seller or the Servicer;

               (h) A repurchase agreement that satisfies the following criteria:

                   (i) Must be between the Certificate Administrator and a
dealer bank or securities firm described in A. or B. below:

               A. Primary dealers on the Federal Reserve reporting dealer list
which are rated "A" or better by S&P and Moody's, or

               B. Banks rated "A" or above by S&P and Moody's

                   (ii) The written repurchase agreement must include the
following:

                        Securities which are acceptable for the transfer are:

               1. Direct U.S. governments, or

               2. Federal Agencies backed by the full faith and credit of the
U.S. government (and Fannie Mae & Freddie Mac)

                                       16

<PAGE>

               a. the term of the repurchase agreement may be up to 60 days

               b. the collateral must be delivered to the Certificate
     Administrator or third party custodian acting as agent for the Certificate
     Administrator by appropriate book entries and confirmation statements must
     have been delivered before or simultaneous with payment (perfection by
     possession of certificated securities)

     Valuation of collateral: The securities must be valued weekly,
     marked-to-market at current market price plus accrued interest. The value
     of the collateral must be equal to at least 104% of the amount of cash
     transferred by the Certificate Administrator or custodian for the
     Certificate Administrator to the dealer bank or security firm under the
     repurchase agreement plus accrued interest. If the value of securities held
     as collateral slips below 104% of the value of the cash transferred by the
     Certificate Administrator plus accrued interest, then additional cash
     and/or acceptable securities must be transferred. If, however, the
     securities used as collateral are Fannie Mae or Freddie Mac, then the value
     of collateral must equal at least 105%.

               PERMITTED TRANSFEREE: Any Person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in Code Section 521) which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in Code Section 860E(c)(1))
with respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C), (v) a Person other than a
"United States Person" as defined in Code Section 7701(a)(30), unless the
Servicer consents in writing to the Transfer to such Person and (vi) any other
Person so designated by the Servicer based upon an Opinion of Counsel that the
transfer of a Percentage Interest in a Class R Certificate to such Person may
cause the Trust Fund to fail to qualify as a REMIC at any time that the
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Code Section
7701 or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of Freddie Mac, a majority of its board of directors is not
selected by such governmental unit.

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

               PLAN: As described in Section 4.02(i).

               POOL CAP: As to any Distribution Date, the weighted average of
the net mortgage interest rates (for each Mortgage Loan, the applicable Interest
Rate less the sum of the Servicing Fee, the Certificate Administrator Fee and
the Custodian Fee), weighted on the basis of the Mortgage Loan Principal
Balances as of the first day of the related Collection Period.

                                       17
<PAGE>

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

               PRINCIPAL AND INTEREST ACCOUNT: The principal and interest
account established by the Servicer pursuant to Section 5.03 hereof.

               PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property, at any date of determination, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut-Off Date or as of the applicable
substitution date relative to Qualified Substitute Mortgage Loans, after
application of principal payments received on or before such date, minus (ii)
the sum of (a) the principal portion of the Monthly Payments received during
each Collection Period ending prior to the most recent Distribution Date, which
were distributed pursuant to Section 6.04 on any previous Distribution Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property to the extent applied by the Servicer as recoveries
of principal in accordance with the provisions hereof, which were distributed
pursuant to Section 6.04 on any previous Distribution Date.

               PRINCIPAL DISTRIBUTION AMOUNT: For each Distribution Date, the
sum of (i) the Principal Remittance Amount minus the Overcollateralization
Release Amount, if any, and (ii) the Accelerated Principal Distribution Amount.

               PRINCIPAL REMITTANCE AMOUNT: For each Distribution Date, the sum
(less reimbursement of Servicing Advances), without duplication, with respect to
the Mortgage Loans and the immediately preceding Collection Period, of

               (1) each scheduled payment of principal received by the Servicer
         on or prior to the Determination Date, including any advances with
         respect thereto,

               (2) all full and partial principal Prepayments received by the
         Servicer during the related Prepayment Period,

               (3) the principal portion of all insurance proceeds, released
         mortgaged property proceeds and Net Liquidation Proceeds received by
         the Servicer during the related Prepayment Period,

               (4) that portion of the purchase price for any Loan purchased
         during the related prepayment period by the seller which represents
         principal,

               (5) any substitution adjustments, received on or prior to the
         previous Determination Date and not yet distributed, and

               (6) any proceeds representing principal received by or on behalf
         of the Trustee in connection with the liquidation or termination of the
         Trust Fund.

               PRINCIPAL PREPAYMENT: Any payment or other recovery of principal
on a Mortgage Loan equal to the outstanding principal balance thereof, received
in advance of the final scheduled Due Date which is intended to satisfy a
Mortgage Loan in full.

                                       18

<PAGE>

               PRIOR LIEN: With respect to any Mortgage Loan which is not a
first priority lien, each mortgage loan relating to the corresponding Mortgaged
Property having a higher priority lien.

               PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the
meaning set forth from time to time in the definition thereof at Section
860F(a)(2) of the Code (or any successor statute thereto).

               PUD AND DE MINIMIS PUD: A planned unit development in which
individual fee title is held to the interior and exterior of the units and
underlying land and common areas, recreational facilities and streets are held
in undivided common ownership.

               PURCHASE AGREEMENT: The Loan Purchase Agreement, dated as of
November 30, 2001, between the Seller and the Transferor.

               QUALIFIED MORTGAGE: "Qualified mortgage" shall have the meaning
set forth from time to time in the definition thereof at Section 860G(a)(3) of
the Code (or any successor statute thereto).

               QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage
loans substituted for a Deleted Mortgage Loan pursuant to Section 2.05 or 3.02
hereof, which (i) has or have a mortgage interest rate or rates of not less than
(and not more than two percentage points more than) the Mortgage Interest Rate
for the Deleted Mortgage Loan, (ii) relates or relate to the same type of
Residential Dwelling or Multifamily Property, as the case may be, as the Deleted
Mortgage Loan, (iii) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (iv) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value Ratio of the Deleted Mortgage Loan at such time, (v) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance (prior to the occurrence of Realized Losses) of the Deleted
Mortgage Loan as of such date, (vi) with respect to each Deleted Mortgage Loan
that is a first lien mortgage loan, is a first lien mortgage loan, (vii)
satisfies or satisfy the criteria set forth from time to time in the definition
of a "qualified replacement mortgage" at Section 860G(a)(4) of the Code (or any
successor statute thereto), and (viii) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01(b)
and 3.02.

               RATING AGENCIES: S&P and Moody's.

               REALIZED LOSS: With respect to each Liquidated Mortgage Loan, an
amount (not less than zero or greater than the related outstanding Principal
Balance as of the date of the final liquidation) equal to the outstanding
Principal Balance of the Mortgage Loan as of the date of such liquidation, minus
the Net Liquidation Proceeds relating to such Liquidated Mortgage Loan (such Net
Liquidation Proceeds to be applied first to the Principal Balance of the
Liquidated Mortgage Loan and then to interest thereon). With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, the
Realized Loss shall be calculated as the difference between the Principal
Balance of the Mortgage Loan immediately prior to such Deficient Valuation and
the Principal Balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to any Mortgage Loan made to a Mortgagor who has filed a
petition in bankruptcy under the United States Bankruptcy Code, as amended from

                                       19

<PAGE>

time to time (11 U.S.C.), a Realized Loss shall be deemed to have occurred
whenever a withdrawal is made from the Principal and Interest Account in respect
of such Mortgage Loan pursuant to Section 5.04(c), and shall be equal to the
amount of such withdrawal.

               RECORD DATE: With respect to any Distribution Date, the close of
business on the last day of the month immediately preceding the month of the
related Distribution Date.

               REFERENCE BANKS: Leading banks selected by the Certificate
Administrator and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which have been designated by the Certificate Administrator to the
Servicer and (iii) which are not affiliates of FUNB.

               REGISTRATION STATEMENT: The registration statement (File No.
333-53168) filed with the Securities and Exchange Commission in connection with
the issuance and sale of the Certificates, including the Prospectus dated
October 29, 2001 and the Prospectus Supplement dated December 19, 2001.

               REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer with respect to (i) the payment of any tax reimbursable
pursuant to Section 5.01(h), (ii) the Monthly Advances and Servicing Advances
reimbursable pursuant to Section 5.04(b), (iii) any advances reimbursable
pursuant to Section 9.01 and not previously reimbursed pursuant to Section
6.02(c)(i), and (iv) any other amounts reimbursable to the Servicer prior to a
distribution to the Class R Certificateholders pursuant to this Agreement.

               RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan,
proceeds received by the Servicer in connection with (a) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(b) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise, which are not
released to the Mortgagor in accordance with applicable law, the Servicer's
customary second mortgage servicing procedures and this Agreement.

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

               REMIC CHANGE OF LAW: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.

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

                                       20
<PAGE>

               REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure. The proceeds of any REO Disposition constitute part of the
definition of Liquidation Proceeds.

               REO PROPERTY: As described in Section 5.10.

               REPRESENTATION LETTER: The Letter of Representations executed by
the Depositor, the Trustee and the Depository with respect to the Class A, Class
M and Class B Certificates.

               RESIDENTIAL DWELLING: Any one or more of the following, (i)
Single Family Detached House, (ii) Row House, (iii) Two-Family House, (iv)
Low-Rise Condominium, (v) PUD and De Minimis PUD, (vi) Three- or Four-Family
House, (vii) High-Rise Condominium, (viii) Mixed Use Building or (ix)
manufactured home (as defined in Fannie Mae/Freddie Mac Seller-Servicers' Guide)
to the extent that it constitutes real property in the state in which it is
located.

               RESIDUAL CERTIFICATES: As specified in the Preliminary Statement.

               RESPONSIBLE OFFICER: When used with respect to the Trustee, the
Certificate Administrator or the Custodian, (a) any officer assigned to the
Corporate Trust Department, including any Vice President, Assistant Vice
President, any Assistant Secretary, any trust officer or any other officer of
the Trustee or the Certificate Administrator, as applicable, customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject, and (b) who shall have responsibility
for the administration of this Agreement. When used with respect to an Depositor
or any other person, any Vice President, Assistant Vice President, the
Treasurer, or any Secretary or Assistant Secretary.

               ROW HOUSE: A single family dwelling unit attached to another
dwelling unit by common walls.

               SAIF: The Savings Association Insurance Fund, or any successor
thereto.

               SELLER: First Union National Bank.

               SENIOR ENHANCEMENT PERCENTAGE: For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class Principal
Balance of the Class M and Class B Certificates and (ii) the
Overcollateralization Amount, in each case before taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the aggregate Principal Balance of the Mortgage Loans as of the last day of
the related Collection Period.

               SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: On any date of
determination thereof, 42.00%.

                                       21
<PAGE>

               SERVICER: HomEq Servicing Corporation, a New Jersey corporation,
and its successors and assigns as Servicer hereunder.

               SERVICING ACCOUNT: The Servicing Account established and
maintained by the Servicer in accordance with Section 6.11 hereof. The Servicing
Account, and amounts deposited therein, shall not constitute part of the Trust
Fund and Certificateholders shall have no rights thereto.

               SERVICING ADVANCES: All reasonable and customary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Mortgage Interest Rate, except that any amount of such interest accrued
at a rate in excess of the weighted average Pass-Through Rate of the
Certificates, with respect to the Distribution Date on which the Net Liquidation
Proceeds will be distributed shall be reimbursable only from Excess Proceeds.

               SERVICING FEE: As to each Mortgage Loan, the annual fee payable
to the Servicer. Such fee shall be calculated and payable monthly only from the
amounts received in respect of interest on such Mortgage Loan, shall accrue at
the rate of 0.50% per annum for each first lien Mortgage Loan and 0.75% per
annum for each junior lien Mortgage Loan and shall be computed on the basis of
the same principal amount and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee is payable
solely from the interest portion of related (i) Monthly Payments, (ii)
Liquidation Proceeds or (iii) Released Mortgaged Property Proceeds collected by
the Servicer, or as otherwise provided in Section 5.04. The Servicing Fee
includes any servicing fees owed or payable to any Subservicer.

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

               SHORTFALL AMOUNTS: The sum of all amounts paid to the
Certificates with respect to all related: (x) Interest Shortfall Carryforward
Amounts for the Class M and Class B Certificates; and (y) Applied Realized Loss
Amounts.

               SI TRUST CERTIFICATE: The certificate, a form of which is
attached hereto as Exhibit K, representing ownership of the supplemental
interest trust created under Section 6.06 hereof.

                                       22
<PAGE>

               SIMPLE INTEREST LOANS: Those Mortgage Loans that employ the
simple interest method of calculating interest thereon. The Mortgage Loan
Schedule shall identify which Mortgage Loans are Simple Interest Loans.

               SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not
attached in any way to any other unit.

               SINGLE FAMILY LOANS: Mortgage Loans secured by Mortgaged Property
consisting of one-to-four family units.

               SIXTY-DAY DELINQUENCY RATIO: As of any Distribution Date and with
respect to each of the Mortgage Loans, a fraction, expressed as a percentage,
the numerator of which is the aggregate of the outstanding Principal Balances of
all Mortgage Loans that were delinquent 60 days or more as of the end of the
related Collection Period (including Loans in respect of which the related
borrower is in bankruptcy, the related real estate is in the process of
foreclosure or has been foreclosed upon but is still in inventory), and the
denominator of which is the sum of the Principal Balances of all the Mortgage
Loans as of the end of the related Collection Period.

               S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.

               STARTUP DAY: The Closing Date.

               STEPDOWN DATE: Means the later to occur of:

               (A) the earlier to occur of (i) the Distribution Date in January
         2005, and (ii) the Distribution Date on which the aggregate Class
         Principal Balance of the Class A-1, Class A-2 and Class A-3
         Certificates is reduced to zero;

               (B) the first Distribution Date on which the Senior Enhancement
         Percentage after taking into account distributions of principal to the
         Certificates on such Distribution Date, is greater than or equal to the
         Senior Specified Enhancement Percentage; and

               (C) the Distribution Date on which the aggregate Principal
         Balance of the Mortgage Loans is equal to or less than 50% of the
         aggregate Principal Balance as of the Cut-Off Date.

               SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.

               SUBSERVICING AGREEMENT: Any agreement between the Servicer and
any Subservicer relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee.

                                       23
<PAGE>

               SUBSTITUTION ADJUSTMENT: As to any date on which a substitution
occurs pursuant to Sections 2.05 or 3.02, the amount (if any) by which the
aggregate principal balances (after application of principal payments received
on or before the date of substitution) of any Qualified Substitute Mortgage
Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Mortgage Loans.

               SUPPLEMENTAL INTEREST ACCOUNT: The Account created pursuant to
Section 6.06 hereof.

               SUPPLEMENTAL INTEREST AMOUNTS: For any Distribution Date and the
Class A-2 Certificates, the sum of (i) if on such Distribution Date the Class
A-2 Pass-Through Rate is based upon the Fixed Cap, the excess of (A) the amount
of interest such Class of Certificates would be entitled to receive on such
Distribution Date had interest been calculated at such Class' applicable
Pass-Through Rate without giving effect to the Fixed Cap, over (B) the amount of
interest such Class of Certificates will receive on such Distribution Date at
the Fixed Cap plus (ii) the unpaid portion of any such excess from prior
Distribution Dates (and interest thereon at the then applicable Pass-Through
Rate for such Class of Certificates, without giving effect to the Fixed Cap).

               TARGETED OVERCOLLATERALIZATION AMOUNT: As of the Distribution
Date, (x) prior to the Stepdown Date, 1.00% of the initial aggregate Principal
Balance of the Mortgage Loans as of the Cut-Off Date (y) on and after the
Stepdown Date, the greater of (A) approximately 2.00% of the aggregate Principal
Balance of the Mortgage Loans as of the last day of the related Collection
Period and (B) approximately 0.50% of the initial aggregate Principal Balance of
the Mortgage Loans and (2) upon the occurrence and during the continuance of a
Trigger Event, the Targeted Overcollateralization Amount will equal the lesser
of (1) the Targeted Overcollateralization Amount as of the immediately preceding
Distribution Date and (2) the then aggregate Principal Balance of the Mortgage
Loans.

               TAX MATTERS PERSON: The Person or Persons designated from time to
time to act as the "tax matters person" (within the meaning of the REMIC
Provisions) of REMIC I.

               TAX RETURN: 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 REMIC I due to their classification each as a REMIC
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 provision of federal, state or local tax laws.

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

               TERMINATION PRICE: The price defined in Section 11.01 hereof.

                                       24
<PAGE>

               THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under
one roof.

               TRANSFEROR: RAFC Transferor Trust, or its successor in interest.

               TREASURY INDEX: The applicable One-Year Constant Maturity
Treasury Index as published by the Federal Reserve Board on the applicable
Federal Reserve Board statistical Release No. H.15.

               TRIGGER EVENT: On a Distribution Date if (i) the Sixty-Day
Delinquency Ratio equals or exceeds 35% of the Senior Enhancement Percentage; or
(ii) if the aggregate amount of Realized Losses incurred since the Cut-Off Date
through the last day of the related Collection Period divided by the initial
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                                    Percentage
               ---------------------------------------------------------------
               January 25, 2005 to December 26, 2005                3.25%
               January 25, 2006 to December 26, 2006                4.25%
               January 25, 2007 to December 26, 2007                5.00%
               January 25, 2008 and thereafter                      5.25%

               TRUSTEE: Citibank, N.A., or its successor in interest, or any
successor appointed as herein provided.

               TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) the Mortgage Loans, together with the Mortgage Files relating
thereto and all proceeds thereof, (ii) such assets (including any Permitted
Instruments) as from time to time are identified as REO Property relating to
Mortgage Loans or are deposited in or constitute each Certificate Account,
Principal and Interest Account, and Expense Account, (iii) the rights of the
Trustee under all insurance policies with respect to the Mortgage Loans required
to be maintained pursuant to this Agreement and any related Insurance Proceeds,
(iv) Liquidation Proceeds (v) Released Mortgaged Property Proceeds, including
all earnings thereon and proceeds thereof and (vi) the Cap Agreement and the
Supplemental Interest Account.

               TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee
or the Custodian pursuant to Section 2.04.

               TWO FAMILY HOUSE: Two dwelling units under one roof.

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

               UPPER TIER REMIC: As described in the Preliminary Statement.

                                       25
<PAGE>

                                   ARTICLE II

                      SALE AND CONVEYANCE OF THE TRUST FUND

Section 2.01      Sale and Conveyance of Trust Fund;

                  The Transferor hereby sells, transfers, assigns, sets over and
conveys, without recourse, to the Depositor, all of its right, title and
interest in and to the Mortgage Loans and all other assets included or to be
included in the Trust Fund. Furthermore, the Depositor hereby sells, transfers,
assigns, sets over and conveys, without recourse, to the Trustee for the benefit
of the Certificateholders, all of its right, title and interest in and to the
Mortgage Loans and all other assets included or to be included in the Trust
Fund.

Section 2.02      Possession of Mortgage Files.

                  (a) Upon the issuance of the Certificates, the ownership of
each Mortgage Note, the Mortgage and the contents of the related Mortgage File
relating to the Mortgage Loans (other than the Reserve Amount) is vested in the
Trustee, for the benefit of the Certificateholders.

                  (b) Pursuant to Section 2.04, the Depositor has delivered or
caused to be delivered each Trustee's Mortgage File relating to the Mortgage
Loans to the Custodian on behalf of the Trustee.

Section 2.03      Books and Records.

                  The sale of each Mortgage Loan shall be reflected on the
balance sheets and other financial statements as a sale of assets by the
Transferor to the Depositor and by the Depositor to the Trustee. Each of the
Transferor and the Depositor shall maintain its books and records for each
Mortgage Loan which shall be clearly marked to reflect the ownership of each
Mortgage Loan by the Trustee for the benefit of the Certificateholders.

Section 2.04      Delivery of Mortgage Loan Documents.

                  The Transferor shall deliver to the Depositor, and the
Depositor contemporaneously with the delivery of this Agreement, shall deliver
or cause to be delivered to the Custodian, the following documents relating to
the Mortgage Loans:

                  (i) the original Mortgage Note, endorsed "Pay to the order of
holder" or "Pay to the order of Citibank, N.A., as Trustee of the RAFC
Asset-Backed Trust, Series 2001-1, relating to the RAFC Asset-Backed
Certificates, Series 2001-1" and signed, by facsimile or manual signature, in
the name of the Person delivering the note by a Responsible Officer, with all
prior and intervening endorsements showing a complete chain of endorsement from
the originator to such Person, or with respect to any lost Mortgage Note, an
original Lost Note Affidavit, together with a copy of the related Mortgage Note;
provided however, that ____ Mortgage Notes may be delivered to the Custodian no
later than 30 days after the Closing Date;

                                       26
<PAGE>

                  (ii) either: (1) the original Mortgage, with evidence of
recording thereon, (2) a copy of the Mortgage certified as a true copy by a
Responsible Officer of the Originator where the original has been transmitted
for recording until such time as the original is returned by the public
recording office or (3) a copy of the Mortgage certified by the public recording
office in those instances where the original recorded Mortgage has been lost;

                  (iii) either: (1) the original assignment of the Mortgage from
the Person delivering such Assignment to " Citibank, N.A., as Trustee of the
RAFC Asset-Backed Trust, Series 2001-1, relating to the RAFC Asset-Backed
Certificates, Series 2001-1" with evidence of recording thereon (provided,
however, that where permitted under the laws of the jurisdiction wherein the
Mortgaged Property is located, the assignment of Mortgage may be effected by one
or more blanket assignments for Mortgage Loans secured by Mortgaged Properties
located in the same county), (also provided, however, that the Person delivering
such assignment shall not be required to record an assignment of a Mortgage if
such Person furnishes to the Trustee and the Custodian on or before the Closing
Date, at the Person's expense, an opinion of counsel with respect to the
relevant jurisdiction that such recording is not necessary to perfect the
Trustee's interest in the related Mortgage Loans (in form and substance and from
counsel satisfactory to the Rating Agencies)). Notwithstanding the delivery of
opinions specified above, the [Servicer] shall cause to be recorded each
assignment of a Mortgage upon the earlier to occur of (a) the removal of the
Servicer pursuant to this Pooling and Servicing Agreement or (b) written
notification to the Trustee, of the occurrence of a foreclosure, bankruptcy or
insolvency relating to the applicable Mortgagor; or (2) a copy of such
assignment of Mortgage certified as a true copy by a Responsible Officer of the
Originator where the original has been transmitted for recording (provided,
however, that where the original assignment of Mortgage is not being delivered
to the Custodian, each such Responsible Officer of the Originator may complete
one or more blanket certificates attaching copies of one or more assignments of
Mortgage relating to the Mortgages originated by the Originator);

                  (iv) (1) the original policy of title insurance or, if such
policy has not yet been delivered by the insurer, the commitment or binder to
issue same, or if the original principal balance of the Mortgage Loan was less
than or equal to $15,000 or the Mortgage Loan was not originated by the
Originator, other evidence of the status of title, which shall consist of an
attorney's opinion of title or certificate of title, a preliminary title report,
a property search, a title search, a lot book report, a property information
report or a report entitled "prelim" or "PIRT" (property information report),
and (2) proof of hazard insurance in the form of a hazard insurance policy or
hazard insurance policy endorsement that names the Originator, its successors
and assigns, as a mortgagee/loss payee, and, if such endorsement does not show
the amount insured by the related hazard insurance policy, some evidence of such
amount;

                  (v) with respect to any intervening assignments, if
applicable, either: (1) originals of all intervening assignments, if any,
showing a complete chain of title from the originator to the Person delivering
such assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (2) copies of any assignments
certified as true copies by a Responsible Officer of the Originator where the
originals have been submitted for recording until such time as the originals are
returned by the public recording officer, or (3) copies of any assignments
certified by the public recording office in any instances where the original
recorded assignments have been lost;

                                       27
<PAGE>

                  (vi) originals of all assumption and modification agreements,
if any; and

                  (vii) Except with respect to certain Loans with original
principal balances of less than $15,000, the appraisal made in connection with
the origination of the related Loan with photographs of the subject property and
of comparable properties (if available), constituting evidence sufficient to
indicate that the Mortgaged Property relates to a Residential Dwelling (or, with
respect to Multifamily Loans, a Multifamily Property) and identifying the type
thereof.

                  The Depositor shall, within five Business Days after the
receipt thereof, and in any event, within one year of the Closing Date, deliver
or cause to be delivered to the Custodian: (a) the original recorded Mortgage in
those instances where a copy thereof certified by a Responsible Officer of the
Depositor was delivered by the Depositor to the Custodian: (b) if required
pursuant to Section 2.04(iii), the original recorded Assignment of Mortgage to
the Trustee, which, together with any intervening assignments of Mortgage,
evidences a complete chain of title from the Depositor to the Trustee in those
instances where copies thereof certified by a Responsible Officer of the
Depositor were delivered by the Depositor to the Custodian; (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer of the Depositor were delivered by the Depositor to the
Custodian; and (d) the title insurance policy, or, where no such policy is
required to be provided, the other evidence of title and hazard insurance
required in clause (d) above. Notwithstanding anything to the contrary contained
in this Section 2.04, in those instances where the public recording office
retains the original Mortgage, Assignment of Mortgage or the intervening
assignments of the Mortgage after it has been recorded, the Depositor shall be
deemed to have satisfied its obligations hereunder upon delivery to the
Custodian, of a copy of such Mortgage, Assignment of Mortgage or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof. From time to time the Depositor may forward or cause
to be forwarded to the Custodian additional original documents evidencing an
assumption or modification of a Mortgage Loan. All Mortgage Loan documents held
by the Custodian as to each Mortgage Loan are referred to herein as the
"Trustee's Mortgage File."

                  All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.

Section 2.05      Acceptance of the Trust Fund; Certain Substitutions;
Certification by the Custodian.

                  (a) The Custodian, on behalf of the Trustee, agrees to execute
and deliver on the Closing Date with respect to the Mortgage Loans an
acknowledgment of receipt of, for each Mortgage Loan, a Mortgage Note, in the
form attached as Exhibit D-1 hereto; provided that the Custodian shall execute
and deliver an updated acknowledgement of receipt upon delivery by the Depositor
of the additional Mortgage Notes as contemplated by Section 2.04(i) above. The
Custodian declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of the Trust Fund and delivered to the Custodian, in trust upon and
subject to the conditions set forth herein solely as bailee for the Trustee. The
Custodian agrees, for the benefit of the Certificateholders, to review each

                                       28
<PAGE>

Trustee's Mortgage File relating to the Mortgage Loans within 150 days after the
Closing Date (or, with respect to any Qualified Substitute Mortgage Loan, within
45 days after the assignment thereof) and, on each such date, to deliver to the
Depositor, the Servicer, the Originator, the Certificate Administrator and the
Trustee, a certification in the form attached hereto as Exhibit D-2 to the
effect that, as to each Mortgage Loan listed in the applicable Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), with such exceptions, if any, as identified therein (i) all
documents required to be delivered pursuant to this Agreement have been
delivered to the Custodian (other than items (vi) and (vii) listed in Section
2.04 and proof of hazard insurance as set forth in Section 2.04(iv)(2)), (ii)
such documents (other than items listed in Section 2.04) have been reviewed by
it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Mortgage Loan, (iii) based on its examination and only as to
the foregoing documents, the information set forth on the applicable Mortgage
Loan Schedule accurately reflects the information set forth in the Trustee's
Mortgage File, and (iv) each Mortgage Note has been endorsed as provided in
Section 2.04 of this Agreement. The Custodian shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face. Within 375 days after the Closing Date, the
Custodian shall deliver to the Servicer, the Depositor, the Trustee, the
Originator and any Certificateholder who requests a copy a final certification
in the form attached hereto as Exhibit D-3 evidencing, if such be the case, the
completeness of the Trustee's Mortgage Files (other than items listed in Section
2.04(vi) and (vii)). In no event shall the Trustee have any liability or
responsibility for reviewing any of the Trustee's Mortgage Files or any of the
documents contained therein or for the Custodian's failure to perform any of its
respective obligations hereunder to conduct any such review.

                  (b) If the Custodian during the process of reviewing the
Trustee's Mortgage Files finds any document constituting a part of a Trustee's
Mortgage File which is not properly executed, has not been received, is
unrelated to a Mortgage Loan identified in the applicable Mortgage Loan
Schedule, or does not conform in a material respect to the requirements of
Section 2.04 or the description thereof as set forth in the applicable Mortgage
Loan Schedule, the Custodian shall promptly so notify the Depositor, the Seller
and Trustee. In performing any such review the Custodian may conclusively rely
on the Depositor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Custodian's review of
the Mortgage Files is limited solely to confirming that the documents listed in
Section 2.04 (other than the items listed in Section 2.04(vi) and (vii)) appear
on their face to have been executed and received and to relate to the Mortgage
Loans identified in the applicable Mortgage Loan Schedule, and to verify that
each Mortgaged Property appears from the information contained in the Trustee's
Mortgage File to be a Residential Dwelling (or, with respect to the Multifamily
Loans, a Multifamily Property). The Custodian shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form, whether any document
has been recorded in accordance with the requirements of the applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction. The Servicer agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Mortgage File of which it is so
notified. If, however, within 60 days after notice to it respecting such defect

                                       29
<PAGE>

the Servicer has not remedied the defect and the defect materially and adversely
affects the interest of the Certificateholders in the related Mortgage Loan, the
Servicer will (i) substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan in the manner and subject to the conditions set forth
in Section 3.02 or (ii) purchase such Mortgage Loan at a purchase price equal to
the Principal Balance of the Mortgage Loan as of the date of purchase, before
the occurrence of Realized Losses, if any, plus interest on the actual number of
days during the related Interest Accrual Period for the Certificates on such
Principal Balance, computed at the applicable Mortgage Interest Rate, plus any
accrued unpaid Servicing Fees, Monthly Advances and Servicing Advances
reimbursable to the Servicer, which purchase price shall be deposited in the
Principal and Interest Account on the next succeeding Determination Date.

                  (c) Upon receipt by the Custodian of a certification of a
Servicing Officer of the Servicer of such substitution or purchase and the
deposit of the amounts described above in the Principal and Interest Account
(which certification shall be in the form of Exhibit F hereto), the Custodian
shall release to the Servicer the related Trustee's Mortgage File and the
Custodian, shall execute, without recourse, and deliver such instruments of
transfer prepared by the Seller necessary to transfer such Mortgage Loan to the
Seller. All costs of any such transfer shall be borne by the Servicer.

                  If requested by either the Depositor or the Servicer on the
Distribution Date in June of each year, commencing 2002, the Custodian shall
deliver to the Depositor, the Servicer, the Certificate Administrator and the
Trustee a certification detailing all transactions with respect to the Mortgage
Loans for which the Custodian holds a Trustee's Mortgage File pursuant to this
Agreement during the prior calendar year. Such certification shall list all
Trustee's Mortgage Files which were released by or returned to the Custodian
during the prior calendar year, the date of such release or return, the reason
for such release or return, and the person to whom the Trustee's Mortgage File
was released or the person who returned the Trustee's Mortgage File.

Section 2.06      [Reserved]

Section 2.07      Authentication of Certificates.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on behalf of the Trustee (as set forth
in the acknowledgment of the Trustee, in the form of Exhibit G attached hereto,
delivered on the Closing Date) of the Trustee's Mortgage Files relating to the
Mortgage Loans and, concurrently with such delivery, the Trustee has
authenticated or caused to be authenticated and delivered to or upon the written
order of the Servicer, in exchange for the Mortgage Loans, the Trustee's
Mortgage Files and the other assets included in the definition of the Trust Fund
relating to the Mortgage Loans (other than the Reserve Amount), the Certificates
duly authenticated by the Trustee in authorized denominations.

Section 2.08      Fees and Expenses of the Trustee, Certificate Administrator
and the Custodian.

                  The Custodian Fee and the Certificate Administrator Fee and
expenses shall be paid from the Expense Account in the manner set forth in
Section 6.02 hereof; provided, however, that the Seller shall be liable for any
expenses of the Trust Fund incurred prior to the Closing Date. The Trustee shall
be compensated for acting as Trustee hereunder by the Certificate Administrator.

                                       30
<PAGE>

The parties hereto hereby covenant with the Certificateholders that every
material contract or other material agreement entered into by the applicable
party, on behalf of the Trust Fund shall expressly state therein that no
Certificateholder shall be personally liable in its capacity as such in
connection with such contract or agreement.

Section 2.09      Assignment Event.

                  Immediately upon the occurrence of any Assignment Event, the
Certificate Administrator or the Servicer shall notify the Trustee of such
occurrence or the Trustee shall notify the Servicer and the Certificate
Administrator and the Custodian. Thereafter, the Custodian shall, at the expense
of the Seller (i) begin transferring all Trustee's Mortgage Files in its
possession relating to the Mortgage Loans to the Trustee and (ii) either cause
proper assignments of each Mortgage to be recorded in the relevant real property
recording office for each such Mortgage or to deliver assignments of the
Mortgages, in recordable form, to the Trustee, together with an opinion of
counsel, addressed to and acceptable to the Trustee, to the effect that
recordation of such assignments is not necessary to perfect the interest of the
Trustee in such Mortgages. The Custodian shall undertake such transfer and
recording in a manner that will result in the completion of the transfer of all
such Trustee's Mortgage Files relating to the Mortgage Loans to the successor
Custodian and the recording of such assignments of mortgage (or delivery of such
opinion of counsel) within 30 days following the occurrence of an Assignment
Event. Any expenses incurred by the Trustee with respect to clauses (i) and/or
(ii) above shall be paid by the Servicer within thirty (30) days of receipt of a
request therefor from the Trustee. From and after the occurrence of an
Assignment Event, and the delivery of the Trustee's Mortgage Files relating to
the Mortgage Loans to the Co-Trustee, Trustee shall act as custodian or it may
engage the services of another Person to act as Custodian and such successor
Custodian shall be entitled to the Custodian Fee. From time to time following
delivery of the Trustee's Mortgage Files relating to the Mortgage Loans to the
Trustee pursuant to this Section 2.09, the Trustee may appoint a Custodian who
is acceptable to the Certificate Administrator. The Servicer shall notify the
Rating Agencies of any appointment of a successor Custodian. The Custodian
hereby acknowledges that it is bailee of the Trustee and is holding all of the
Trustee's Mortgage Files relating to the Mortgage Loans delivered to it solely
in trust for the Trustee.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

Section 3.01      Representations of the Servicer, the Transferor and the
Depositor.

                  (a) The Servicer (for the purposes of this Section 3.01(a),
"HomEq") hereby represents and warrants to the other parties hereto and the
Certificateholders as of the Closing Date:

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<PAGE>

                       (i) HomEq is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each state
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
HomEq and perform its obligations hereunder; HomEq has corporate power and
authority to execute and deliver this Agreement and each Subservicing Agreement
and to perform in accordance herewith and therewith; the execution, delivery and
performance of this Agreement and each Subservicing Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement and each
Subservicing Agreement) by HomEq and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action; this Agreement and each Subservicing Agreement
evidences the valid, binding and enforceable obligation of HomEq; HomEq is a
Permitted Transferee; and all requisite corporate action has been taken by HomEq
to make this Agreement and each Subservicing Agreement valid, binding and
enforceable upon HomEq in accordance with the respective terms of each, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity, none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;

                       (ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by or from
any federal, state or other governmental authority or agency (other than any
such actions, approvals, etc., under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which HomEq makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
HomEq of the documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and any
subservicing agreement and the other documents on the part of HomEq and the
performance by HomEq of its obligations under this Agreement and any
subservicing agreement and such of the other documents to which it is a party;

                       (iii) The consummation of the transactions contemplated
by this Agreement and any subservicing agreement will not result in the breach
of any terns or provisions of the certificate of incorporation or by-laws of
HomEq or result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any obligation
under, any material agreement, indenture or loan or credit agreement or other
material instrument to which HomEq or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to which HomEq
or its property is subject;

                       (iv) Neither this Agreement or any subservicing agreement
nor any statement, report or other document furnished or to be furnished
pursuant to this Agreement and any subservicing agreement or in connection with
the transactions contemplated hereby and thereby contains any untrue statement
of material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;

                                       32
<PAGE>

                       (v) HomEq 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;

                       (vi) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the best of HomEq's
knowledge, threatened against HomEq which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of HomEq or in any
material impairment of the right or ability of HomEq to carry on its business
substantially as now conducted, or in any material liability on the part of
HomEq or which would draw into question the validity of this Agreement and each
Subservicing Agreement or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of HomEq contemplated herein, or which
would be likely to impair materially the ability of HomEq to perform under the
terms of this Agreement and any subservicing agreement;

                       (vii) The Trust Fund will not constitute an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;

                       (viii) HomEq is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of HomEq or its properties or might have consequences that would
materially and adversely affect its performance hereunder or under any
subservicing agreement;

                       (ix) The statements contained in the Registration
Statement which describe HomEq or matters or activities for which HomEq is
responsible in accordance with the Registration Statement, this Agreement and
all documents referred to therein or delivered in connection therewith, or which
are attributable to HomEq therein are true and correct in all material respects,
and the Registration Statement does not contain any untrue statement of a
material fact with respect to HomEq and does not omit to state a material fact
necessary to make the statements contained therein with respect to HomEq not
misleading. HomEq is not aware that the Registration Statement contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements contained therein not misleading. There is no
fact peculiar to HomEq or the Mortgage Loans and known to HomEq that materially
adversely affects or in the future may (so far as HomEq can now reasonably
foresee) materially adversely affect HomEq or the Mortgage Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement;

                   (b) The Transferor represents and warrants as of the Closing
Date to the other parties hereto and the Certificateholders:

                       (i) The Transferor is a business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has full power and authority as a business trust, and has taken all action
necessary, to execute and deliver this Agreement, and any and all other
documents to be executed or delivered by it in connection with this Agreement,
and to fulfill its obligations under, and to consummate the transactions
contemplated by, this Agreement, and this Agreement and such other documents
executed in connection herewith are the legal, valid and binding obligations of

                                       33
<PAGE>

the Transferor, enforceable against it in accordance with their respective
terms, except as such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;

                       (ii) The execution and delivery of this Agreement and
each other document to be executed or delivered by it in connection with this
Agreement, and the performance of its obligations hereunder and thereunder by
the Transferor will not violate the provisions of its organizational documents
conflict with any provision of any law or regulation to which it is subject, or
conflict with, result in a breach of, or constitute a default under any of the
terms, conditions or provisions of, any agreement or instrument to which the
Transferor is a party or by which it is bound, or any order or decree applicable
to the Transferor, or result in the creation or imposition of any Lien on any of
the Transferor's assets or property, which would materially and adversely affect
the ability of the Transferor to carry out the transactions contemplated by this
Agreement or such other documents executed in connection herewith; no consent,
approval, authorization or order of or filing with or notice to any court or
governmental agency or body is required for the execution, delivery and
performance by the Transferor of this Agreement or such other documents;

                       (iii) There is no action, suit or proceeding pending
against the Transferor in any court or by or before any other governmental
agency or instrumentality which would materially and adversely affect the
validity of the Mortgage Loans or the ability of the Transferor or the
Certificateholders to carry out the transactions contemplated by this Agreement;
and

                       (iv) On the Closing Date, after the purchase of the
Mortgage Loans from the Seller, the Transferor will have good title to, and will
be the sole owner of, the Mortgage Loans, and on the Closing Date, the
Transferor will transfer to the Depositor all of the Transferor's right, title
and interest in the Mortgage Loans, free and clear of any pledge, lien,
encumbrance or security interest (except for the transactions contemplated by
this Agreement).

                       (v) The Transferor will treat the transfer of the
Mortgage Loans as a sale for tax, reporting and accounting purposes.

                   (c) The Depositor hereby represents and warrants to the other
parties hereto and the Certificateholders as of the Closing Date:

                       (i) The Depositor is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation and, except as set forth below, has all licenses necessary to
carry on its business as now being conducted; the Depositor has corporate power
and authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Depositor and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action;
this Agreement evidences the valid, binding and enforceable obligation of the
Depositor; and all requisite corporate action has been taken by the Depositor to
make this Agreement valid, binding and enforceable upon the Depositor in

                                       34
<PAGE>

accordance with the terms of this Agreement, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity, none of
which will affect the ownership of the Mortgage Loans by the Trustee, as
trustee.

                       (ii) No approval of the transactions contemplated by this
Agreement from any state or federal regulatory authority having jurisdiction
over the Depositor is required or, if required, such approval has been or will,
prior to the Closing Date, be obtained;

                       (iii) The Depositor received fair consideration and
reasonably equivalent value in exchange for the sale of the interest in the
Mortgage Loans;

                       (iv) The Depositor sold the Mortgage Loans, without any
intent to hinder, delay or defraud any of its creditors;

                       (v) The Depositor is solvent and the Depositor will not
be rendered insolvent as a result of the sale of the Mortgage Loans to the Trust
Fund;

                       (vi) The consummation of the transactions contemplated by
this Agreement will not result in the breach of any terms or provisions of the
certificate of incorporation or by-laws of the Depositor or result in the breach
of any term or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to which the
Depositor or its property is subject, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Depositor or its
property is subject;

                       (vii) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Depositor or its properties or might have consequences that
would materially and adversely affect its performance hereunder;

                       (viii) There is no action, suit, proceeding or
investigation pending or, to the best of such Depositor's knowledge, threatened
against the Depositor which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, condition
(financial or other), properties or assets of the Depositor or in any material
impairment of the right or properties or assets of the Depositor to carry on its
business substantially as now conducted, or in any material liability on the
part of the Depositor or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of such Depositor contemplated herein, or which
would be likely to impair materially the ability of such Depositor to perform
under the terms of this Agreement;

                       (ix) Neither this Agreement nor any statement, report or
other document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements contained herein or therein not misleading;

                                       35
<PAGE>

                       (x) The statements contained in the Registration
Statement which describe the Depositor or matters or activities for which the
Depositor is responsible in accordance with the Registration Statement, and all
documents referred to therein or delivered in connection therewith, or which are
attributable to the Depositor therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Depositor and does not omit to state a
material fact necessary to make the statements contained therein with respect to
the Depositor not misleading. The Depositor is not aware that the Registration
Statement contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements contained therein not misleading.
There is no fact peculiar to the Depositor and known to the Depositor that
materially and adversely affects or in the future may (so far as the Depositor
can now reasonably foresee) materially and adversely affect the Depositor or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement;

                       (xi) Upon the receipt of each Trustee's Mortgage File by
the Custodian under this Agreement, the Trustee will have good and marketable
title on behalf of the Trust Fund to each Mortgage Loan and such other items
comprising the corpus of the Trust Fund free and clear of any lien (other than
liens which will be simultaneously released);

                       (xii) The Depositor will treat the transfer of the
Mortgage Loans as a sale for tax, reporting and accounting purposes.

                       (xiii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by or from
any federal, state or other governmental authority or agency (other than any
such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by the
Depositor of the documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement to which it is a
party and the other documents on the part of the Depositor and the performance
by the Depositor of its obligations under this Agreement to which it is a party
and such of the other documents to which it is a party;

                       (xiv) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Depositor pursuant to this Agreement are
not subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction; and

                       (xv) The Trust Fund will not constitute an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

                                       36
<PAGE>

Section 3.02      Purchase and Substitution.

                  The Transferor and the Depositor hereby assign to the Trustee
their right to enforce the representations and warranties of the Seller made
with respect to the Mortgage Loans in the Purchase Agreement. It is understood
and agreed that the representations and warranties set forth in Section 3.02 of
the Purchase Agreement shall survive delivery of the Certificates to the
Certificateholders. Upon discovery by the Seller, the Depositor, the Servicer,
the Custodian, the Certificate Administrator or the Trustee of a breach of any
of such representations and warranties which materially and adversely affects
the value of the Mortgage Loans or the interest of the Certificateholders, or
the Certificateholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the Seller's
or Depositors' best knowledge), the party discovering such breach shall give
prompt written notice to the others. Within 60 days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, the Seller shall (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan by depositing in the Principal and
Interest Account, on the next succeeding Determination Date, an amount in the
manner specified in Section 2.05(b), or (c) remove such Mortgage Loan from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans, provided such
substitution is effected not later than the date which is two years after the
Startup Day, or at such later date if the Trustee and the Certificate
Administrator receive an Opinion of Counsel that such substitution would not
constitute a Prohibited Transaction or cause the Trust Fund to fail to qualify
as a REMIC at any time any Certificates are outstanding.

                  As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall
effect such substitution by delivering to the Custodian, who shall deliver to
the Trustee and the Certificate Administrator a certification in the form
attached hereto as Exhibit F, and the documents constituting the Trustee's
Mortgage File for such Qualified Substitute Mortgage Loan or Loans.

                  The Servicer shall deposit in the Principal and Interest
Account all payments received in connection with such Qualified Substitute
Mortgage Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Mortgage Loans on or before the
date of substitution will be retained by the Servicer on behalf of the Seller.
The Trust Fund will own all payments received on the Deleted Mortgage Loan on or
before the date of substitution, and the Seller on behalf of the Depositors
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Servicer shall give written notice to
the Trustee, the Custodian and the Certificate Administrator and the Seller that
such substitution has taken place and shall amend the applicable 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.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of this Agreement in all respects, including Sections
2.04 and 2.05, and the Seller and the Depositor shall be deemed to have made
with respect to such Qualified Substitute Mortgage Loan or Loans, as of the date
of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Seller will remit
to the Servicer, and the Servicer will deposit into the Principal and Interest
Account an amount equal to the Substitution Adjustment.

                                       37
<PAGE>

                  It is understood and agreed that the obligations of the Seller
to cure, purchase or substitute for a defective Mortgage Loan constitute the
sole remedies of the Trustee, the Custodian, the Certificate Administrator and
the Certificateholders respecting a breach of the foregoing representations and
warranties.

                  For as long as the Trust Fund shall exist, the Servicer and
the Trustee shall act in accordance herewith to assure continuing treatment of
the Trust Fund as one or more REMICs. In particular, the Trustee shall not (a)
sell or knowingly permit the sale of all or any portion of the Mortgage Loans or
of any Permitted Instrument unless such sale is as a result of a repurchase of
the Mortgage Loans pursuant to this Agreement or the Trustee has received an
Opinion of Counsel to the effect that such sale (i) is in accordance with a
qualified liquidation as defined in Section 860F(a)(4) of the Code and as
described in Section 11.01 hereof, or (ii) would not be treated as a prohibited
transaction within the meaning of Section 860F(a)(2) of the Code; and (b) accept
any contribution to the Trust Fund after the Startup Day without an Opinion of
Counsel that such contribution is included within the exceptions provided in
Section 860G(d)(2) of the Code and therefore will not be subject to the tax
imposed by Section 860G(d)(1) of the Code.

                                   ARTICLE IV

                                THE CERTIFICATES

Section 4.01      The Certificates.

                  (a) The Certificates shall be substantially in the forms
annexed hereto as Exhibit B and shall, upon original issue, be delivered by the
Servicer to the Trustee for execution and authentication and redelivery to or
upon the written order of the Depositor, upon receipt by the Custodian of the
documents specified in Section 2.04. All Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee by its President, one of
its Executive Vice Presidents or Vice Presidents, or by its Treasurer, in the
denominations specified in the definition of Percentage Interest, and shall be
authenticated by manual signature on behalf of the Trustee by one of its
authorized signatories. Certificates bearing the signatures of individuals who
were at the time of the execution or authentication of the Certificates the
proper officers of the Trustee or an authorized signatory of the Trustee, as the
case may be, shall bind the Trustee notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.

                  (b) The Trustee shall elect that the Trust Fund shall be
treated as one or more REMICs under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections.

                                       38
<PAGE>

Section 4.02      Registration of Transfer and Exchange of Certificates.

                  (a) The Certificate Administrator shall cause to be kept at
its office, or at the office of its designated agent, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, it shall
provide for the registration of the applicable Classes of Certificates and of
transfers and exchanges of the applicable Classes of Certificates as herein
provided. Each Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder of the
applicable Class. First Union National Bank is initially appointed Certificate
Registrar for the purpose of registering the Certificates and transfer and
exchanges of the Certificates, as herein provided (each, a "Certificate
Registrar").

                  (b) It is intended that the Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Certificates shall initially be issued in the form of a
single fully registered Certificate of such Class. The Certificates shall have
an aggregate denomination equal to the following:

                           CLASS                  DENOMINATION
Class A-1                                                     $ 53,351,000
Class A-2                                                     $ 85,000,000
Class A-3                                                     $564,106,000
Class M-1                                                     $ 55,574,000
Class M-2                                                     $ 44,459,000
Class B-1                                                     $ 35,567,000
Class B-2                                                     $ 42,236,000

Upon initial issuance, the ownership of such Classes of Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.

                  The Depositor and the Certificate Administrator are hereby
authorized to execute and deliver the Representation Letter with the Depository.

                  (c) With respect to the Certificates registered in the
Certificate Register in the name of Cede & Co., as nominee of the Depository,
the Depositor and the Certificate Administrator shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which the
Depository holds the Certificates from time to time as a Depository. Without
limiting the immediately preceding sentence, the Depositor and the Certificate
Administrator shall have no responsibility or obligation with respect to (a) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Certificates, (b) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Holder of a Certificate or (c) the payment to any Direct or Indirect
Participant or any other Person, other than a registered Holder of a Certificate
as shown in the Certificate Register, of any amount with respect to any
distribution of principal or interest on the Certificates. No Person other than
a registered Holder of a Certificate as shown in the Certificate Register shall
receive a certificate evidencing such Certificate.

                                       39
<PAGE>

                  (d) Upon delivery by the Depository to the Certificate
Administrator of written notice to the effect that the Depository has determined
to substitute a new nominee in place of Cede & Co., and subject to the
provisions hereof with respect to the payment of distributions by the mailing of
checks or drafts to the registered Holders of Certificates appearing as
registered Owners in the Certificate Register on a Record Date, the name "Cede &
Co." in this Agreement shall refer to such new nominee of the Depository.

                  (e) In the event that (i) the Depository or the Depositor
advises the Certificate Administrator in writing that the Depository is no
longer willing or able to discharge properly its responsibilities as nominee and
depository with respect to the Certificates and the Depositor is unable to
locate a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Certificates shall
no longer be restricted to being registered in the Certificate Register in the
name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Depositor may determine that the Certificates shall be registered
in the name of and deposited with a successor depository operating a global
book-entry system, as may be acceptable to the Depositor, or such depository's
agent or designee but, if the Depositor does not select such alternative global
book-entry system, then the Certificates may be registered in whatever name or
names registered Holders of Certificates transferring Certificates shall
designate, in accordance with the provisions hereof.

                  (f) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Certificates are registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal and interest
on such Certificates and all notices with respect to such Certificates shall be
made and given, respectively, in the manner provided in the Representation
Letter.

                  (g) The Class R and Class X Certificates shall be issued
without principal balances in minimum Percentage Interests as provided in the
definition of Percentage Interest. The Class B-2, Class R and Class X
Certificates have not been registered or qualified under the 1933 Act, or any
state securities law. No transfer, sale, pledge or other disposition of any
Class B-2, Class R, or Class X Certificate shall be made unless such disposition
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made in reliance upon an
exemption from the 1933 Act, the Certificate Administrator or the Certificate
Registrar may require, in order to assure compliance with the 1933 Act, that the
Class B-2, Class R or Class X Certificateholder desiring to effect such
disposition and such Class B-2, Class R or Class X Certificateholder's
prospective transferee each certify to the Trustee or the Certificate Registrar
in writing the facts surrounding such disposition. Unless the Trustee requests
otherwise, such certification shall be substantially in the form of Exhibit C
hereto. In the event that such certification of facts does not on its face
establish the availability of an exemption under Rule 144A of the 1933 Act or
under Section 4(2) or a comparable provision of the 1933 Act, the Certificate
Administrator shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Certificate Administrator or of the
Trust Fund. The Depositor is not obligated under this Agreement to register the
Class B-2, Class X or Class R Certificates under the 1933 Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of Class B-2, Class R or Class X Certificates without
such registration or qualification.

                                       40
<PAGE>

                  (h) Each Person who has or who acquires any Percentage
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Percentage Interest to have agreed to be bound by the
following provisions and to have irrevocably appointed the Seller or its
designee as its attorney-in-fact to negotiate the terms of any mandatory sale
under clause (v) below and to execute all instruments of transfer and to do all
other things necessary in connection with any such sale, and the rights of each
Person acquiring any Percentage Interest in a Class R Certificate are expressly
subject to the following provisions:

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

                       (ii) No Percentage Interest in a Class R Certificate may
be transferred (including the sale to the initial holder) and the Certificate
Administrator shall not register the transfer of a Class R Certificate unless
the Certificate Administrator and the Seller shall have been furnished with (A)
an affidavit (a "Transfer Affidavit") of the proposed transferee in the form
attached as Exhibit G (and if required by the Transfer Affidavit, the Opinion of
Counsel, as therein referenced) and (B) a certificate (a "Transfer Certificate")
of the transferor to the effect that such transferor has no actual knowledge
that the proposed transferee is not a Permitted Transferee.

                       (iii) Each Person holding or acquiring any Percentage
Interest in a Class R Certificate shall agree (A) to require a Transfer
Affidavit from any other Person to whom such Person attempts to transfer its
Percentage Interest in a Class R Certificate, (B) to require a Transfer
Affidavit from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any transfer of a Class R Certificate, (C) to deliver a
Transfer Certificate to the Trustee and the Seller in connection with any such
attempted transfer and (D) not to transfer its Percentage Interest in a Class R
Certificate or to cause the transfer of a Percentage Interest in a Class R
Certificate to any other Person if it has actual knowledge that such Person is
not a Permitted Transferee.

                       (iv) Any attempted or purported transfer of any
Percentage Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no rights in
the purported transferee. If any purported transferee shall become a Holder of a
Class R Certificate in violation of the provisions of this Section 4.02, then
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of such Class
R Certificate. The Certificate Administrator shall notify the Seller upon
knowledge of a Responsible Officer that the registration of transfer of a Class
R Certificate was not in fact permitted by this Section 4.02. The Certificate
Administrator shall be under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not permitted by this Section
4.02 or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt of the related
Transfer Affidavit and Transfer Certificate. The Certificate Administrator shall
be entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and after either
such time. Any such payments so recovered by the Certificate Administrator shall
be paid and delivered by the Certificate Administrator to the last preceding
Holder of such Certificate.

                                       41
<PAGE>

                       (v) If any purported transferee shall become a Holder of
a Class R Certificate in violation of the restrictions in this Section 4.02,
then the Seller or its designee shall, without notice to the Holder or any prior
Holder of such Class R Certificate, as the case may be, sell such Class R
Certificate to a purchaser selected by the Seller or its designee on such
reasonable terms as the Seller or its designee may choose. Such purchaser may be
the Seller itself or any affiliate of the Seller. The proceeds of such sale, net
of commissions, expenses and taxes due, if any, will be remitted by the Seller
to the last preceding purported transferee of such Class R Certificate, except
that in the event that the Seller determines that the Holder or any prior Holder
of such Class R Certificate may be liable for any amount due under this Section
4.02 or any other provision of this Agreement, the Seller may withhold a
corresponding amount from such remittance as security for such claim. The terms
and conditions of any sale under this clause (v) shall be determined in the sole
discretion of the Seller or its designee, and it shall not be liable to any
Person having a Percentage Interest in a Class R Certificate, as applicable, as
a result of its exercise of such discretion.

                  Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at such office, the Seller shall
execute in the name of the designated transferee or transferees, a new
Certificate of the same Class and Percentage Interest and dated the date of
authentication by the Trustee. The Certificate Registrar shall notify the Seller
and the Trustee of any such transfer.

                  At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
of alike aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate the Certificates which the
Certificateholder making the exchange is entitled to receive.

                       (i) The Class B-2, Class R and Class X Certificates may
not be transferred to any employee benefit plan (within the meaning of Section
3(3) of ERISA) that is subject to ERISA or any plan (within the meaning of
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code
(each, a "Plan"), or to any Person acting on behalf of or investing the assets
of a Plan. The Trustee shall not register the transfer of a Class R Certificate
or Class X Certificate, or any interest therein, unless the proposed transferee
has represented to the Trustee in writing that it is not a Plan and is not
acting on behalf of or investing the assets of a Plan. Each Person holding or
acquiring a Class B-2 Certificate or any interest therein shall be deemed by the
acceptance or acquisition of such Certificate or interest to have represented
that it is not a Plan and is not acting on behalf of or investing the assets of
a Plan. Any attempted or purported transfer of a Class B-2, Class R or Class X
Certificate in violation of the provisions of this Section 4.02(i) shall be
absolutely null and void and shall vest no rights in the purported transferee.

                                       42
<PAGE>

                       (j) No service charge shall be made for any transfer or
exchange of Certificates, but the Certificate Registrar 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. All Certificates
surrendered for transfer and exchange shall be marked canceled by the
Certificate Administrator.

Section 4.03      Mutilated, Destroyed, Lost or Stolen Certificates.

                  If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Certificate Administrator and the Certificate
Registrar and the Certificate Administrator receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Certificate Administrator and the
Certificate Registrar such security or indemnity (which may include a letter of
indemnity delivered by an insurance company) as may be required by each of them
to save each of them harmless, then, in the absence of notice to the Servicer,
the Certificate Administrator and the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, deliver and authenticate, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest, but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section 4.03,
the Servicer and the Certificate 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 connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.

Section 4.04      Persons Deemed Owners.

                  Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Seller, the Trustee, the Certificate Administrator
and the Certificate Registrar may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.04 and for all other purposes whatsoever, and
the Seller, the Servicer, the Trustee and the Certificate Registrar shall not be
affected by notice to the contrary.

                                    ARTICLE V

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 5.01     Duties of the Servicer.

                 (a) It is intended that each REMIC hereunder shall constitute,
and that the affairs of each REMIC shall be conducted so as to qualify as a
"real estate mortgage investment conduit" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Servicer covenants
and agrees that it shall act as agent (and the Servicer is hereby appointed to
act as agent) on behalf of each REMIC and the Certificate Administrator
covenants and agrees that it shall act as Tax Matters Person on behalf of each

                                       43
<PAGE>

REMIC. The Certificate Administrator (and in the case of (iv) and (v) below, the
Servicer) shall: (i) prepare and file, or cause to be prepared and filed, in a
timely manner, U.S. Real Estate Mortgage Investment Conduit Income Tax Returns
(Form 1066) and any other Tax Return required to be filed by each REMIC using a
calendar year as the taxable year for each REMIC and using the accrual method of
accounting, including, without limitation, information reports relating to
"original issue discount," as defined in the Code, based upon the Prepayment
Assumption and calculated by using the issue price of the Certificates; (ii)
make, or cause to be made, an election, on behalf of each REMIC, to be treated
as a REMIC on the federal tax return of each REMIC for their first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded, to the
Trustee, the Certificateholders and to the Internal Revenue Service and any
other relevant governmental taxing authority all information returns or reports
as and when required to be provided to them in accordance with the REMIC
Provisions and any other provision of federal, state or local income tax laws;
(iv) to the extent that the affairs of each REMIC are within its control,
conduct such affairs at all times that any Certificates are outstanding so as to
maintain the status of each REMIC as a REMIC under the REMIC Provisions and any
other applicable federal, state and local laws; (v) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of each REMIC or that would cause the imposition
of a prohibited transaction tax or a tax on contributions to each REMIC; (vi)
pay the amount of any and all federal, state, and local taxes, including,
without limitation, prohibited transaction taxes as defined in Section 860F of
the Code imposed on each REMIC when and as the same shall be due and payable
(but such obligation shall not prevent the Certificate Administrator or any
other appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Certificate Administrator from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings); (vii)
ensure that any such returns or reports filed on behalf of each REMIC are
properly executed by the appropriate person; (viii) represent each REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of each REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
item of each REMIC and otherwise act on behalf of each REMIC in relation to any
tax matter involving each REMIC; and (ix) as provided in Section 5.11 hereof,
make available information necessary for the computation of any tax imposed (1)
on transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is held by an
entity which is not a Permitted Transferee. The Trustee will cooperate with the
Servicer and the Certificate Administrator in the foregoing matters and will
sign, as Trustee, any and all Tax Returns required to be filed by each REMIC.
The Servicer shall indemnify the Trustee, the Certificate Administrator and each
REMIC, as applicable, for any liability they may incur in connection with this
Section 5.01(a); provided, however, that the Servicer shall not indemnify the
Trustee for its negligence or willful misconduct.

                  With respect to any Mortgage Note relating to a Mortgage Loan
released by the Custodian to the Servicer or any Subservicer in accordance with
the terms of this Agreement, other than a release or satisfaction pursuant to
Section 7.02, prior to such release, the Custodian shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of
Citibank, N.A., as Trustee under the Pooling and Servicing Agreement dated as of
November 30, 2001" and (b) complete a restrictive endorsement that reads
"Citibank, N.A., as Trustee, is the holder of the mortgage note for the benefit
of the Certificateholders under the Pooling and Servicing Agreement dated as of
November 30, 2001" with respect to those Mortgage Notes relating to Mortgage
Loans currently endorsed "Pay to the order of Holder."

                                       44
<PAGE>

                  (b) The Servicer, as independent contract servicer, shall
service and administer the Mortgage Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration consistent with the terms of this Agreement. The
Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such subservicing agreement and (x) has (i) been designated an approved
Seller-Servicer by Freddie Mac or Fannie Mae for first and second mortgage loans
and (ii) has a net worth of at least $5,000,000 or (y) is an affiliate of the
Servicer. The Servicer shall give notice to the Trustee of the appointment of
any subservicer. Any such subservicing agreement shall be consistent with and
not violate the provisions of this Agreement. The Servicer shall be entitled to
terminate any subservicing agreement in accordance with the terms and conditions
of such subservicing agreement and to either itself directly service the related
Mortgage Loans or enter into a subservicing agreement with a successor
subservicer which qualifies hereunder.

                  (c) Notwithstanding any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and subservicer or reference to actions taken through a subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee and the Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. For purposes
of this Agreement, the Servicer shall be deemed to have received payments on
Mortgage Loans when any subservicer has received such payments. The Servicer
shall be entitled to enter into any agreement with a subservicer for
indemnification of the Servicer by such subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.

                  (d) Any subservicing agreement that may be entered into and
any transactions or services relating to the Mortgage Loans involving a
subservicer in its capacity as such and not as an originator shall be deemed to
be between the subservicer and the Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the subservicer
except as set forth in Section 5.01(e).

                  (e) In the event the Servicer shall for any reason no longer
be the Servicer (including by reason of an Event of Default), the Certificate
Administrator or its designee shall, subject to Section 10.02 hereof, thereupon
assume all of the rights and obligations of the Servicer under each subservicing
agreement that the Servicer may have entered into with respect to the Mortgage
Loans, unless the Certificate Administrator is then permitted and elects to
terminate any subservicing agreement in accordance with its terms. The
Certificate Administrator, its designee or the successor servicer for the
Certificate Administrator shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
subservicing agreement to the same extent as if the subservicing agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the subservicing agreements.
The Servicer at its expense and without right of reimbursement therefor, shall,

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upon request of the Certificate Administrator, deliver to the assuming party all
documents and records relating to each subservicing agreement and the Mortgage
Loans then being serviced and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the subservicing agreements to the assuming party. Any expenses incurred by
the Certificate Administrator with respect to the transfer of the subservicing
agreements shall be paid by the Servicer within thirty (30) days of receipt of a
request therefor from the Certificate Administrator.

                  (f) Consistent with the terms of this Agreement, the Servicer
may waive, modify or vary any term of any defaulted Mortgage Loan or consent to
the postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Certificateholders, with respect to the Mortgage Loans,
respectively, provided, however, that, unless the Servicer determines that any
modification would not be considered a new mortgage loan for federal income tax
purposes, the Servicer may not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, defer (subject to
Section 5.12), or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan), or extend the
final maturity date on such Mortgage Loan. No costs incurred by the Servicer or
any subservicer in respect of Servicing Advances shall for the purposes of
distributions to Certificateholders be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered, to execute and
deliver on behalf of the Trustee, the Certificate Administrator and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, the Trustee and the Custodian shall execute
any powers of attorney furnished by the Servicer and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.

                  The Servicer, in servicing and administering the Mortgage
Loans, shall employ or cause to be employed procedures (including collection,
foreclosure and REO Property management procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, in accordance with accepted second mortgage
servicing practices (or, in the case of Multifamily Loans, in accordance with
accepted multifamily loan servicing practices) of prudent lending institutions
and giving due consideration to the Certificateholders' reliance on the
Servicer.

                  (g) On and after such time as the Trustee and the Certificate
Administrator receive the resignation of, or notice of the removal of, the
Servicer from its rights and obligations under this Agreement, and with respect
to resignation pursuant to Section 9.04, after receipt of the Opinion of Counsel
required pursuant to Section 9.04, the Certificate Administrator or its designee
shall assume all of the rights and obligations of the Servicer, subject to
Section 10.02 hereof. The Servicer shall, upon request of the Certificate
Administrator but at the expense of the Servicer, deliver to the Custodian all
documents and records (including computer tapes and diskettes) relating to the
Mortgage Loans and an accounting of amounts collected and held by the Servicer
and otherwise use its best efforts to effect the orderly and efficient transfer
of servicing rights and obligations to the assuming party. Any expenses incurred
by the Certificate Administrator with respect to the transfer of such servicing
rights and obligations shall be paid by the Servicer within thirty (30) days of
receipt of a request therefor from the Certificate Administrator.

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<PAGE>

                  (h) In the event that any tax is imposed on the REMIC, such
tax shall be charged against amounts otherwise distributable to the Holders of
the Class R Certificates. Notwithstanding anything to the contrary contained
herein, the Servicer is hereby authorized to retain from the Remaining Amount
Available for the sufficient funds to reimburse the Servicer for the payment of
such tax (to the extent that the Servicer has paid any such tax and has not been
previously reimbursed or indemnified therefor). The Servicer agrees to first
seek indemnification for any such tax payment from any indemnifying parties
before reimbursing itself from amounts otherwise distributable to the Holders of
the Class R Certificates.

Section 5.02      Liquidation of Mortgage Loans.

                  In the event that any payment due under any Mortgage Loan and
not postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interests of the Certificateholders. The Servicer shall foreclose
upon or otherwise comparably effect the ownership in the name of the Trustee
(subject to the provisions of Section 12.10) for the benefit of the
Certificateholders, as applicable, of Mortgaged Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of delinquent payments in accordance with the provisions of Section
5.10. In connection with such foreclosure, the Servicer shall exercise
collection and foreclosure procedures with the same degree of care and skill in
its exercise or use as it would exercise or use under the circumstances in the
conduct of its own affairs. The Servicer shall take into account the existence
of any hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of a
Mortgaged Property; provided, however, that the Servicer shall not take title to
any Mortgaged Property in the name of the Trustee with respect to any such
Mortgaged Property if the Servicer has actual knowledge or reasonably believes
that any such environmental substance or waste exists and it determines that it
would not be commercially reasonable to foreclose on such Mortgaged Property.
Any amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances."

                  After a Mortgage Loan has become a Liquidated Mortgage Loan,
the Servicer shall promptly prepare and forward to the Trustee and the
Certificate Administrator and, upon request, any Certificateholder, a
Liquidation Report, in the form attached hereto as Exhibit H, detailing the
Liquidation Proceeds received from the Liquidated Mortgage Loan, expenses
incurred with respect thereto, and any Realized Loss incurred in connection
therewith.

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<PAGE>

Section 5.03      Establishment of Principal and Interest Account; Deposits in
Principal and Interest Account.

                  (a) The Servicer shall cause to be established and maintained
one or more Principal and Interest Accounts for the Trust Fund, in one or more
Designated Depository Institutions, in the form of time deposit or demand
accounts, which may be interest-bearing or such accounts may be trust accounts
wherein the moneys therein are invested in Permitted Instruments, titled "HomEq
Servicing Corporation, in trust for the registered holders of RAFC Trust 2001-1
Asset Backed Certificates, Series 2001-1 and various Mortgagors"; provided,
however, that for so long as (i) (A) the Servicer remains an affiliate of FUNB,
(B) no Event of Default shall have occurred and be continuing and (C) FUNB
maintains a short-term rating of at least "A-1" by S&P, and "P-1" by Moody's,
and for five Business Days following any reduction, suspension, termination or
withdrawal in either such rating, or (ii) following the occurrence and
continuation of any event described in subclause (i) of this paragraph, an
arrangement is established that is satisfactory to the Rating Agencies, which
does not in itself result in (I) any reduction of any rating issued in respect
of the Certificates or (II) any reduction below investment grade of the
Certificates, the Servicer, notwithstanding anything to the contrary herein
provided, may establish and maintain the Principal and Interest Account as a
deposit account with FUNB. Each such Principal and Interest Account shall be
insured by the BIF or SAIF administered by the FDIC to the maximum extent
provided by law.

                  (b) The Servicer and any subservicer shall deposit without
duplication (within 24 hours of receipt thereof) in the Principal and Interest
Account and retain therein:

                       (i) all payments received after the Cut-Off Date on
account of principal on the Mortgage Loans, as the case may be, including all
Excess Payments, Principal Prepayments and Curtailments received after the
Cut-Off Date;

                       (ii) all payments received after the Cut-Off Date on
account of interest on the Mortgage Loans, as the case may be;

                       (iii) all Net Liquidation Proceeds received with respect
to the Mortgage Loans, as the case may be;

                       (iv) all Insurance Proceeds received with respect to the
Mortgage Loans, as the case may be (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property, or to be released to
the Mortgagor in accordance with customary second mortgage servicing
procedures);

                       (v) all Released Mortgaged Property Proceeds received
with respect to the Mortgage Loans, as the case may be;

                       (vi) any amounts paid in connection with the purchase of
any Mortgage Loan, as the case may be, and the amount of any Substitution
Adjustment received with respect to the Mortgage Loans, as the case may be, paid
pursuant to Sections 2.05 and 3.02;

                       (vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section 5.04, 5.08, 5.10 or 5.15(c);
and

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<PAGE>

                       (viii) the amount of any credit life insurance premium
refund which is not due to the related Mortgagor.

                  (c) The foregoing requirements for deposit in the Principal
and Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, the Servicing Fee with respect
to each Mortgage Loan, and payments in the nature of prepayment penalties or
premiums, late payment charges and assumption fees, to the extent received and
permitted by Sections 7.01 and 7.03, together with the difference between any
Liquidation Proceeds and the related Net Liquidation Proceeds, need not be
deposited by the Servicer in the Principal and Interest Account.

                  (d) Any interest earnings on funds held in the Principal and
Interest Account paid by a Designated Depository Institution shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Available Funds to the Certificate Administrator. Any reference herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.

Section 5.04      Permitted Withdrawals From the Principal and Interest Account.

                  The Servicer shall withdraw funds from the Principal and
Interest Account for the following purposes:

                  (a) to effect the remittance to the Certificate Administrator
by 12:00 noon New York time on each Determination Date as follows: the portion
of the Excess Spread relating to the Mortgage Loans and the portion of the
Available Funds, that are net of Compensating Interest and Monthly Advances and
for the related Distribution Date to the Certificate Administrator for deposit
in the Certificate Account. For the purposes of this Section 5.04(a), the
calculation of the Available Funds shall be made without reference to the actual
deposit of funds in the Certificate Account;

                  (b) to reimburse itself for any accrued unpaid Servicing Fees,
unreimbursed Monthly Advances and for unreimbursed Servicing Advances to the
extent that funds relating to such amount have been deposited in the Principal
and Interest Account (and not netted from Monthly Payments received). The
Servicer's right to reimbursement for unpaid Servicing Fees and, except as
provided in the following sentence, Servicing Advances and Monthly Advances
shall be limited to Liquidation Proceeds, Released Mortgaged Property Proceeds,
Insurance Proceeds and such other amounts as may be collected by the Servicer
from the Mortgagor or otherwise relating to the Mortgage Loan in respect of
which such unreimbursed amounts are owed. The Servicer's right to reimbursement
for Servicing Advances and Monthly Advances in excess of such amounts shall be
limited to any late collections of interest received on the Mortgage Loans,
generally, including Liquidation Proceeds, Released Mortgaged Property Proceeds
and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or Class R Certificateholders; provided, however,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the applicable Class A, Class M and/or Class B
Certificateholders to receive the related Interest Shortfall Carryforward
Amounts;

                                       49
<PAGE>

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

                  (d) (i) to make investments in Permitted Instruments and (ii)
to pay to itself, as permitted by Section 5.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the Principal and Interest Account;

                  (e) to withdraw any funds deposited in the Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;

                  (f) to pay itself servicing compensation pursuant to Section
7.03 hereof or interest as permitted under the definition of Excess Proceeds;

                  (g) to withdraw amounts required to be deposited into the
Servicing Account pursuant to Section 6.11(a).

                  (h) to clear and terminate the Principal and Interest Account
upon the termination of the Trust Fund.

                  So long as no default or Event of Default shall have occurred
and be continuing, and consistent with any requirements of the Code, the
Principal and Interest Account shall either be maintained as an interest-bearing
account meeting the requirements set forth in Section 5.03(a), or the funds held
therein may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "HomEq Servicing
Corporation in trust for the registered holders of RAFC Trust 2001-1 Asset
Backed Certificates, Series 2001-1." All interest or other earnings from funds
on deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from the Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
Principal and Interest Account in Permitted Instruments shall be deposited in
such Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.

Section 5.05      Payment of Taxes, Insurance and Other Charges.

                  With respect to each Mortgage Loan, the Servicer shall
maintain accurate records reflecting fire and hazard insurance coverage.

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<PAGE>

                  With respect to each Mortgage Loan which is a first lien
Mortgage Loan, or as to which the Servicer has advanced the outstanding
principal balance of any Prior Lien pursuant to Section 5.14 or as to which the
Servicer maintains escrow accounts, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage (provided, however, that to the extent
the Servicer advances its own funds, such advances shall constitute "Servicing
Advances"). To the extent that a Mortgage does not provide for escrow payments,
the Servicer shall determine that any such payments are made by the Mortgagor at
the time they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Mortgage Loan that are
required to be remitted to the Trust Fund would not be reduced, as a result of
such failure to timely pay, from the amount that would otherwise be remitted to
the Trust Fund; provided further, however, that this provision shall not have
the effect of permitting the Servicer to take, or fail to take, any action in
respect of the payments described herein that would adversely affect the
interest of the Trust Fund in any Mortgaged Property.

Section 5.06      Transfer of Principal and Interest Account.

                  The Servicer may, upon written prior notice to the Trustee and
the Certificate Administrator, transfer the Principal and Interest Account to a
different Designated Depository Institution.

Section 5.07      Maintenance of Hazard Insurance.

                  The Servicer shall cause to be maintained, subject to the
provisions of Section 5.08 hereof, fire and hazard insurance with extended
coverage customary in the area where the Mortgaged Property is located, in an
amount which is at least equal to the least of (a) the outstanding principal
balance owing on the Mortgage Loan and any Prior Lien, (b) the full insurable
value of the premises securing the Mortgage Loan and (c) the minimum amount
required to compensate for damage or loss on a replacement cost basis. If the
Mortgaged Property is in an area identified in the Federal Register by the Flood
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) the Servicer will cause to be purchased a
flood insurance policy with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (i) the outstanding
principal balance of the Mortgage Loan and any Prior Lien, (ii) the full
insurable value of the Mortgaged Property, or (iii) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended.
The Servicer shall also maintain, to the extent such insurance is available, on
REO Property, fire and hazard insurance in the amounts described above,
liability insurance and, to the extent required and available under the National
Flood Insurance Act of 1968, as amended, flood insurance in an amount equal to
that required above. Any amounts collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
Mortgaged Property, or to be released to the Mortgagor in accordance with
customary second mortgage servicing procedures) shall be deposited in the
Principal and Interest Account, subject to withdrawal pursuant to Section 5.04.

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<PAGE>

It is understood and agreed that no earthquake or other additional insurance
need be required by the Servicer of any Mortgagor or maintained on REO Property,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. All policies
required hereunder shall be endorsed with standard mortgagee clauses with losses
payable to the Servicer.

Section 5.08      Maintenance of Mortgage Impairment Insurance Policy.

                  In the event that the Servicer shall obtain and maintain a
blanket policy insuring against fire and hazards of extended coverage on all of
the Mortgage Loans, then, to the extent such policy names the Trustee on behalf
of the Certificateholders as loss payee and provides coverage in an amount equal
to the aggregate unpaid principal balance on the Mortgage Loans without
coinsurance, and otherwise complies with the requirements of Section 5.07, the
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under Section 5.07, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with Section
5.07, and there shall have been a loss which would have been covered by such
policy, deposit in the Principal and Interest Account from the Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with Section 5.07 and the amount paid under such
blanket policy. Upon the request of the Trustee or the Certificate
Administrator, the Servicer shall cause to be delivered to the Trustee or the
Certificate Administrator, as applicable, a certified true copy of such policy.
The current issuer of such policy is Lloyds of London.

Section 5.09      Fidelity Bond.

                  The Servicer shall maintain with a responsible company, and at
its own expense, a blanket fidelity bond and an errors and omissions insurance
policy, in a minimum amount equal to $1,500,000, and a maximum deductible of
$100,000, if commercially available, with coverage on all employees acting in
any capacity requiring them to handle funds, money, documents or papers relating
to the Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee and its respective officers, and employees, against losses resulting
from forgery, theft, embezzlement or fraud, by such Servicer Employees. The
errors and omissions policy shall insure against losses resulting from the
errors, omissions and negligent acts of such Servicer Employees. No provision of
this Section 5.09 requiring such fidelity bond and errors and omissions
insurance shall relieve the Servicer from its duties as set forth in this
Agreement. Upon the request of the Trustee or the Certificate Administrator, the
Servicer shall cause to be delivered to the Trustee or the Certificate
Administrator, as applicable, a certified true copy of such fidelity bond and
insurance policy. The current issuer of such fidelity bond and insurance policy
is National Union Fire Insurance Company of Pittsburgh, Pennsylvania.

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<PAGE>

Section 5.10      Title, Management and Disposition of REO Property.

                  In the event that title to the Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed
or certificate of sale shall, subject to Section 12.10, be taken in the name of
the Trustee for the benefit of the applicable Certificateholders.

                  The Servicer shall manage, conserve, protect and operate each
REO Property for the Certificateholders solely for the purpose of its prudent
and prompt disposition and sale. The Servicer shall, either itself or through an
agent selected by the Servicer, manage, conserve, protect and operate the REO
Property in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed. The
Servicer shall attempt to sell the same (and may temporarily rent the same) on
such terms and conditions as the Servicer deems to be in the best interest of
the applicable Certificateholders.

                  The Servicer shall cause to be deposited in the Principal and
Interest Account, no later than five Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related REO Property net of funds necessary for the proper operation, management
and maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.

                  The disposition of REO Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the applicable Certificateholders. The
proceeds of sale of the REO Property shall be promptly deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid, the Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees, and unreimbursed Monthly Advances,
and the Servicer shall deposit in the Principal and Interest Account the net
cash proceeds of such sale to be distributed to the applicable
Certificateholders, in accordance with Section 6.04 hereof.

                  In the event any Mortgaged Property is acquired as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, the Servicer shall dispose of such Mortgaged Property before the end of
the third calendar year following the year of its acquisition unless the
Servicer shall have received an Opinion of Counsel also addressed to the Trustee
to the effect that the holding of such Mortgaged Property subsequent to such
period will not result in the imposition of taxes on "prohibited transactions"
as defined in Section 860F of the Code or cause either the REMIC to fail to
qualify as a REMIC at any time that any Class X Certificates are outstanding.
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Servicer pursuant to this Section shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund, and no construction shall take place on such Mortgaged
Property, in such a manner or pursuant to any terms that would cause such
Mortgaged 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 the Trust
Fund of any "income from non-permitted assets" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period

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<PAGE>

greater than the three calendar year period referred to above is permitted under
this Agreement and is necessary to sell any REO Property, the Servicer shall
give appropriate notice to the Trustee and the Certificate Administrator and
shall report monthly to the Certificate Administrator as to the progress being
made in selling such REO Property.

Section 5.11      Certain Tax Information.

                  The Servicer shall furnish (a) any information which may be
required under the Code including the computation of the present value of the
"excess inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.

Section 5.12      Collection of Certain Mortgage Loan Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
comply with the terms and provisions of any applicable hazard insurance policy.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Mortgage Loan or
any other fee or charge which the Servicer would be entitled to retain hereunder
as servicing compensation and extend the due date for payments due on a Mortgage
Note for a period (with respect to each payment as to which the due date is
extended) not greater than 125 days after the initially scheduled due date for
such payment provided that the Servicer determines such extension would not be
considered a new mortgage loan for federal income tax purposes. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Mortgage Note, the Servicer shall nonetheless make payment of any required
Monthly Advance with respect to the payments so extended to the same extent as
if such installment were due, owing and delinquent and had not been deferred,
and shall be entitled to reimbursement therefor in accordance with Section
5.04(b) hereof.

Section 5.13      Access to Certain Documentation and Information Regarding the
Mortgage Loans.

                  The Servicer shall provide to the Trustee, the Custodian, the
Certificate Administrator, the Certificateholders, the FDIC, the Office of
Thrift Supervision and the supervisory agents and examiners of each of the
foregoing access to the documentation regarding the Mortgage Loans required by
applicable local, state and federal regulations, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.

Section 5.14      Superior Liens.

                  The Servicer shall file of record a request for notice of any
action by a superior lienholder under a Prior Lien for the protection of the
Trustee's interest, where permitted by local law and whenever applicable state

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<PAGE>

law does not require that a junior lienholder be named as a party defendant in
foreclosure proceedings in order to foreclose such junior lienholder's equity of
redemption. The Servicer must also notify any superior lienholder in writing of
the existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the Mortgagor or the Mortgaged Property by
the superior lienholder.

                  If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by any Prior Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions.
The Servicer shall immediately notify the Trustee of any such action or
circumstances. The Servicer will advance the necessary funds to cure the default
or reinstate the superior lien, if such advance is in the best interests of the
related Certificateholders. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.

                                   ARTICLE VI

                       PAYMENTS TO THE CERTIFICATEHOLDERS

Section 6.01      Certificate Account.

                  (a) No later than the Closing Date, the Certificate
Administrator will establish and maintain with itself in its trust department a
separate trust account, which shall not be interest bearing, titled "RAFC
Certificate Account 2001-1" (the "Certificate Account").

                  (I) The Certificate Administrator shall, promptly upon
receipt, deposit into the Certificate Account and retain therein:

                       (i) the Available Funds (net of the amount of Monthly
Advances and Compensating Interest deposited pursuant to subclause (ii) below);

                       (ii) the Compensating Interest and the Monthly Advance
remitted to the Trustee by the Servicer; and

                       (iii) amounts required to be paid by the Servicer
pursuant to Section 6.03(e) in connection with losses on investments of amounts
in the Certificate Account.

                  (b) Amounts on deposit in the Certificate Account shall be
withdrawn, in no particular order of priority:

                       (i) by the Certificate Administrator, to invest amounts
on deposit in the Certificate Account in Permitted Instruments pursuant to
Section 6.03;

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                       (ii) by the Certificate Administrator, to pay on a
monthly basis to the Servicer as additional servicing compensation interest paid
and earnings realized on Permitted Instruments;

                       (iii) by the Certificate Administrator, to withdraw any
amount not required to be deposited in the Certificate Account or deposited
therein in error; and

                       (iv) by the Certificate Administrator, to clear and
terminate the Certificate Account upon the termination of the Trust Fund in
accordance with the terms of Section 11.01 hereof.

Section 6.02      Expense Account.

                  (a) No later than the Closing Date, the Certificate
Administrator will establish and maintain with itself in its trust department a
trust account, which shall not be interest-bearing, titled "RAFC Expense Account
2001-1" (the "Expense Account"). The Trustee shall deposit into the Expense
Account:

                       (i) on each Distribution Date from the amounts on deposit
in the Certificate Account an amount equal to one-twelfth of that portion of the
Annual Expense Escrow Amount (as determined by the Servicer or the Certificate
Administrator) relating to the Mortgage Loans, subject to the provisions of
Section 6.04(d); and

                       (ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.03(e) in connection with losses on investments of
amounts in the Expense Account.

                  (b) If, at any time the aggregate amount then on deposit in
the Expense Account shall be insufficient to pay in full the Custodian Fee and
the Certificate Administrator Fee (each as calculated by the Servicer) and
expenses then due with respect to the Trust Fund, the Trustee, the Custodian or
Certificate Administrator, as the case may be, shall make demand on the Servicer
to advance the amount of such insufficiency, and the Servicer shall promptly
advance such amount to the Certificate Administrator for deposit in the Expense
Account. Thereafter, the Servicer shall be entitled to reimbursement from the
Expense Account for the amount of any such advance from any excess funds
available pursuant to subclause (c)(ii) below. Without limiting the obligation
of the Servicer to advance such insufficiency, in the event the Servicer does
not advance the full amount of such insufficiency by the Business Day
immediately preceding the Determination Date, the amount of such insufficiency
shall be deposited into the Expense Account for payment to the Trustee, the
Custodian or the Certificate Administrator, as the case may be, pursuant to
Section 6.04(d)(xi), to the extent of available funds in the Certificate
Account.

                  (c) The Certificate Administrator may invest amounts on
deposit in the Expense Account in Permitted Instruments pursuant to Section 6.07
hereof, and the Certificate Administrator shall withdraw amounts on deposit in
the Expense Account to:

                       (i) pay the Custodian Fee and the Certificate
Administrator Fee and expenses with respect to the Trust Fund in accordance with
written instructions provided by the Servicer or the Certificate Administrator;

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                       (ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on Permitted
Instruments;

                       (iii) to withdraw any amounts not required to be
deposited in the Expense Account or deposited therein in error; and

                       (iv) to clear and terminate the able Expense Account upon
the termination of the Trust Fund in accordance with Section 11.01 hereof.

                  (d) On the twelfth Distribution Date following the Closing
Date, and on each twelfth Distribution Date thereafter, the Certificate
Administrator shall determine that all payments required to be made during the
prior twelve month period pursuant to subclauses (c)(i), (c)(ii) and (c)(iii)
above, have been made, and, if all such payments have been made, from the
amounts remaining in the Expense Account, the Certificate Administrator shall
(in the following order of priority):

                       (i) reimburse the Servicer and/or the Seller, for
reimbursable advances made pursuant to Section 9.01;

                       (ii) reimburse the Servicer for advances made by it
pursuant to subclause (b) above; and

                       (iii) remit to the Servicer as additional servicing
compensation any amounts remaining in any Expense Account after payments made
pursuant to subclauses (c)(i), (c)(ii), (c)(iii), (d)(i) and (d)(ii), above.

Section 6.03      Investment of Accounts.

                  (a) So long as no default or Event of Default shall have
occurred and be continuing, and consistent with any requirements of the Code,
all or a portion of any Account held by the Certificate Administrator, shall be
invested and reinvested by the Certificate Administrator, as directed in writing
by the Servicer, in one or more Permitted Instruments bearing interest or sold
at a discount. If no such direction is received, the Certificate Administrator
shall invest the funds in any such Account in the Permitted Instruments
described in paragraph (f) of the definition thereof. No such investment in the
Certificate Account shall mature later than the Business Day immediately
preceding the next Distribution Date and no such investment in the Expense
Account shall mature later than the Business Day immediately preceding the date
such funds will be needed to pay fees or premiums or be transferred to the
Certificate Account, as the case may be; provided, however, the Certificate
Administrator, or any affiliate thereof may be the obligor on any investment
which otherwise qualifies as a Permitted Instrument and any investment on which
the Certificate Administrator is the obligor may mature on such Distribution
Date or date when needed, as the case may be.

                  (b) If any amounts are needed for disbursement from any
Account held by the Certificate Administrator, and sufficient uninvested funds
are not available to make such disbursement, the Certificate Administrator,
shall cause to be sold or otherwise converted to cash a sufficient amount of the
investments in such Account. The Certificate Administrator, shall not be liable
for any investment loss or other charge resulting therefrom.

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                  (c) Subject to Section 12.01 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee, resulting from any investment loss on any Permitted Instrument included
therein (except to the extent that the Trustee is the obligor thereon).

                  (d) The Trustee shall invest and reinvest funds in the
Accounts held by it to the fullest extent practicable, in such manner as the
Servicer shall from time to time direct in writing, but only in one or more
Permitted Instruments.

                  (e) All income or other gain from investments in any Account
held by the Trustee shall be deposited in such Account, immediately on receipt,
and the Trustee shall notify the Servicer of any loss resulting from such
investments. The Servicer shall remit the amount of any such loss from its own
funds, without reimbursement therefor, to the Trustee for deposit in the Account
from which the related funds were withdrawn for investment by the next
Determination Date following receipt by the Servicer of such notice.

Section 6.04      Flow of Funds.

                  (a) Distributions of Interest. On each Distribution Date, the
Certificate Administrator shall withdraw from the Certificate Account that
portion of the Available Funds which represents the Interest Remittance Amount
for that distribution date and apply such amount in the following order of
priority (based solely upon information provided by the Servicer):

                       (i) to the Expense Account, an amount equal to
one-twelfth of the Annual Expense Escrow Amount with respect to the Mortgage
Loans, plus any amount required to be paid to the Trustee, the Certificate
Administrator or the Custodian pursuant to Section 6.02(a) resulting from
insufficiencies in such Expense Account;

                       (ii) concurrently, to the Holders of the Class A-1, Class
A-2 and Class A-3 Certificates, the related Current Interest and any Interest
Shortfall Carryforward Amount for each such Class;

                       (iii) to the Holders of the Class M-1 Certificates, the
related Current Interest and any Interest Shortfall Carryforward Amount for such
Class;

                       (iv) to the Holders of the Class M-2 Certificates, the
related Current Interest and any Interest Shortfall Carryforward Amount for such
Class;

                       (v) to the Holders of the Class B-1 Certificates, the
related Current Interest and any Interest Shortfall Carryforward Amount for such
Class;

                       (vi) to the Holders of the Class B-2 Certificates, the
related Current Interest and any Interest Shortfall Carryforward Amount for such
Class; and

                       (vii) any remaining Interest Remittance Amount will be
applied as described below under Section 6.04(d).

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                  (b) Distributions of Principal Prior to Stepdown Date. On each
Distribution Date (a) prior to the Stepdown Date or (b) on which a Trigger Event
is in effect, the Certificate Administrator shall withdraw from the Certificate
Account that portion of the Available Funds which represents the Principal
Remittance Amount and make the distributions in the following amounts and order
of priority:

                       (i) to the Holders of the Class A-1 Certificates, the
entire amount of the Principal Distribution Amount, until the Certificate
Balance of the Class A-1 Certificates has been reduced to zero;

                       (ii) concurrently, to the Holders of the Class A-2 and
Class A-3 Certificates, the remaining Principal Distribution Amount, until the
Certificate Balances of the Class A-2 and Class A-3 Certificates have been
reduced to zero, such payment to be made pro rata between such Classes on the
basis of the Certificate Balances of such Classes immediately prior to such
distribution date;

                       (iii) if the Certificate Balance of the Class A
Certificates has been reduced to zero, to the Holders of the Class M-1
Certificates, the remaining Principal Distribution Amount until the Certificate
Balance of the Class M-1 Certificates has been reduced to zero;

                       (iv) if the Certificate Balances of the Class A and Class
M-1 Certificates have been reduced to zero, to the Holders of the Class M-2
Certificates, the remaining Principal Distribution Amount until the Certificate
Balance of the Class M-2 Certificates has been reduced to zero;

                       (v) if the Certificate Balances of the Class A and Class
M Certificates have been reduced to zero, to the Holders of the Class B-1
Certificates, the remaining Principal Distribution Amount until the Certificate
Balance of the Class B-1 Certificates has been reduced to zero;

                       (vi) if the Certificate Balances of the Class A, Class M
and Class B-1 Certificates have been reduced to zero, to the Holders of the
Class B-2 Certificates, the remaining Principal Distribution Amount until the
Certificate Balance of the Class B-2 Certificates has been reduced to zero; and

                       (vii) any remaining Principal Distribution Amount will be
applied as described under Section 6.04(d).

                  (c) Distributions of Principal On or After Stepdown Date. On
each Distribution Date (a) on or after the Stepdown Date and (b) on which a
Trigger Event is not in effect, the Certificate Administrator shall withdraw
from the Certificate Account that portion of the Available Funds which
represents the Principal Remittance Amount and make the distributions in the
following amounts and order of priority:

                       (i) the Class A Principal Distribution Amount will be
distributed:

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                           (a) to the Holders of the Class A-1 Certificates,
                  until the principal balance of the Class A-1 Certificates is
                  reduced to zero; and

                           (b) to the Holders of the Class A-2 and Class A-3
                  Certificates, such payment to be made pro rata between such
                  Classes on the basis of the Certificate Balances of such
                  Classes immediately prior to such Distribution Date, until the
                  Certificate Balances of the Class A-2 and Class A-3
                  Certificates are reduced to zero;

                       (ii) to the Holders of the Class M-1 Certificates, the
Class M-1 Principal Distribution Amount;

                       (iii) to the Holders of the Class M-2 Certificates, the
Class M-2 Principal Distribution Amount;

                       (iv) to the Holders of the Class B-1 Certificates, the
Class B-1 Principal Distribution Amount;

                       (v) to the Holders of the Class B-2 Certificates, the
Class B-2 Principal Distribution Amount; and

                       (vi) any remaining Principal Distribution Amount will be
applied as described under Section 6.04(d).

                  (d) Distributions of Excess Cashflow. On each Distribution
Date, the Certificate Administrator will make the following distributions to the
extent of amounts available therefor from Sections 6.04(a)(vii), 6.04(b)(vii)
and 6.04(c)(vi) in the following order of priority:

                       (i) to the Holders of the Class A Certificates, any
unpaid Interest Shortfall Carryforward Amounts for those Classes, such payment
to be made pro rata among these Classes on the basis of the shortfalls for each
Class;

                       (ii) to fund the Accelerated Principal Distribution
Amount, if any;

                       (iii) to the Holders of the Class M-1 Certificates, any
unpaid Interest Shortfall Carryforward Amount for that Class;

                       (iv) to the Holders of the Class M-1 Certificates, any
unpaid Applied Realized Loss Amount for that class;

                       (v) to the Holders of the Class M-2 Certificates, any
unpaid Interest Shortfall Carryforward Amount for that Class;

                       (vi) to the Holders of the Class M-2 Certificates, any
unpaid Applied Realized Loss Amount for that class;

                       (vii) to the Holders of the Class B-1 Certificates, any
unpaid Interest Shortfall Carryforward Amount for that Class;

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                       (viii) to the Holders of the Class B-1 Certificates, any
unpaid Applied Realized Loss Amount for that class;

                       (ix) to the Holders of the Class B-2 Certificates, any
unpaid Interest Shortfall Carryforward Amount for that Class;

                       (x) to the Holders of the Class B-2 Certificates, any
unpaid Applied Realized Loss Amount for that class;

                       (xi) to the Expense Account, the amount, if any, required
to be deposited therein pursuant to Section 6.02(b) hereof;

                       (xii) to the Holders of the Class X Certificates, the
Class X Distribution Amount; and

                       (xiii) any remainder, to the Holders of the Class R-2
Certificates.

                  (e) All distributions made to the Certificateholders on each
Distribution Date will be made on a pro rata basis among the Certificateholders
of the respective Class of record on the next preceding Record Date based on the
Percentage Interest represented by their respective Certificates, and shall,
except for the final payment on such Certificates, be made by wire transfer of
immediately available funds to the account of such Certificateholder as shall
appear on the Certificate Register without the presentation or surrender of the
Certificate or the making of any notation thereon, at a bank or other entity
having appropriate facilities therefor, at the expense of each such
Certificateholder unless such Certificateholder shall own of record Certificates
which have original principal amounts aggregating (i) at least $5,000,000 or
(ii) one of the two highest outstanding amounts less than $5,000,000.

Section 6.05      Allocation of Realized Losses.

                  (a) If on any Distribution Date, after taking into account all
Realized Losses experienced during the prior Collection Period and after taking
into account the distribution of principal (including the Accelerated Principal
Distribution Amount), with respect to the Certificates on such Distribution
Date, the aggregate Class Principal Balance of the Certificates exceeds the
aggregate Principal Balance of the Mortgage Loans, as applicable, as of the end
of the related Collection Period, then the Class Principal Balance of the Class
M and/or Class B Certificates shall be reduced such that the level of the
Overcollaterization Amount is zero, rather than negative. The resulting Applied
Realized Loss Amount for the applicable Class shall be applied as a reduction in
the Class Principal Balance of the related Class M and/or Class B Certificates
in reverse order of seniority, i.e., first against the Class B-2 Class Principal
Balance until it is reduced to zero, then against the Class B-1 Class Principal
Balance until it is reduced to zero, then against the Class M-2 Class Principal
Balance until it is reduced to zero, and lastly against the Class M-1 Class
Principal Balance until it is reduced to zero. In no event shall the Class
Principal Balance of any Class A Certificate be written down as a result of
applying Realized Losses.

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                  (b) Once the Class Principal Balance of a Class of Class M
and/or Class B Certificates, as applicable, has been reduced the amount of such
reduction will no longer bear interest, nor will such amount thereafter be
"reinstated" or "written up," although the amount of such write down may, on
future Distribution Dates, be paid to Holders of the Class M and/or Class B
Certificates which experienced the write down, in direct order of seniority as
distributions on account of the related Class M-1, Class M-2, Class B-1, or
Class B-2 Realized Loss Amounts, as applicable.

Section 6.06      Statements.

                  (a) Each month, not later than 12:00 noon New York time on the
Determination Date, the Certificate Administrator shall prepare a report signed
by an officer of the Certificate Administrator (a "Certificate Administrator's
Report") stating the date (day, month and year), the Series number of the
Certificates, the date of this Agreement, and the following (based solely on the
information received from the Servicer in the Servicer's monthly computer tape):

                       (i) the Available Funds for the related Distribution
Date;

                       (ii) the Class Principal Balances for each Class of
Certificates or, in the case of the first Determination Date, the Original
Principal Balance for each Class of Certificates;

                       (iii) the Principal Distribution Amounts for the related
Distribution Date, in the aggregate and listed separately for the portions
relating to each Class of Certificates;

                       (iv) the Overcollateralization Amount and Targeted
Overcollateralization Amount for the related Distribution Date;

                       (v) the number and Principal Balances of all Mortgage
Loans which were the subject of Principal Prepayments during the Collection
Period;

                       (vi) the amount of all Curtailments which were received
during the Collection Period;

                       (vii) the aggregate amount of all Excess Payments and the
amounts of Monthly Payments in respect of principal received during the
Collection Period;

                       (viii) the amount of interest received on the Mortgage
Loans;

                       (ix) the amount of the Monthly Advances to be made on the
Determination Date, the portion of the Monthly Advances to be deposited in the
Certificate Account pursuant to Section 6.01(a)(ii), and the Compensating
Interest payment to be made on the Determination Date;

                       (x) the delinquency and foreclosure information set forth
in the form attached hereto as Exhibit I;

                       (xi) the amount of any Realized Losses incurred during
the related Collection Period;

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                       (xii) the Current Interest for the Distribution Date for
each Class of Certificates and any Interest Shortfall Carryforward Amount
relating to each Class of Certificates;

                       (xiii) the Reimbursable Amounts and amounts payable to
the Class X Certificates pursuant to Sections 6.04(d) with respect to the
Distribution Date;

                       (xiv) the Class Principal Balance for each Class of
Certificates and the Principal Balance after giving effect to the distribution
to be made on the Distribution Date and after allocation of Realized Losses made
on such Distribution Date;

                       (xv) the Cumulative Realized Losses with respect to the
Distribution Date;

                       (xvi) the Supplemental Interest Amount for the Class A-2
Certificates with respect to the Distribution Date;

                       (xvii) the Servicing Fees, and amounts to be deposited to
the Expense Account;

                       (xviii) the amount of all payments and reimbursements to
the Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e) and (f);

                       (xix) the weighted average maturity and weighted average
Mortgage Interest Rate of the Mortgage Loans for the related Collection Period,
and the weighted average Mortgage Interest Rate for the prior three month
period;

                       (xx) the Pass-Through Rate for each Class of Certificates
with respect to the Distribution Date and if the Pass-Through Rate for any Class
of Certificates was based on the Pool Cap (or in the case of the Class A-2
Certificates, the Fixed Cap), what it would have been without regard to the Pool
Cap (or Fixed Cap);

                       (xxi) the rate of LIBOR with respect to the Distribution
Date;

                       (xxii) the Pool Cap with respect to the Distribution
Date;

                       (xxiii) if the Pass-Through Rate for the Class A-2
Certificates for such Distribution Date is based on the Fixed Cap, the amount of
any remaining Supplemental Interest Amount for such Class after any Supplemental
Interest Payments are made for such Distribution Date;

                       (xxiv) with respect to the Class A-2 Certificates, the
amount of the distribution, if any, allocable to Supplemental Interest Amount
and the amount of any Supplemental Interest Amount for all prior Distribution
Dates after giving effect to such distribution;

                       (xxv) whether the Trigger Event is in effect;

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                       (xxvi) the amount of any Applied Realized Loss Amount
with respect to each Class of Certificates, the amount of Realized Losses for
the related Collection Period with respect to the Mortgage Loans, and the amount
of Cumulative Realized Losses on the Mortgage Loans as of the close of such
Distribution Date;

                       (xxvii) the amount of the Accelerated Principal
Distribution Amount for such Distribution Date;

                       (xxviii) the number and Principal Balance of all
Defaulted Mortgage Loans purchased during the Collection Period;

                       (xxix) the Overcollaterization Amount for the applicable
Distribution Date;

                       (xxx) such other information as the Trustee may
reasonably require.

                  The Certificate Administrator will make the report to
Certificateholders available each month via the Certificate Administrator's
internet website. The Certificate Administrator's internet website will
initially be located at "www.firstlinkabs.com". Assistance in using the website
can be obtained by calling the Certificate Administrator's customer service desk
at 704-383-9568. Parties that are unable to use the above distribution method
are entitled to have a paper copy mailed to them via first class mail by calling
the customer service desk and indicating such.

                  The Trustee shall forward such report to the
Certificateholders on the Distribution Date, together, if requested by a
Certificateholder, with a separate report indicating the amount of funds
deposited in the Certificate Account pursuant to Section 6.01(a); and the
amounts which are reimbursable to the Servicer or the Seller, as appropriate,
pursuant to Sections 6.02(c)(i) and 6.02(c)(ii).

                  In the discretion of the Certificate Administrator, in the
case of certain information furnished pursuant to the above provisions, the
amounts shall be expressed in a separate Section of the report as a dollar
amount for each Class per $25,000 original dollar amount as of the Cut-Off Date.

                  Each month, not later than the third Business Day prior to the
Determination Date occurring in such month, the Servicer shall deliver to the
Certificate Administrator the Servicer's Monthly Computer Tape in the form
attached hereto as Exhibit J (both in hard copy and in computer tape form). The
Certificate Administrator may rely fully upon and shall have no liability with
respect to any information provided to it by the Servicer. The Certificate
Administrator shall not be obligated to verify, recompute, reconcile or confirm
any information contained in the Servicer's Monthly Computer Tape or otherwise
provided by the Servicer.

                  In making any payments or distributions required to be made by
them pursuant to any of the provisions hereof, the Certificate Administrator
shall make such payments and distributions based solely upon the information
contained in the Servicer's Monthly Computer Tape or, if such information is not
included in the Servicer's Monthly Computer Tape, upon written instructions of
the Servicer. The Trustee may rely fully upon and shall have no liability with

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respect to any such information provided to it by the Servicer or the
Certificate Administrator. The Trustee shall not be obligated to verify,
recompute, reconcile or confirm any information contained in any Certificate
Administrator's Report or otherwise provided by the Certificate Administrator or
the Servicer.

                  (b) Within a reasonable period of time after the end of each
calendar year, the Certificate Administrator shall furnish to each Person who at
any time during the calendar year was a Certificateholder and who so requests
the amount of interest and principal distributed with respect to each Class of
Certificates plus such other customary information as the Certificate
Administrator determines to be necessary and/or required by the Internal Revenue
Service to enable the Certificateholders to prepare their tax returns for such
calendar year. Such obligation of the Certificate Administrator shall be deemed
to have been satisfied to the extent that substantially comparable information
shall be provided by the Certificate Administrator pursuant to any requirements
of the Code as from time to time are in force.

                  (c) On each Distribution Date, the Certificate Administrator
shall make available to the Class X and Class R Certificateholders a copy of the
report forwarded to the Certificateholders in respect of such Distribution Date,
as the case may be, and a statement, prepared by the Servicer or the Certificate
Administrator, setting forth the amounts actually distributed to the Class X and
Class R Certificateholders, on such Distribution Date together with such other
information as the Servicer or Certificate Administrator provides and deems
necessary or appropriate.

                  (d) Within a reasonable period of time after the end of each
calendar year, the Certificate Administrator shall distribute to each Person who
at any time during the calendar year was a Class X or Class R Certificateholder
and who so requests such information as is reasonably necessary to provide to
such Person a statement containing the information provided pursuant to the
previous paragraph aggregated for such calendar year or applicable portion
thereof during which such Person was a Class X or R Certificateholder, as
applicable. Such obligation of the Certificate Administrator shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Certificate Administrator pursuant to any requirements
of the Code as from time to time in force.

                  (e) Upon reasonable advance notice in writing, the Servicer
will provide to each Certificateholder which is a savings and loan association,
bank or insurance company certain reports and access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the Office of Thrift
Supervision or other regulatory authorities with respect to investment in the
Certificates.

                  (f) The Servicer shall furnish to each Certificateholder,
during the term of this Agreement, such periodic, special, or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Certificateholder, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions as the Certificateholder may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by such Certificateholder for the
Servicer's actual expenses incurred in providing such reports if such reports
are not producible in the ordinary course of the Servicer's business.

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                  (g) The Certificate Administrator shall, on behalf of the
Trust Fund, prepare, sign and file with the Securities and Exchange Commission
any and all reports, statements and information respecting the Trust which the
Depositor determines are required to be filed with the Securities and Exchange
Commission pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, each such report, statement and information to be filed on or
prior to the required filing date for such report, statement or information.
Upon the request of the Certificate Administrator, each of the Servicer and the
Depositor shall cooperate with the Certificate Administrator in the preparation
of any such report and shall provide to the Certificate Administrator in a
timely manner all such information or documentation as the Certificate
Administrator may reasonably request in connection with the performance of its
duties and obligations under this Section 6.06(g).

Section 6.07      Advances by the Servicer.

                  Not later than 12:00 noon New York time on each Determination
Date, the Servicer shall remit to the Certificate Administrator for deposit in
the Certificate Account an amount (as indicated in the Servicer's Certificate
prepared pursuant to Section 6.06), to be distributed on the related
Distribution Date pursuant to Section 6.04, equal to the aggregate amount of
scheduled principal and interest (net of the Servicing Fee) for each Delinquent
Mortgage Loan that is an Actuarial Loan. Such amount is defined herein as the
"Monthly Advance." The Servicer may reimburse itself for Monthly Advances made
pursuant to Section 5.04.

                  Notwithstanding anything herein to the contrary, no Monthly
Advance shall be required to be made if the Servicer determines that such
Monthly Advance would, if made, constitute a Nonrecoverable Advance.

Section 6.08      Compensating Interest.

                  The Certificateholders shall be entitled to a full month's
interest for each Mortgage Loan for any month during which a Principal
Prepayment or Curtailment is received on such Mortgage Loan. Not later than the
12:00 noon New York time on each Determination Date, with respect to each
Mortgage Loan for which a Principal Prepayment or Curtailment was received
during the related Collection Period, the Servicer shall remit to the
Certificate Administrator for deposit in the Certificate Account from amounts
otherwise payable to it as servicing compensation, an amount (such amount
required to be delivered to the Certificate Administrator is referred to herein
as "Compensating Interest") (as indicated in the Servicer's Monthly Tape
prepared pursuant to Section 6.06) equal to the difference between (a) interest
on the actual number of days since the last Distribution Date to but not
including the upcoming Distribution Date or, with respect to the first
Distribution Date, from the Closing Date, at the then weighted average Mortgage
Interest Rates on the Principal Balance of each such Mortgage Loan and (b) the
amount of interest actually received on each such Mortgage Loan for such
Collection Period as of the beginning of the Collection Period applicable to the
Distribution Date on which such amount will be distributed.

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Section 6.09      Reports of Foreclosure and Abandonment of Mortgaged Property.

                  Each year the Trustee shall execute and return to the Servicer
for filing the reports of foreclosures and abandonments of any Mortgaged
Property prepared by the Servicer required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Certificate Administrator and the
Trustee reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Trust Fund acquired an interest
in a Mortgaged Property through foreclosure or other comparable conversion in
full or partial satisfaction of the Mortgage Loan, or (ii) knew or had reason to
know that a Mortgaged Property had been abandoned. The reports from the Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by such Section 6050J.

Section 6.10      Supplemental Interest Account.

                  (a) The parties do hereby create and establish a sub-trust of
the Trust Fund, which shall hold an account, which, no later than the Closing
Date, the Certificate Administrator shall establish and maintain, as a
segregated trust account that is an Eligible Account, which shall be titled
"Supplemental Interest Account, Citibank, N.A., as Trustee for the registered
holders of RAFC Trust 2001-1, Asset-Backed Certificates, Series 2001-1, Class
A-2" (the "Supplemental Interest Account"). The Certificate Administrator shall,
promptly upon receipt, deposit in the Supplemental Interest Account all amounts
received by it from the Servicer in respect of the Cap Agreement. Funds
deposited in the Supplemental Interest Account shall be held in trust by the
Certificate Administrator for the Class A-2 Certificateholders and the Holder of
the SI Trust Certificate for the uses and purposes set forth herein.

                  (b) The Certificate Administrator will invest funds deposited
in the Supplemental Interest Account as directed in writing by the Servicer in
Permitted Investments with a maturity date (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
Certificate 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 Certificate Administrator
or an Affiliate manages or advises such investment. For federal income tax
purposes, the Holder of the SI Trust Certificate shall be the owner of the
Supplemental Interest Account and shall report all items of income, deduction,
gain or loss arising therefrom. All income and gain realized from investment of
funds deposited in the Supplemental Interest Account shall be credited to such
Account. At no time will the Supplemental Interest Account be an asset of any
REMIC created hereunder. In no event shall the Certificate Administrator be
liable for the selection of Permitted Investments or for investment losses
incurred thereon. The Certificate Administrator shall have no liability in
respect of losses incurred as a result of the liquidation of any Permitted
Investments prior to its stated maturity or failure to provide timely written
direction.

                  (c) On each Remittance Date, the Certificate Administrator
shall distribute the funds held in the Supplemental Interest Account as follows:

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                       (i) first, to pay the Supplemental Interest Amount for
the Class A-2 Certificates; and

                       (ii) second, any excess to the Holder of the SI Trust
Certificate.

                  (d) The Certificate Administrator shall comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Person entitled thereto of
any applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.

                  (e) Notwithstanding any other provision of this Section 6.06,
the right to receive the Supplemental Interest Amount shall not be separately
transferable from the Class A-2 Certificates.

Section 6.11      Establishment of Servicing Account; Collection of Taxes,
Assessments and Similar Items.

                  (a) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Servicing Accounts (each a "Servicing
Account"). The Servicer will deposit and retain, or cause to be deposited and
retained, therein all collections from the Mortgagors for the payment of taxes,
assessments, insurance premiums, or comparable items as agent of the Mortgagors.

                  (b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in accounts each designated as a "Mortgage
Loan Servicing Account," held in trust by the Servicer or a Subservicer acting
on its own behalf and as agent for holders of various pass-through securities
and other interests in mortgage loans sold by it. The amount at any time
credited to a Servicing Accounts must be fully insured by FDIC, or, to the
extent that such deposits exceed the limits of such insurance, such excess must
be (i) transferred to another fully insured account in another Designated
Depository Institution or (ii) if permitted by applicable law, invested in
Permitted Instruments held in trust by the Servicer or a Subservicer.
Withdrawals of amounts from a Servicing Account may be made only to effect
timely payment of taxes, assessments, insurance premiums, or comparable items,
to reimburse the related Servicer or Subservicer for any advances made with
respect to such items, to refund to any Mortgagors any sums as may be determined
to be overages, to pay interest, if required, to Mortgagors on balances in the
Servicing Accounts, to pay the related Servicer or Subservicer the remainder of
any income on balances in the Servicing Accounts or to clear and terminate the
Servicing Accounts at or any time after the termination of this Agreement.

                                  ARTICLE VII

                           GENERAL SERVICING PROCEDURE

Section 7.01      Assumption Agreements.

                  When a Mortgaged Property has been or is about to be conveyed
by the Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the

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maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Mortgage Note; provided, however, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law or if such
enforcement would materially increase the risk of default or delinquency on, or
materially decrease the security for, such Mortgage Loan. In such event, the
Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable law or the Mortgage, the Mortgagor remains liable thereon. The
Servicer is also authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Mortgage Note. The Servicer shall notify the Certificate Administrator and
the Trustee, that any such substitution or assumption agreement has been
completed by forwarding to the Custodian (who shall forward it to the
Certificate Administrator and the Trustee) the original of such substitution or
assumption agreement, which original shall be added by the Custodian to the
related Trustee's Mortgage File and shall, for all purposes, be considered a
part of such Trustee's Mortgage File to the same extent as all other documents
and instruments constituting a part thereof. In connection with any assumption
or substitution agreement entered into pursuant to this Section 7.01, the
Servicer shall not change the Mortgage Interest Rate or the Monthly Payment,
defer or forgive the payment of principal or interest, reduce the outstanding
principal amount or extend the final maturity date on such Mortgage Loan. Any
fee collected by the Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.

Section 7.02      Satisfaction of Mortgages and Release of Mortgage Files.

                  The Servicer shall not grant a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage or otherwise prejudice any right the Certificateholders may have
under the mortgage instruments, subject to Section 5.01 hereof. The Servicer
shall maintain the Fidelity Bond as provided for in Section 5.09 insuring the
Servicer against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.

                  Upon the payment in full of any Mortgage Loan, or the receipt
by the Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Servicer will immediately notify the
Custodian, the Certificate Administrator and the Trustee, by an Officers'
Certificate in the form of Exhibit F attached hereto (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 Principal
and Interest Account pursuant to Section 5.03 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Trustee's
Mortgage File. Upon receipt of such certification and request, the Custodian

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shall promptly release the related Trustee's Mortgage File to the Servicer.
Expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be payable only from and to the extent of servicing
compensation and shall not be chargeable to the Principal and Interest Account
or the Certificate Account.

                  From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any primary mortgage guaranty insurance policy, the Custodian shall, upon
request of the Servicer and delivery to the Custodian of a certification in the
form of Exhibit F attached hereto signed by a Servicing Officer, release the
related Trustee's Mortgage File to the Servicer and the Custodian shall execute
such documents furnished by the Servicer as shall be necessary to the
prosecution of any such proceedings. Such servicing receipt shall obligate the
Servicer to return the Trustee's Mortgage File to the Custodian when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Principal and Interest Account and remitted to the Trustee for
deposit in the Certificate Account or the Trustee's 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 nonjudicially, and the Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Trustee's 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, the servicing
receipt shall be released by the Custodian to the Servicer.

                  The Trustee upon the request of the Servicer and receipt of
the applicable documents from the Custodian shall execute and deliver to the
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Together with such documents or
pleadings, the Servicer shall deliver to the Trustee a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
Trustee and certifying 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. The Trustee shall,
upon receipt of a written request from a Servicing Officer, execute any document
provided to the Trustee by the Servicer or take any other action requested in
such request, that is, in the opinion of the Servicer as evidenced by such
request, required by any state or other jurisdiction to discharge the lien of a
Mortgage upon the satisfaction thereof and the Trustee will sign and post, but
will not guarantee receipt of, any such documents to the Servicer, or such other
party as the Servicer may direct, within five Business Days of the Trustee's
receipt of such certificate or documents. Such certificate or documents shall
establish to the Trustee's satisfaction that the related Mortgage Loan has been
paid in full by or on behalf of the Mortgagor and that such payment has been
deposited in the Principal and Interest Account.

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                  Notwithstanding anything in this Agreement to the contrary,
all requests for release, and certificates of the Servicer relating to releases
of the related Trustee's Mortgage Files shall be delivered by the Servicer to
the Custodian, which shall forward such requests to the Certificate
Administrator and the Trustee, and all releases of Trustee's Mortgage Files
shall be made by delivery of such files by the Trustee to the Custodian, which
shall be responsible for delivering such files to the Servicer or its designee.
The Trustee shall not be liable for the Custodian's failure or delay in
forwarding a request for release to the Trustee or for the Custodian's failure
or delay in delivering a Trustee's Mortgage File to the Servicer or its designee
or returning such file to the Trustee.

Section 7.03      Servicing Compensation.

                  As compensation for its services hereunder, the Servicer shall
be entitled to withdraw from the Principal and Interest Account or to retain
from interest payments on the Mortgage Loans the Servicer's Servicing Fee.
Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Section
6.02(c)(ii) and late payment charges shall be retained by or remitted to the
Servicer to the extent not required to be remitted to the Trustee for deposit in
the Certificate Account. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for
herein.

Section 7.04      Annual Statement as to Compliance.

                  The Servicer will deliver to the Trustee, the Certificate
Administrator and each of the Rating Agencies, on or before January 31 of each
year beginning January 31, 2002, an Officers' Certificate stating that (i) the
Servicer has fully complied with the provisions of Articles V and VII, (ii) a
review of the activities of the Servicer during the preceding calendar year and
of performance under this Agreement has been made under such officers'
supervision, and (iii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof and the action being taken by the Servicer to cure
such default.

Section 7.05      Annual Independent Public Accountants' Servicing Report.

                  On or before January 31 of each year beginning January 31,
2002, the Servicer, at its expense, shall cause a firm of independent public
accountants reasonably acceptable to the Trustee to furnish a letter or letters
to the Trustee, the Certificate Administrator and the Rating Agencies to the
effect that such firm has with respect to the Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.

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Section 7.06      Trustee's and Certificate Administrator's Right to Examine
Servicer Records and Audit Operations.

                  The Trustee and the Certificate Administrator shall have the
right upon reasonable prior notice, during normal business hours and as often as
reasonably required, to examine and audit any and all of the books, records or
other information of the Servicer, whether held by the Servicer or by another on
behalf of the Servicer, which may be relevant to the performance or observance
by the Servicer of the terms, covenants or conditions of this Agreement. No
amounts payable in respect of the foregoing shall be paid from the Trust Fund.

Section 7.07      Reports to the Trustee; Principal and Interest Account
Statements.

                  Not later than 20 days after each Record Date, the Servicer
shall forward to the Certificate Administrator a statement, upon request,
certified by a Servicing Officer, setting forth the status of the Principal and
Interest Account as of the close of business on the preceding Record Date and
showing, for the period covered by such statement, the aggregate of deposits
into the Principal and Interest Account for each category of deposit specified
in Section 5.03, the aggregate of withdrawals from the Principal and Interest
Account for each category of withdrawal specified in Section 5.04, the aggregate
amount of permitted withdrawals not made in the related Collection Period, and
the amount of any Monthly Advances or payments of Compensating Interest, in each
case, for the related Collection Period.

Section 7.08      Administration of Cap Agreement.

                  (a) The Servicer shall take all such actions on behalf of the
Trustee and the Certificate Administrator as are necessary to administer the Cap
Agreement and to enforce the Trustee's rights under the Cap Agreement, which
actions shall conform to the standards of an institution prudently administering
the Cap Agreement for its own account. Except as expressly set forth herein, the
Servicer shall have full authority on behalf of the Trustee and the Certificate
Administrator to do anything it deems appropriate or desirable in connection
with the administration of the Cap Agreement. The Servicer shall make its best
reasonable efforts to collect or cause to be collected from the Cap Agreement
counterparty payments due to the Trustee thereunder.

                  (b) The Servicer shall cause to be deposited into the
Supplemental Interest Account all payments received from the Cap Agreement
counterparty under the terms of the Cap Agreement.

                  (c) Notwithstanding the provisions of Section 7.08(a) and (b),
the Servicer shall not take any action in regard to the Cap Agreement that is
inconsistent with the interests of the Trustee on behalf of the Class A-2
Certificateholders and the Holder of the SI Trust Certificate therein.

                  (d) The Trustee and the Certificate Administrator shall
furnish the Servicer with any powers of attorney and other documents in form as
provided to it that are necessary or appropriate to enable the Servicer to
service and administer the Cap Agreement, and the Trustee and the Certificate
Administrator shall not be liable for the actions of the Servicer under such
powers of attorney.

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                                  ARTICLE VIII

                                   [RESERVED]

                                   ARTICLE IX

                                  THE SERVICER

Section 9.01      Indemnification; Third Party Claims.

                  The Servicer agrees to indemnify and hold the Trustee, the
Certificate Administrator, the Custodian and each Certificateholder harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Certificate Administrator, the Custodian and any Certificateholder
may sustain in any way related to the failure of the Servicer to perform its
duties and service the Mortgage Loans in compliance with the terms of this
Agreement. The Servicer shall immediately notify the Trustee, the Certificate
Administrator, the Custodian and each Certificateholder if a claim is made by a
third party with respect to this Agreement, and the Servicer shall assume (with
the consent of the applicable indemnified parties) the defense of any such claim
and pay all expenses in connection therewith, including reasonable counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against the Servicer, the Certificate Administrator, the Trustee, the
Custodian and/or Certificateholder in respect of such claim. The Certificate
Administrator shall reimburse the Servicer from the Expense Account pursuant to
Section 6.02(c)(i), and, if necessary, from amounts otherwise payable to the
Holders of the Class X Certificates from the Remaining Amount Available for all
amounts advanced by it pursuant to the preceding sentence with respect to the
Trust Fund except when the claim relates directly to the failure of the Servicer
to service and administer the Mortgages in compliance with the terms of this
Agreement.

Section 9.02      Merger or Consolidation of the Servicer.

                  The Servicer will keep in full effect its existence, rights
and franchises as a corporation, and will obtain and preserve its qualification
to do business as a foreign corporation, in each jurisdiction necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its duties under this Agreement.

                  Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and a valid Contract of
Insurance and shall be the successor of the Servicer, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. The Servicer
shall send notice of any such merger or consolidation to the Trustee.

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Section 9.03      Limitation on Liability of the Servicer and Others.

                  The Servicer and any director, officer, employee or agent of
the Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities respecting any matters arising hereunder. Subject to the
terms of Section 9.01 herein, the Servicer shall have no obligation to appear
with respect to, prosecute or defend any legal action which is not incidental to
the Servicer's duty to service the Mortgage Loans in accordance with this
Agreement.

Section 9.04      Servicer Not to Resign.

                  The Servicer shall not assign this Agreement nor resign from
the obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Trustee and the Majority Certificateholders, or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by a written Opinion of Counsel (who may be counsel for the Servicer) to such
effect delivered to the Trustee and to each Certificateholder, which Opinion of
Counsel shall be in form and substance acceptable to the Trustee. No such
resignation shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 10.02.

Section 9.05      Appointment of Certificate Administrator.

                  The Servicer and the Trustee hereby appoint FUNB as
Certificate Administrator and, in such capacity, the Certificate Administrator
shall have all the rights, powers, obligations and duties respecting the
Certificate Administrator set forth herein.

                  The Certificate Administrator shall undertake to perform such
duties and only such duties as are specifically set forth in this Agreement. The
Certificate Administrator shall have all the rights and benefits of and the
limitation on liability afforded to the Trustee under Article XII to the same
extent as though the Certificate Administrator had been named in the various
provisions of Article XII.

Section 9.06      Appointment of Special Servicer.

                  At any time prior to the occurrence of an Event of Default,
the initial Holders of a majority of the Percentage Interest of the Class X
Certificates may, by notice in writing to the Servicer, the Certificate
Administrator and the Trustee, require the Servicer to appoint a sub-servicer
for one or more specific Mortgage Loans, or replace HomEq Servicing Corporation
as Servicer with an entity named by such Certificateholder: provided, however,
that (i) such appointment shall not result in any of the Rating Agencies
lowering the ratings then assigned by it to any Class of Certificates and (ii)
any successor servicer is designated at least a "select servicer" by S&P. Any
removal of HomEq Servicing Corporation as Servicer and appointment of a
successor also shall comply with the provisions of Section 10.02. If the initial
Holder of the Class X Certificates transfers more than a majority of the
Percentage Interest of such Class, such Holder will no longer have the rights
set forth in this Section 9.06. Also, upon the occurrence of an Event of
Default, the Holders of the Class X Certificates shall lose such rights.

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                                    ARTICLE X

                                     DEFAULT

Section 10.01     Events of Default.

                  (a) In case one or more of the following Events of Default
shall occur and be continuing, that is to say:

                       (i) (A) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and adversely affects
the interests of the Certificateholders; (B) the failure by the Servicer to make
any required Monthly Advance; (C) the failure by the Servicer to remit any
Compensating Interest; or (D) any failure by the Servicer to remit to
Certificateholders, or to the Trustee for the benefit of the Certificateholders,
any payment required to be made under the terms of this Agreement which
continues unremedied, in the case of the events described in clauses (i)(A) and
(i)(C) for 30 days, after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Trustee or to the Servicer and the Trustee by any Certificateholder; or

                       (ii) failure by the Servicer or the Seller duly to
observe or perform, in any material respect, any other covenants, obligations or
agreements of the Servicer or the Seller as set forth in this Agreement, which
failure continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer or the Seller, as the case may be, by the Trustee or
to the Servicer or the Seller, as the case may be, and the Trustee by any
Certificateholder; or

                       (iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force, undischarged or unstayed for
a period of 60 days; or

                       (iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of the Servicer's
property; or

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

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                  (b) then, and in each and every such case, so long as an Event
of Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(B)), if such Event of Default shall not have been
remedied within 30 days after the Servicer has received notice of such Event of
Default, (x) with respect solely to clause (i)(B) above, if such Monthly Advance
is not made earlier than 4:00 p.m. New York time on the Determination Date, the
Trustee shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer and, unless such failure is cured, either by receipt of
payment or receipt of evidence satisfactory to the Trustee (e.g., a wire
reference number communicated by the sending bank) that such funds have been
sent, by 12:00 Noon New York time on the following Business Day, the Trustee
shall immediately assume, pursuant to Section 10.02 hereof, the duties of a
successor Servicer; and (y) in the case of clauses (i)(A), (i)(C), (i)(D), (ii),
(iii), (iv) and (v), the Majority Certificateholders, by notice in writing to
the Servicer, may, in addition to whatever rights such Certificateholders may
have at law or equity including damages, injunctive relief and specific
performance, in each case commence termination of all the rights and obligations
of the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, as Servicer. Upon receipt by the Servicer of a second written
notice from the Majority Certificateholders stating that they or it intend to
terminate the Servicer as a result of such Event of Default, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall, subject to Section 10.02, pass to and be vested in
the Trustee or its designee and the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or its designee for administration by it
of all amounts which shall at the time be credited by the Servicer to the
Principal and Interest Account or thereafter received with respect to the
Mortgage Loans. Notwithstanding anything herein to the contrary, the Trustee
shall not be held liable by reason of any failure to make, or any delay in
making, any payment or distribution hereunder or any portion thereof caused by
the failure of the Servicer to deliver, or any delay in delivering, cash,
documents, records or other instruments to it.

Section 10.02     Trustee to Act; Appointment of Successor.

                  Within a period not to exceed ninety (90) days after the time
the Servicer receives a notice of termination pursuant to Section 10.01 or the
Trustee receives the resignation of the Servicer evidenced by an Opinion of
Counsel pursuant to Section 9.04 or the Servicer is removed as servicer pursuant
to this Article X, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, provided, however, that the Trustee shall
not be liable for any actions of any servicer prior to it, and that the Trustee
shall not be obligated to make advances or payments pursuant to Sections 6.02,
6.07, 6.04, 5.05, 5.10 or 5.14 but only to the extent the Trustee, determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee. As compensation therefor,
the Trustee shall be entitled to all funds relating to the Mortgage Loans which
the Servicer would have been entitled to receive from the Principal and Interest
Account pursuant to Section 5.04 if the Servicer had continued to act as
servicer hereunder, together with other servicing compensation in the form of
assumption fees, late payment charges, the Servicing Fee or otherwise as
provided in Sections 7.01 and 7.03.

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                  Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders so request in writing to the Trustee, appoint, or petition a
court of competent jurisdiction to appoint, any established mortgage loan
servicing institution reasonably acceptable to the Rating Agencies (as confirmed
by a letter from each Rating Agency stating that no reduction of any rating
issued in respect of the Certificates will occur as a result of such
appointment), that has a net worth of not less than $15,000,000 and which is
approved as a servicer by Fannie Mae and Freddie Mac as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any collections received by the
Servicer after removal or resignation shall be endorsed by it to the Trustee and
remitted directly to the Trustee or, at the direction of the Trustee, to the
successor servicer. The compensation of any successor servicer (including,
without limitation, the Trustee) so appointed shall be the aggregate Servicing
Fees, and other servicing compensation in the form of assumption fees, late
payment charges or otherwise. In the event the Trustee is required to solicit
bids as provided herein, the Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to,
with respect to the Mortgage Loans each would be servicing, the full amount of
the aggregate Servicing Fees relating to such Mortgage Loans as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Servicer
in respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Monthly Advances. After such deductions, the remainder of
such sum shall be paid by the Trustee to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Servicer agrees to cooperate
with the Trustee and any successor servicer in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts which then have been or should
have been deposited in a Principal and Interest Account by the Servicer or which
are thereafter received with respect to the Mortgage Loans. The Trustee shall be
entitled to be reimbursed from the Servicer for all costs associated with the
transfer of servicing from the predecessor servicer, including, without
limitation, any costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the Trustee to correct any errors or insufficiencies
in the servicing data or otherwise to enable the Trustee to service the Mortgage
Loans properly and effectively. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the

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failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. No appointment of a successor
to the Servicer hereunder shall be effective until written notice of such
proposed appointment shall have been provided by the Trustee to each
Certificateholder and the Rating Agencies shall have consented thereto (as
confirmed by a letter from each Rating Agency stating that no reduction of any
rating issued in respect of the Certificates will occur as a result of such
appointment). The Trustee shall not resign as servicer until a successor
servicer reasonably acceptable to the Rating Agencies has been appointed (as
confirmed by a letter from each Rating Agency stating that no reduction of any
rating issued in respect of the Certificates will occur as a result of such
appointment).

                  Pending appointment of a successor to the Servicer hereunder,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Servicer pursuant to Section 7.03 or
otherwise as provided in this Agreement. The Servicer, the Trustee, the
Certificate Administrator, the Custodian and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.

Section 10.03     Waiver of Defaults.

                  The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article X, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.

Section 10.04      Control by Majority Certificateholders.

                  The Majority Certificateholders may direct the time, method
and place of conducting any proceeding relating to the Trust Fund or the
Certificates or for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Fund provided that:

                       (i) such direction shall not be in conflict with any rule
of law or with this Agreement;

                       (ii) the Trustee shall have been provided with indemnity
satisfactory to it; and

                       (iii) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; provided, however,
that the Trustee need not take any action which it determines might involve it
in liability or may be unjustly prejudicial to the Holders not so directing.

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                                   ARTICLE XI

                                   TERMINATION

Section 11.01     Termination.

                  Subject to Section 11.03, this Agreement shall terminate upon
notice to the Trustee and the Certificate Administrator of either: (a) the
latter of the final payment or other liquidation of the last Mortgage Loan or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due thereunder,
or (b) mutual consent of the Servicer and all Certificateholders in writing;
provided, however, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the United
States to the Court of St. James, alive as of the date hereof.

                  Subject to Section 11.03, the Servicer may, at its option, on
any date on which the aggregate Principal Balances of the Mortgage Loans are
less than ten (10) percent of the aggregate Principal Balances of the Mortgage
Loans as of the Cut-Off Date (such date, the "Optional Servicer Termination
Date"), purchase on the next succeeding Distribution Date, all of the Mortgage
Loans and any related REO Properties at a price equal to the sum of (x) 100% of
the Principal Balances of the Mortgage Loans before the occurrence of Realized
Losses, and any related REO Property, and (y) accrued but unpaid interest
thereon (whether through payments by the applicable Mortgagor, Monthly Advances
or otherwise) at the weighted average Mortgage Interest Rate of the Mortgage
Loans (the "Termination Price").

                  Notice of any termination, specifying the Distribution Date
upon which the Trust Fund will terminate and the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation shall be given promptly by the Servicer by letter
to the Certificateholders mailed during the month of such final distribution
before the Determination Date in such month, specifying (i) the Distribution
Date upon which final payment of the Certificates will be made upon presentation
and surrender of such Certificates at the office of the Certificate
Administrator therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of such
Certificates at the office of the Certificate Administrator therein specified.
The Servicer shall give such notice to the Trustee and the Certificate
Administrator. The Servicer shall give such notice to the Trustee at the time
such notice is given to Certificateholders. Any obligation of the Servicer to
pay amounts due to the Trustee, the Certificate Administrator and the Custodian
shall survive the termination of the Trust Fund.

                  In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Servicer shall give a
second written notice to such remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto and shall at the expense of the Trust Fund cause to be published once,
in the eastern edition of The Wall Street Journal notice that such money remains
unclaimed. If within six months after the second notice all of such Certificates
shall not have been surrendered for cancellation, the Certificate Administrator

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may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their
Certificates and the cost thereof shall be paid out of the funds and other
assets which remain subject hereto. If within the period then specified in the
escheat laws of the State of New York after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Certificate Administrator upon transfer of
such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.

Section 11.02     Termination Upon Loss of REMIC Status.

                  (a) Following a final determination by the Internal Revenue
Service, or by a court of competent jurisdiction, in either case, from which no
appeal is taken within the permitted time for such appeal, or if any appeal is
taken, following a final determination of such appeal from which no further
appeal can be taken, to the effect that either REMIC does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination, the Majority Certificateholders may direct
the Trustee on behalf of REMIC to adopt a "plan of complete liquidation" (within
the meaning of Section 860F(a)(4) of the Code) and the Trustee shall notify the
Certificate Administrator. Upon receipt of such direction by the Majority
Certificateholders, the Certificate Administrator shall notify the Class R
Certificateholders of such election to liquidate or such determination to
purchase, as the case may be (the "Termination Notice"). The Holders of a
majority of the Percentage Interest of the Class R Certificates then outstanding
may, within 60 days from the date of receipt of the Termination Notice (the
"Purchase Option Period"), at their option, purchase from the Lower Tier REMIC
all Mortgage Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Mortgage Loan then remaining
in the Lower Tier REMIC at a purchase price equal to the Termination Price.

                  (b) If, during the Purchase Option Period, the Class R
Certificateholders have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period in
the event that the Majority Certificateholders have given the Trustee the
direction described in clause (a) above, the Trustee shall sell the Mortgage
Loans and distribute the proceeds of the liquidation in accordance with the plan
of complete liquidation, such that, if so directed, the distribution of the
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 60th day, or such later day as the Class A, Class M and
Class B Certificateholders shall permit or direct in writing, after the
expiration of the Purchase Option Period. In connection with such purchase, the
Servicer shall remit to the Certificate Administrator all amounts then on
deposit in the Principal and Interest Account for deposit to the related
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.

                  (c) Following a Final Determination, the Holders of a majority
of the Percentage Interest of the Class R Certificates then outstanding may, at
their option and upon delivery to the Trustee and the Certificate Administrator
of an opinion of nationally recognized tax counsel selected by the Holders of
the Class R Certificates which opinion shall be reasonably satisfactory in form
and substance to the Majority Certificateholders to the effect that the effect

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of the Final Determination is to increase substantially the probability that the
gross income of either REMIC will be subject to federal taxation, purchase from
the Lower Tier REMIC all Mortgage Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise in respect of any
Mortgage Loan then remaining in the Lower Tier REMIC at a purchase price equal
to the Termination Price. In connection with such purchase, the Servicer shall
remit to the Certificate Administrator all amounts then on deposit in the
Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Majority
Certificateholders give the Holders of a majority of the Percentage Interest of
the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.

Section 11.03     Additional Termination Requirements.

                  (a) In the event the Servicer exercises its purchase option as
provided in Section 11.01 or 11.02, each REMIC shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 11.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on either REMIC as
defined in Section 860F of the Code, or (ii) cause either REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

                       (i) Within 90 days prior to the final Distribution Date,
the holders of the Class R Certificates shall adopt a plan of complete
liquidation meeting the requirements of a "Qualified Liquidation" under Section
860F of the Code and any regulations thereunder;

                       (ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date, the Trustee
shall sell for cash all of the assets of the Lower Tier REMIC to the Servicer;
and

                       (iii) At the time of the making of the final payment on
the Certificates, the Trustee shall (x) deposit into and withdraw from the
Certificate Account the amount of such final payment and shall distribute or
credit, or cause to be distributed or credited, to the Certificateholders of
each Class, the related Class Principal Balance, plus interest on the actual
number of days since the last Distribution Date up to but not including the
upcoming Distribution Date at the related Class Pass-Through Rate, and (y) to
the Class R Certificateholders, distribute all cash on hand after such payment
and after payment of all amounts due and owing to the Trustee, the Certificate
Administrator and the Custodian hereunder to the respective Certificateholders.

                  (b) By their acceptance of the Class R Certificates the
holders thereof hereby (i) agree to adopt such a plan of complete liquidation
upon the written request of the Servicer and to take such other action in
connection therewith as may be reasonably requested by the Servicer and (ii)
appoint the Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation.

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Section 11.04     Accounting Upon Termination of Servicer.

                  Upon termination of the Servicer under Article X hereof, the
Servicer shall:

                  (a) deliver to its successor or, if none shall yet have been
appointed, to the Certificate Administrator the funds in the Principal and
Interest Account;

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

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

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

                                   ARTICLE XII

                                   THE TRUSTEE

Section 12.01     Duties of the Trustee.

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

                  The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee 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, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Seller, the Certificate Administrator or any
Depositor hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.

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

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

                       (ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by officers of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts;

                       (iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Certificateholders, relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement;

                       (iv) In the absence of actual knowledge of a Responsible
Officer of the Trustee of an Event of Default, the Trustee shall not be required
to take notice or be deemed to have notice or knowledge of any default or Event
of Default unless a Responsible Officer of the Trustee shall be specifically
notified in writing by the Servicer or any of the Certificateholders. In the
absence of actual knowledge or receipt of such notice, the Trustee may
conclusively assume that there is no default or Event of Default; and

                       (v) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability for the performance of any
of its duties hereunder or the exercise of any of its rights or powers if there
is reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

Section 12.02     Certain Matters Affecting the Trustee.

                  (a) Except as otherwise provided in Section 12.01:

                       (i) The Trustee may rely 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 believed by it to be genuine and to have been signed or presented by
the proper party or parties;

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                       (ii) The Trustee may consult with counsel of its
selection and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;

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

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

                       (v) Prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Holders of Certificates
evidencing Percentage Interests aggregating not less than 25% of the aggregate
Class Principal Balances of all Certificates; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be repaid by the Servicer upon
demand from the Servicer's own funds;

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

                       (vii) The Trustee shall not be required to give any bond
or surety in respect of the execution of the trust created hereby or the powers
granted hereunder; and

                       (viii) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.

                       (ix) Anything is this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special, indirect,
punitive or consequential damages of any kind whatsoever regardless of the form
of action from which such damages may have arisen.

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                  (b) Following the Startup Day, the Trustee shall not knowingly
accept any contribution of assets to the Trust Fund unless the Trustee shall
have received an Opinion of Counsel to the effect that the inclusion of such
assets in the Trust Fund will not cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are outstanding or subject the Trust
Fund to any tax under the REMIC Provisions or other applicable provisions of
federal, New York State or New York City law or ordinances.

Section 12.03     Trustee Not Liable for Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the certificate of authentication on the Certificates) shall be taken as
the statements of the Servicer, and the Trustee assume no responsibility for
their correctness. The Trustee make no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.

Section 12.04     Trustee May Own Certificates.

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights it would have if it
were not the Trustee, and may otherwise deal with the parties hereto.

Section 12.05     Seller to Pay Trustee's, Certificate Administrator's and
Custodian's Fees and Expenses.

                  The Seller will pay or reimburse the Trustee, the Certificate
Administrator and the Custodian upon request for all reasonable expenses,
disbursements and advances incurred or made in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith, provided that the Trustee, the Certificate
Administrator and the Custodian shall have no lien on the Trust Fund, other than
the Expense Account, for the payment of its fees and expenses. To the extent
that actual fees and expenses of the Trustee, the Certificate Administrator or
the Custodian exceed the amount available for payment thereof on deposit in the
Expense Account as of the date such fees and expenses are due and payable, the
Seller shall reimburse the respective party for such shortfall out of its own
funds without reimbursement therefor, except as provided in Section 6.02. The
Trustee, the Certificate Administrator and the Custodian and any director,
officer, employee or agent of the Trustee, the Certificate Administrator and the
Custodian shall be indemnified by the Seller and held harmless against any loss,
liability or expense (including reasonable attorney's fees) incurred in
connection with the performance of their duties or the exercise of their rights
under this Agreement, or with respect to the Certificates, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or thereunder or by reason of
reckless disregard of obligations and duties hereunder or thereunder.

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                  Such indemnity shall survive the termination of this Agreement
or the resignation or removal of the Trustee, the Certificate Administrator or
the Custodian. Without limiting the foregoing, in the event that fails to pay
the expenses and indemnities due hereunder, such amounts shall be payable from
the Certificate Account at any time.

Section 12.06     Eligibility Requirements for Trustee.

                  The Trustee hereunder shall at all times be a banking
association organized and doing business under the laws of any state or the
United States of America, (i) authorized under such laws to exercise corporate
trust powers, (ii) having a combined capital and surplus of at least
$30,000,000, (iii) except in the case of the initial Trustee, whose unsecured
and unguaranteed long-term debt obligations shall be rated at least "A" by S&P
and (iv) subject to supervision or examination by federal or state authority. If
such banking association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section its combined capital and
surplus shall be deemed to be as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign, upon the request of the Majority Certificateholders, in the manner and
with the effect specified in Section 12.07.

Section 12.07     Resignation and Removal of the Trustee.

                  The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the
Certificate Administrator and to all Certificateholders. Upon receiving such
notice of resignation, the Certificate Administrator shall promptly appoint a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the successor trustee. A copy of such instrument shall be delivered
to the Certificateholders by the Certificate Administrator. Unless a successor
trustee shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.

                  If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 12.06 and shall fail to resign after
written request therefor by the Certificate Administrator, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Certificate Administrator may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Certificate Administrator.

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                  The Majority Certificateholders may at any time remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Certificate
Administrator, one complete set to the Trustee so removed and one complete set
to the successor trustee so appointed.

                  Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08. If the Trustee resigns or is removed pursuant to any provision of
this Section, the Trustee shall also be deemed to have resigned or been removed,
as the case may be, as the Supplemental Trustee.

Section 12.08     Successor Trustee.

                  Any successor trustee appointed as provided in Section 12.07
shall execute, acknowledge and deliver to the Certificate Administrator and to
its predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.

                  No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 12.06.

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

                  Any successor trustee hereunder shall automatically, without
any further action on its part, become the successor Supplemental Trustee under
the Supplemental Trust.

Section 12.09     Merger or Consolidation of the Trustee.

                  Any Person into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or national banking association
succeeding to the business of the trustee, shall be the successor of the Trustee
hereunder, provided such corporation or national banking association shall be
eligible under the provisions of Section 12.06, 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.

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<PAGE>

Section 12.10     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 the Trust Fund or property securing the same may at the time be located,
the Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee, pursuant to the procedure set forth below, to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity, such title to the Trust Fund, or any part thereof, and, subject
to the other provisions of this Section 12.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 12.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 12.08 hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 12.10, 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 (whether as trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund 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 XII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.

                  Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or
co-trustee. 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.

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Section 12.11     Authenticating Agent.

                  Upon the request of the Certificate Administrator, the Trustee
shall appoint an Authenticating Agent, with power to act on the Trustee's behalf
and subject to its direction in the authentication and delivery of the
Certificates in connection with transfers and exchanges under Section 4.02, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section to authenticate and deliver Certificates.
For all purposes of this Agreement, the authentication and delivery of
Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the authentication and delivery of Certificates by the Trustee.
Such Authenticating Agent shall at all times be a Person meeting the
requirements for the Trustee set forth in Section 12.06, other than Section
12.06(iv).

                  Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.

                  Any Authenticating Agent may at any time resign by giving
notice of resignation to the Trustee and the Certificate Administrator. The
Trustee may at any time terminate the agency of any Authenticating Agent
appointed by it by giving written notice of termination to such Authenticating
Agent and the Servicer. Upon receiving such a notice of resignation or upon such
a termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section, the Trustee shall promptly appoint a successor
Authenticating Agent and shall give written notice of such appointment to all
Certificateholders as their names and addresses appear on the Certificate
Register. The Servicer agrees to pay to the Authenticating Agent from time to
time reasonable compensation for its services. The provisions of Sections 4.04
and 12.03 shall be applicable to any Authenticating Agent.

Section 12.12     Tax Returns and Reports.

                  The Trustee, upon request, will furnish the Certificate
Administrator with all such information within the Trustee's possession as may
be reasonably required in connection with the Certificate Administrator's
preparation of all Tax Returns of either REMIC and, upon request within five (5)
Business Days after its receipt thereof, shall (i) sign on behalf of either
REMIC any Tax Return that the Trustee is required to sign pursuant to applicable
federal, state or local tax laws, and (ii) cause such Tax Return to be returned
to the Certificate Administrator for filing.

                  For Federal income tax purposes, the taxable year of the Trust
Fund shall be a calendar year and the Certificate Administrator shall maintain
or cause the maintenance of the books of the Lower Tier REMIC and the Upper Tier
REMIC on the accrual method of accounting.

                                       89
<PAGE>

                  The Certificate Administrator shall prepare and file or cause
to be filed with the Internal Revenue Service Federal tax information returns
with respect to either REMIC and the Certificates containing such information
and at the times and in the manner as may be required by the Code or applicable
Treasury regulations, and shall furnish to each Holder of Certificates at any
time during the calendar year for which such returns or reports are made such
statements or information at the times and in the manner as may be required
thereby. In connection with the foregoing, the Certificate Administrator shall
provide the name, address and telephone number of the person who can be
contacted to obtain information required to be reported to the holders of
regular interests in either REMIC (the "REMIC Reporting Agent") as required by
IRS Form 8811. The Certificate Administrator shall indicate the election to
treat each REMIC as a REMIC (which election shall apply to the taxable period
ending December 31, 2001 and each calendar year thereafter) in such manner as
the Code or applicable Treasury regulations may prescribe. The Trustee shall
sign all tax information returns provided to it by the Certificate Administrator
to be filed pursuant to this Section and any other returns as may be required by
the Code, and in doing so shall rely entirely upon, and shall have no liability
for information provided by, or calculations provided by, the Certificate
Administrator. The Certificate Administrator is hereby designated as the Tax
Matters Person (within the meaning of Section 1.860F-4(d) of the Regulations)
for REMIC I. Any Holder of a Class R Certificate will by acceptance thereof so
appoint the Certificate Administrator as agent and attorney-in-fact for the
purpose of acting as Tax Matters Person. In the event that the Code or
applicable Treasury Regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Certificate Administrator from
acting as Tax Matters Person (as an agent or otherwise), the Trustee or the
Certificate Administrator shall take whatever action that in its sole good faith
judgment is necessary for the proper filing of such information returns or for
the provision of a tax matters person, including designation of the Holder of a
Class R Certificate to sign such returns or act as tax matters person. Each
Holder of a Class R Certificate shall be bound by this Section.

                  The Trustee shall provide upon request such information as
required in Section 860D(a)(6)(B) of the Code to the Internal Revenue Service
and any Person purporting to transfer a Class R Certificate.

Section 12.13     Appointment of Custodian.

                  The Trustee and the Certificate Administrator hereby appoint
FUNB as Custodian with respect to the Trustee's Mortgage Files relating to all
Mortgage Loans that constitute, or may in the future constitute, part of the
Trust Fund. The Custodian shall be responsible hereunder solely for the express
duties and functions specified for it herein with respect to the custody, review
and confirmation, safekeeping, substitution and release of the Trustee's
Mortgage Files relating to the Mortgage Loans. The Custodian shall have all of
the rights and benefits of and limitations on liability afforded to be Trustee
under this Article XII to the same extent as though the Custodian had been named
in the various provisions of this Article XII.

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<PAGE>

                  The Custodian shall be entitled to rely and act upon advice of
counsel with respect to its performance hereunder as Custodian and shall be
without liability for any action reasonably taken in good faith pursuant to such
advice, provided that such action is not in violation of applicable Federal or
State law. The Custodian shall have no duties or obligations other than those
specifically set forth herein, and no further duties or obligations shall arise
by implication or otherwise. The Custodian shall have no responsibility or duty
with respect to the Trustee's Mortgage Files that it has relinquished from its
possession pursuant to the terms hereof during the period of time that the
Custodian is not in possession of such Trustee's Mortgage Files. The Custodian
agrees to use its best judgment and good faith in the performance of such
obligations and duties and shall incur no liability for its acts or omissions
hereunder, except as may result from its negligence or willful misconduct. No
provision of this Agreement shall require the Custodian to expend or risk its
own funds or otherwise incur financial liability in the performance of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity is not reasonably assured to it.

Section 12.14     Protection of Trust Fund.

                  (a) The Trustee will hold the Trust Fund in trust for the
benefit of the Holders and, at the request of the Seller, will from time to time
execute and deliver all such supplements and amendments hereto pursuant to
Section 13.02 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:

                       (i) more effectively hold in trust all or any portion of
the Trust Fund;

                       (ii) perfect, publish notice of, or protect the validity
of any grant made or to be made by this Agreement;

                       (iii) enforce any of the Mortgage Loans; or

                       (iv) preserve and defend title to the Trust Fund and the
rights of the Trustee, and the ownership interests of the Owners represented
thereby, in the Trust Fund against the claims of all Persons and parties;

provided, that, upon the occurrence of an Assignment Event, this Section
12.14(a) shall not be construed to require the Trustee to, at its own expense,
cause proper assignments of each Mortgage to be recorded in the relevant real
property recording office.

                  The Trustee shall send copies of any request received from the
Seller to take any action pursuant to this Section 12.14 to the others.

                  (b) Subject to Article X hereof, the Trustee shall have the
power to enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.14 shall require any action by the Trustee
unless the Trustee shall first (i) have been famished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders or the Certificate Administrator in
accordance with the terms of this Agreement.

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<PAGE>

                  (c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties.

Section 12.15     Calculation of LIBOR.

                  (a) On each Interest Determination Date, the Certificate
Administrator will determine LIBOR based on the rate for one-month U.S. dollar
deposits (the "One Month Index Maturity") which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such date in determining the each Pass-Through
Rate for the Distribution Date in the following month. If such LIBOR rate does
not appear on Telerate Page 3750, the LIBOR rate for that day will be determined
on the basis of the rates at which deposits in United States dollars, having the
One-Month Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on that day to
prime banks in the London interbank market by the Reference Banks. The
Certificate Administrator will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that day will be the arithmetic mean of
the quotations. If fewer than two quotations are provided, the rate for that day
will be the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Certificate Administrator, at approximately 11:00 a.m., New York
City time, on that day for loans in United States dollars to leading European
banks having a One-Month Index Maturity and in a principal amount equal to an
amount of not less than U.S. $1,000,000; provided that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, LIBOR in effect for the
applicable Interest Accrual Period will be LIBOR in effect for the previous
Interest Accrual Period.

                  Neither the Seller, Servicer nor the Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the
Pass-Through Rates the Certificate Administrator may conclusively rely and shall
be protected in relying upon the rates appearing on Telerate Page 3750 or the
offered quotations (whether written, oral or on Telerate Page 3750) from
Reference Banks, as appropriate, in effect from time to time. Neither of the
Seller, the Servicer nor the Trustee shall have liability or responsibility to
any Person for (i) the Certificate Administrator's selection of Reference Banks
for purposes of determining LIBOR or (ii) the Certificate Administrator's or the
Servicer's inability, as applicable, following a good-faith reasonable effort,
to obtain such quotations from Reference Banks or such New York City banks or to
determine such arithmetic mean, all as provided for in this Section 12.15.

                  The establishment of LIBOR and the Pass-Through Rates by the
Certificate Administrator shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate, the Seller and the
Servicer.

                  The Certificate Administrator is not responsible for
determining (or for the failure of the Servicer to determine) the Pool Cap.

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<PAGE>

                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS

Section 13.01     Acts of Certificateholders.

                  Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.

Section 13.02     Amendment.

                  (a) This Agreement may be amended from time to time by the
Servicer and the Trustee by written agreement, without notice to or consent of
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement or any
Custodial Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trustee at the expense of the party
requesting the amendment, adversely affect the interests of any
Certificateholder in any material respect or any other party and further
provided that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party.

                  (b) This Agreement may be amended from time to time by the
Depositors, the Seller, the Servicer and the Trustee, with the prior written
consent of the Majority Certificateholders and the Holders of the majority of
the Percentage Interest in each of the Class X, and Class R Certificates for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders; provided, however, that no such amendment shall be made unless the
Trustee receive an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of REMIC I as
a REMIC or cause a tax to be imposed on REMIC I, and provided further, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or reduce the percentage for each
Class the Holders of which are required to consent to any such amendment without
the consent of the Holders of 100% of each Class of Certificates affected
thereby.

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

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<PAGE>

                  (d) Any amendment to this Agreement shall also require the
consent of the Certificate Administrator and/or the Custodian if such proposed
amendment affects any of their respective rights, duties or obligations
hereunder.

                  (e) Any Opinion of Counsel delivered to the Trustee pursuant
to this Section 13.02 also shall state that the amendment being made is
permitted by the terms of this Agreement.

Section 13.03     Recordation of Agreement.

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

Section 13.04     Duration of Agreement.

                  This Agreement shall continue in existence and effect until
terminated as herein provided.

Section 13.05     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, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

Section 13.06     Notices.

                  All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at,
delivered via facsimile or mailed by overnight mail, certified mail or
registered mail, postage prepaid, to (i) in the case of the Seller, the Servicer
and each Depositor, HomEq Servicing Corporation, 707 Third Street, West
Sacramento, California 95605, Attention: Executive Vice President, or such other
addresses as may hereafter be furnished to the Certificateholders in writing by
the Servicer, (ii) in the case of the Trustee Citibank, N.A. [address]
Attention: Corporate Trust Services - RAFC Trust 2001-1, (iii) in the case of
the Certificateholders, as set forth in the Certificate Register, (iv) in the
case of S&P, to Standard & Poor's, 55 Water Street, 41st Floor, New York, New
York 10041, Attention: Mortgage Surveillance Group, (v) in the case of Moody's,
to Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Residential Mortgages, (vi) in the case of the Certificate
Administrator, First Union National Bank, 410 South Tryon Street, 12th Floor,
Charlotte, NC 28288, Attention: HomEq Trust 2001-A or (vii) in the case of the
Custodian, First Union National Bank, 2450 Del Paso Road, Suite 100, Sacramento,

                                       94

<PAGE>

CA 95843, Attention Cheryl Whitehead or to such other address as such party may
hereafter specify in writing. Any such notices shall be deemed to be effective
with respect to any party hereto upon the receipt of such notice by such party,
except that notices to the Certificateholders shall be effective upon mailing or
personal delivery.

Section 13.07     Severability of Provisions.

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

Section 13.08     No Partnership.

                  Nothing herein contained shall be deemed or construed to
create a co-partnership or joint venture between the parties hereto and the
services of the Servicer shall be rendered as an independent contractor and not
as agent for the Certificateholders.

Section 13.09     Counterparts.

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

Section 13.10     Successors and Assigns.

                  This Agreement shall inure to the benefit of and be binding
upon the Servicer, the Depositors, the Trustee and the Certificateholders and
their respective successors and assigns.

Section 13.11     Headings.

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

Section 13.12     Paying Agent.

                  The Trustee may, subject to the eligibility requirements for
the Trustee set forth in Section 12.06 hereof, other than Section 12.06(iv),
respectively appoint one or more successor Paying Agents.

                  Each Paying Agent, immediately upon such appointment, shall
signify its acceptance of the duties and obligations imposed upon it by this
Agreement by written instrument of acceptance deposited with the Trustee.

                  Each such Paying Agent other than the Trustee shall execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of Section 6.06, that such Paying
Agent will:

                                       95

<PAGE>

                       (i) allocate all sums received for distribution to the
Holders of Certificates of each Class for which it is acting as Paying Agent on
each Distribution Date among such Holders in the proportion specified by the
Trustee; and

                       (ii) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided and pay such sums to such Persons as
herein provided.

                  Any Paying Agent other than the Trustee may at any time resign
and be discharged of the duties and obligations created by this Agreement by
giving at least sixty (60) days written notice to the Trustee. Any such Paying
Agent may be removed at any time by an instrument filed with such Paying Agent
signed by the Trustee.

                  In the event of the resignation or removal of any Paying Agent
other than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no successor,
to the Trustee.

                  Upon the appointment, removal or notice of resignation of any
Paying Agent, the Trustee shall notify and the Certificateholders by mailing
notice thereof to their addresses appearing on the Certificate Register.

Section 13.13     Notification to Rating Agencies.

                  The Seller shall give prompt notice to the Rating Agencies of
the occurrence of any of the following events of which it has received notice:
(1) any modification or amendment to this Agreement, (2) any appointment of a
Custodian, (3) any change of the Trustee or the Servicer (4) any Event of
Default, and (5) the final payment of all the Certificates. The Servicer shall
promptly deliver to the Rating Agencies a copy of each of the Servicer's
Certificates.

Section 13.14     Third Party Rights.

                  The Trustee, the Transferor, the Servicer and the Depositor
agree that each of the Certificate Administrator and the Custodian shall be
deemed a third-party beneficiary of this Agreement entitled to all the rights
and benefits set forth herein as fully as if it were a party hereto.

Section 13.16     Limitation of Liability of Owner Trustee.

                  Notwithstanding anything else contained herein to the
contrary, it is expressly understood and agreed by the parties that (a) this
document is executed and delivered by Wilmington Trust Company, not individually
or personally, but solely as Owner Trustee, in the exercise of the powers and
authority conferred and vested in it, pursuant to the Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such

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<PAGE>

liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto, and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents. In
all circumstances hereunder, notwithstanding anything contained herein or in any
other document to the contrary, the Owner Trustee is entitled to the benefits of
the Trust Agreement and has no obligation to act hereunder other than pursuant
to instruction as set forth in the Trust Agreement.

                                       97
<PAGE>

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

                                HOMEQ SERVICING CORPORATION,
                                as Servicer

                                By: /s/ Bruce Hurwitz
                                    ---------------------------------
                                Name:  Bruce Hurwizt
                                Title: Senior Vice President

                                RESIDENTIAL ASSET FUNDING
                                CORPORATION, as Depositor.

                                By: /s/ Robert J. Perret
                                    ---------------------------------
                                Name:  Robert J. Perret
                                Title: Director

                                RAFC TRANSFEROR TRUST,
                                as Transferor

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

                                By: /s/ Patricia A. Evans
                                    ---------------------------------
                                    Name:  Patricia A. Evans
                                    Title: Senior Financial Services Officer

                                CITIBANK, N.A.,
                                not in its individual capacity, but solely as
                                Trustee

                                By: /s/ Kristen Driscoll
                                    ---------------------------------
                                    Name:  Kristen Driscoll
                                    Title: Assistant Vice President

                            [Signature page to PSA]

<PAGE>

              Acceptance of Custodian and Certificate Administrator

                  First Union National Bank hereby accepts its appointment
pursuant to the within instrument to serve as Custodian and as Certificate
Administrator for the purposes specified therein. In connection therewith, First
Union National Bank agrees to be bound by all applicable provisions of such
instrument.

                                FIRST UNION NATIONAL BANK, as Custodian
                                   and as Certificate Administrator

                                By:  /s/ Robert Ashbaugh
                                     ---------------------------------
                                     Name:  Robert Ashbaugh
                                     Title: Vice Pesident

<PAGE>

 STATE OF New York)
                                    : ss.:
COUNTY    New York)

                  On the 27th day of December 2001 before me, a Notary Public in
and for said State, personally appeared Kristen Driscoll, known to me to be an
officer of Citibank, N.A, a national banking association that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said national banking association, and acknowledged to me that such
national banking association, 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.

                                          /s/ Peter Paulyshin
                                          ________________________________
                                          Notary Public

                  My Commission expires

<PAGE>

STATE OF CALIFORNIA        )
                                    : ss.:
COUNTY OF ___________      )

                  On the day of December 2001 before me, a Notary Public in and
for the State of California, personally appeared ________________________ known
to me to be the ________________________ of HomEq Servicing Corporation, 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

                  My Commission expires

<PAGE>

STATE OF NORTH CAROLINA    )
                                    : ss.:
COUNTY OF __________       )

                  On the _______ day of December 2001 before me, a Notary Public
in and for the State of California, personally appeared _____________________
known to me to be the ___________________ of the Residential Asset Funding
Corporation to the within instrument, and also known to me to be the person who
executed it on behalf of such 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

                  My Commission expires

<PAGE>

STATE OF Delaware          )
                                    : ss.:
COUNTY OF New Castle       )

                  On the 19th day of December 2001 before me, a Notary Public
in and for the State of California, personally appeared Patricia A. Evans
known to me to be the SFS Officer of the Wilmington Trust Company to the
within instrument, and also known to me to be the person who executed it on
behalf of such 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.

                                        /s/ Janel R. Havrilla
                                        _________________________________
                                        Notary Public

                  My Commission expires

<PAGE>

STATE OF _____________     )
                                    : ss.:
COUNTY OF __________       )

                  On the _______ day of December 2001 before me, a Notary Public
in and for the State of California, personally appeared _____________________
known to me to be the ___________________ of the First Union National Bank to
the within instrument, and also known to me to be the person who executed it on
behalf of such 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

                  My Commission expires

<PAGE>

                                    EXHIBIT A

                            CONTENTS OF MORTGAGE FILE

         With respect to each Mortgage Loan, the Mortgage File shall include a
copy of any of the following items delivered to the Trustee and an original of
any of the other following items, all of which shall be available for inspection
by the Certificateholders:

    1. The original Mortgage Note, endorsed "Pay to the order of holder" or "Pay
to the order of Citibank, N.A., as Trustee of the RAFC Asset-Backed Trust,
Series 2001-1, relating to the RAFC Asset-Backed Certificates, Series 2001-1"
and signed in the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to such Person.

    2.   Either: (i) the original recorded Mortgage, with evidence of recording
         thereon, (ii) a copy of the Mortgage certified as a true copy by a
         Responsible Officer where the original has been transmitted for
         recording until such time as the original is returned by the public
         recording office or (iii) a copy of the Mortgage certified by the
         public recording office in those instances where the original recorded
         Mortgage has been lost.

    3.   Either (i) the original Assignment of Mortgage from the Person
         delivering such Assignment to "Citibank, N.A., as Trustee under the
         Pooling and Servicing Agreement, dated as of November 30, 2001, RAFC
         Asset Backed Securities, Series 2001-1" with evidence of recording
         thereon (provided, however, that where permitted under the laws of the
         jurisdiction wherein the Mortgaged Property is located, the Assignment
         of Mortgage may be effected by one or more blanket assignments for
         Mortgage Loans secured by Mortgaged Properties located in the same
         county) or (ii) a copy of the Assignment of Mortgage certified as a
         true copy by a Responsible Officer of the Originator where the original
         was transmitted for recording (provided, however, that where the
         original Assignment of Mortgage is not being delivered to the Trustee,
         each such Responsible Officer may complete one or more blanket
         certificates attaching copies of one or more of such Assignments of
         Mortgage relating to the Mortgages originated by the related
         Originator).

    4.   The original policy of title insurance or, if such policy has not yet
         been delivered by the insurer, the commitment or binder to issue same,
         or if the original principal balance of the Mortgage Loan was less than
         or equal to $15,000 or the Mortgage Loan was not originated by a
         Originator, other evidence of the status of title, which shall consist
         of an attorney's opinion of title or certificate of title, a
         preliminary title report, a property search, a title search, a lot book
         report, a property information report or a report entitled "prelim" or
         "PIRT" (property information report), and (ii) proof of hazard
         insurance in the form of a hazard insurance policy or hazard insurance
         policy endorsement that names the related Originator, its successors
         and assigns, as a mortgagee/loss payee, and, if such endorsement does
         not show the amount insured by the related hazard insurance policy,
         some evidence of such amount.

                                      A-1
<PAGE>

    5.   Originals of all assumption and modification agreements, if any.

    6.   Either: (i) original intervening assignments, if any, showing a
         complete chain of title from the originator to the Person delivering
         such Assignment, including warehousing assignments, with recording
         information thereon, if such assignments were recorded, (ii) copies of
         any assignments certified as true copies by a Responsible Officer of
         the Originator where the original has been transmitted for recording
         until such time as the originals are returned by the public recording
         office, or (iii) copies of any assignments certified by the public
         recording office in those instances where the original recorded
         assignments have been lost.

    7.   Mortgage Loan closing statement and any other truth-in-lending or real
         estate settlement procedure forms required by law.

    8.   Residential loan application.

    9.   Verification of employment and income, and tax returns, if any.

    10.  Credit report on the mortgagor.

    11.  Except with respect to certain Mortgage Loans with original principal
         balances of less than $15,000, the appraisal made in connection with
         the origination of the related Mortgage Loan with photographs of the
         subject property and of comparable properties (if available),
         constituting evidence sufficient to indicate that the Mortgaged
         Property relates to a Residential Dwelling and identifying the type
         thereof.

    12.  Copy of any Prior Lien.

    13.  All other papers and records  developed or originated by the Originator
         or others,  required to document the Mortgage Loan or to service the
         Mortgage Loan.

                                      A-2

<PAGE>

                                    EXHIBIT B

                              FORMS OF CERTIFICATES

                                      B-1
<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
            LIBOR + 0.05% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS A-1

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
Fractional Undivided Interest in the Trust described herein.)

<TABLE>
<S>                                      <C>                                             <C>
No.:  A-1                                           January 25, 2002                       LIBOR + 0.05%
                                         -----------------------------------             -----------------
                                                       Startup Day                        Remittance Rate

$          53,351,000                                                                        749213AA2
 ---------------------------             -----------------------------------             -----------------
       Original Principal                            Final Scheduled                           CUSIP
             Amount                                   Distribution
</TABLE>

                                      B-2
<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the business day immediately
preceding such Distribution Date (the "Record Date") will be entitled to receive
an amount equal to the Fractional Undivided Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the same Class as this Certificate. Except for the final distribution,
distributions will be made in immediately available funds to Holders of
Certificates, by wire transfer or otherwise, to the account of a Holder at a
domestic bank or other

                                      B-3
<PAGE>

entity having appropriate facilities therefor, if such Holder has so notified
the Trustee, or by check mailed to the address of the person entitled thereto as
it appears on the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                                      B-4
<PAGE>

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-5

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                                CITIBANK, N.A.
                                   not in its individual capacity, but solely in
                                   its capacity as Trustee

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

This is one of the Class A-1
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-6

<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
            LIBOR + 0.39% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS A-2

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, The Money
Store Inc. or any of its subsidiaries. This Certificate represents a Fractional
Undivided Interest in the Trust described herein.)

<TABLE>
<S>                                      <C>                                             <C>
No.:  A-2                                           January 25, 2002                        LIBOR + 0.39%
                                         -----------------------------------             -------------------
                                                       Startup Day                         Remittance Rate

$          85,000,000                                                                        749213AB0
 ---------------------------             -----------------------------------             -----------------
       Original Principal                            Final Scheduled                           CUSIP
             Amount                                   Distribution
</TABLE>

                                      B-7
<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder

                                      B-8

<PAGE>

has so notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans, payments from an
interest rate cap agreement and amounts on deposit in the Certificate Account,
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing

                                      B-9
<PAGE>

Agreement, have the right to exercise any trust or power set forth in the
Pooling and Servicing Agreement with respect to the Certificates or the Trust
Fund.

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-10
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                                CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class A-2
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
   not in its individual capacity, but solely in
   its capacity as Trustee

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

Date:  December __, 2001

                                      B-11
<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
               5.115% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS A-3

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

                  SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

                  Unless this Certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is
made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.

                  (This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
HomEq Servicing Corporation or any of its subsidiaries. This Certificate
represents a Fractional Undivided Interest in the Trust described herein.)

<TABLE>
<S>                                      <C>                                             <C>
No.:  A-3                                           January 25, 2002                           5.115%
                                         -----------------------------------             -------------------
                                                       Startup Day                         Remittance Rate

$          564,106,000                                                                        749213AC8
 ---------------------------             -----------------------------------             -------------------
       Original Principal                            Final Scheduled                            CUSIP
             Amount                                   Distribution
</TABLE>

                                      B-12
<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder

                                      B-13

<PAGE>

has so notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                                      B-14

<PAGE>

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-15
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                               CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class A-3
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-16

<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
               6.695% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS M-1

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" 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, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
Fractional Undivided Interest in the Trust described herein.)

<TABLE>
<S>                                      <C>                                             <C>
No.:  M-1                                           January 25, 2002                            6.695%
                                         -----------------------------------             --------------------
                                                       Startup Day                          Remittance Rate

$          55,574,000                                                                          749213AD6
 ---------------------------             -----------------------------------             --------------------
       Original Principal                            Final Scheduled                             CUSIP
             Amount                                   Distribution
</TABLE>

                                      B-17
<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.

                                      B-18

<PAGE>

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of

                                      B-19
<PAGE>

transfer at the office designated as the location of the Register duly endorsed
by the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Certificates of like Class, tenor and a like aggregate
fractional undivided interest in the Trust Fund will be issued to the designated
transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-20

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                                CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class M-1
Certificates referred to in
the within-mentioned Pooling
and Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-21

<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
               7.050% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS M-2

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" 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, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
Fractional Undivided Interest in the Trust described herein.

<TABLE>
<S>                                      <C>                                             <C>
No.:  M-2                                           January 25, 2002                            7.050%
                                         -----------------------------------             ---------------------
                                                       Startup Day                          Remittance Rate

$          44,459,000                                                                          749213AE4
 ---------------------------             -----------------------------------             ---------------------
       Original Principal                            Final Scheduled                             CUSIP
             Amount                                   Distribution
</TABLE>

                                      B-22

<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.

                                      B-23
<PAGE>

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of

                                      B-24
<PAGE>

transfer at the office designated as the location of the Register duly endorsed
by the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Certificates of like Class, tenor and a like aggregate
fractional undivided interest in the Trust Fund will be issued to the designated
transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-25
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                              CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class M-2
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-26

<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
               7.525% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS B-1

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" 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, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND CLASS M CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
fractional ownership interest in the Trust described herein.)

<TABLE>
<S>                                         <C>                                             <C>
No.:  B-1                                              January 26, 2002                              7.525%
                                            -----------------------------------             ------------------------
                                                          Startup Day                            Remittance Rate

$          35,567,000                                                                               749213AF1
 ---------------------------                -----------------------------------             ------------------------
       Original Principal                               Final Scheduled                               CUSIP
             Amount                                      Distribution

</TABLE>

                                      B-27
<PAGE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder

                                      B-28
<PAGE>

has so notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                                      B-29
<PAGE>

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-30

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                               CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class B-1
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-31
<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
                8.50% RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                    CLASS B-2

                       Representing Certain Interests in a
                        Trust Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" 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, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND CLASS M CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE MAY 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")) THAT IS SUBJECT TO TITLE I OF ERISA OR ANY
PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE CODE) THAT IS SUBJECT TO
SECTION 4975 OF THE CODE (EACH, A "PLAN"), OR TO ANY PERSON ACTING ON BEHALF OF
OR INVESTING THE ASSETS OF A PLAN. EACH PERSON HOLDING OR ACQUIRING AN INTEREST
IN THIS CERTIFICATE SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT A PLAN
AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

                                      B-32
<PAGE>

         (This Certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
fractional ownership interest in the Trust described herein.)

<TABLE>
<S>                                         <C>                                             <C>
No.:  B-2                                              January 25, 2002                               8.50%
                                            -----------------------------------             ------------------------
                                                          Startup Day                            Remittance Rate

$          42,236,000                                                                               749213AG9
 ---------------------------                -----------------------------------             ------------------------
       Original Principal                               Final Scheduled                               CUSIP
             Amount                                      Distribution

</TABLE>

                                   Cede & Co.
--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                  The Holder hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Distribution Date of the Class of Certificates represented
by this Certificate. Therefore, the actual outstanding principal amount of this
Certificate may, on any date subsequent to the first Distribution Date, be less
than the Original Principal Amount set forth above.

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                                      B-33

<PAGE>

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last business day of the
calendar month immediately preceding such Distribution Date (the "Record Date")
will be entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue

                                      B-34
<PAGE>

beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by the Certificates, upon compliance with the requirements set forth
in the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-35
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                               CITIBANK, N.A.
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class B-2
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.
    not in its individual capacity, but solely in
    its capacity as Trustee

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

Date:  December __, 2001

                                      B-36
<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
                   RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                     CLASS X

                    Representing Certain Interests in a Trust
                           Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.

         THE CERTIFICATE WAS ISSUED ON DECEMBER [27], 2001. UNDER TREASURY
REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL PAYMENTS ON THE
CERTIFICATE MAY BE TREATED AS PART OF THE STATED REDEMPTION PRICE AT MATURITY.
IN THAT CASE, ASSUMING THAT EACH MORTGAGE LOAN UNDERLYING THIS CERTIFICATE
PREPAYS IN ACCORDANCE WITH 100% PREPAYMENT ASSUMPTION (AS DEFINED IN THE POOLING
AND SERVICING AGREEMENT, AS DEFINED BELOW) (THE "PRICING ASSUMPTION"), THE
FOLLOWING INFORMATION IS APPLICABLE UNDER TREASURY REGULATION ss. 1.6049-7(g):
(I) THE OID IS APPROXIMATELY $______ PER $________ OF THE ORIGINAL NOTIONAL
PRINCIPAL AMOUNT OF THIS CERTIFICATE; (II) THE ANNUAL YIELD TO MATURITY OF THIS
CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF OID IS APPROXIMATELY ____%
(COMPOUNDED MONTHLY); (III) THE TOTAL AMOUNT OF OID ALLOCABLE TO THE FIRST SHORT
ACCRUAL PERIOD (_________ TO _____________) IS APPROXIMATELY $_____ PER
$________ OF THE ORIGINAL NOTIONAL PRINCIPAL AMOUNT OF THIS CERTIFICATE; AND
(IV) THE METHOD USED TO CALCULATE THE ANNUAL YIELD TO MATURITY AND THE AMOUNT OF
OID ALLOCABLE TO THE FIRST SHORT ACCRUAL PERIOD IS THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PRICING ASSUMPTION OR AT ANY OTHER RATE. THE ACTUAL YIELD TO MATURITY ON
THIS CERTIFICATE MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE ACCRUAL OF OID
WILL BE ADJUSTED IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE CODE, TO TAKE INTO
ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD. THE PRICING
ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED TO IN SECTION
1272(a)(6) OF THE CODE.

         THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE

                                      B-37
<PAGE>

MADE ONLY IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE MAY 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")) THAT IS SUBJECT TO TITLE I OF ERISA OR ANY
PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE CODE) THAT IS SUBJECT TO
SECTION 4975 OF THE CODE (EACH, A "PLAN"), OR TO ANY PERSON ACTING ON BEHALF OF
OR INVESTING THE ASSETS OF A PLAN. THE TRUSTEE SHALL NOT REGISTER THE TRANSFER
OF THIS CERTIFICATE OR ANY INTEREST HEREIN UNLESS THE PROPOSED TRANSFEREE HAS
REPRESENTED TO THE TRUSTEE IN WRITING THAT IT IS NOT A PLAN AND IS NOT ACTING ON
BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

         (This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, HomEq
Servicing Corporation or any of its subsidiaries. This Certificate represents a
fractional ownership interest in the Trust Fund described herein.)

<TABLE>
<S>                                <C>
No.:  X                            ----------------------------
                                             Startup Day

100% Percentage Interest
                                   ----------------------------
                                            Final Scheduled
                                              Distribution
</TABLE>

--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
a fractional interest in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

         THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE

                                      B-38
<PAGE>

CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.

         This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

         Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.

         On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date"), commencing January 25, 2002, the Holders of the Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which such Distribution Date (the "Record Date") will be
entitled to receive an amount equal to the Fractional Undivided Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. Except for the
final distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.

         Each Holder of record of a Class X Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such
Distribution Date to the Holders of the Class X Certificates. The amounts due on
each Distribution Date are limited to certain residual amounts remaining after
all amounts due to the Holders of the Certificates have been paid on such
Distribution Date.

         The Mortgage Loans will be serviced by HomEq Servicing Corporation (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.

         This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.

         No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.

         Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive

                                      B-39
<PAGE>

distributions to the extent provided in the Pooling and Servicing Agreement with
respect to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Holder.

         The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier to occur of (i) the distribution
to the Certificateholders of all amounts required to be distributed to them
thereunder and (ii) at any time when a Qualified Liquidation of the Trust is
effected; provided, however, that in no event shall the Trust continue beyond
the expiration of 21 years from the death of the survivor of the last lineal
descendant of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the Startup Date.

         Written notice of the final distribution to be made with respect to
each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

         The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.

         As provided in the Pooling and Servicing Agreement, the transfer of
this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

         The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

         As provided in the Pooling and Servicing Agreement, Certificates are
exchangeable for new Certificates of the same Class as this Certificate in
authorized denominations evidencing the same aggregate Percentage Interest.

         No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

         The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.

         Unless the certificate of authentication hereon has been executed by
the Trustee or an Authenticating Agent, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.

                                      B-40

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                               CITIBANK, N.A.,
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class X
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.

Trustee Authentication

CITIBANK, N.A.
not in its individual capacity, but solely in its
capacity as Trustee

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

Date:  December __, 2001

                                      B-41
<PAGE>

                         RAFC ASSET-BACKED TRUST 2001-1,
                   RAFC ASSET BACKED SECURITIES, SERIES 2001-1

                                     CLASS R

                    Representing Certain Interests in a Trust
                           Containing Certain Mortgage
                                 Loans Formed by

                      RESIDENTIAL ASSET FUNDING CORPORATION

         (This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, Residential
Asset Funding Corporation or any of its subsidiaries. This Certificate
represents two fractional ownership interests in the Trust Fund described
herein, namely the UT-R Interest and the LT-R Interest.)

         THIS CERTIFICATE MAY 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")) THAT IS SUBJECT TO TITLE I OF ERISA OR ANY
PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE CODE) THAT IS SUBJECT TO
SECTION 4975 OF THE CODE (EACH, A "PLAN"), OR TO ANY PERSON ACTING ON BEHALF OF
OR INVESTING THE ASSETS OF A PLAN. THE TRUSTEE SHALL NOT REGISTER THE TRANSFER
OF THIS CERTIFICATE OR ANY INTEREST HEREIN UNLESS THE PROPOSED TRANSFEREE HAS
REPRESENTED TO THE TRUSTEE IN WRITING THAT IT IS NOT A PLAN AND IS NOT ACTING ON
BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

<TABLE>
<S>                                     <C>
No.:  R                                 --------------------------
                                                Startup Day

99.99% Percentage Interest
                                        --------------------------
                                               Final Scheduled
                                                 Distribution
</TABLE>

--------------------------------------------------------------------------------
                                Registered Holder

                  The registered Holder named above is the registered Holder of
two fractional interests in a trust fund (the "Trust Fund"), the trust estate of
which consists primarily of mortgage loans. The Certificates are issued pursuant
to a Pooling and Servicing Agreement, dated as of November 30, 2001 (the
"Pooling and Servicing Agreement"), among HomEq Servicing Corporation (the
"Servicer"), Citibank, N.A., as trustee (the "Trustee"), Residential Asset
Funding Corporation, as depositor, RAFC Transferor Trust, as transferor, and
First Union National Bank as certificate administrator and custodian.

                                      B-42

<PAGE>

                  THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.

                  NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS,
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.

                  This Certificate is one of a Class of duly-authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates")
issued in nine Classes. The Certificates, in the aggregate, represent the entire
beneficial ownership in the Trust Fund formed pursuant to the Pooling and
Servicing Agreement. The Holder of this Certificate by virtue of acceptance
hereof assents and is bound by such Pooling and Servicing Agreement.

                  Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.

                  On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing January 25, 2002, the Holders of the
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs
(the "Record Date") will be entitled to receive an amount equal to the
Fractional Undivided Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the same Class as this
Certificate. Except for the final distribution, distributions will be made in
immediately available funds to Holders of Certificates, by wire transfer or
otherwise, to the account of a Holder at a domestic bank or other entity having
appropriate facilities therefor, if such Holder has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.

                  The Mortgage Loans will be serviced by HomEq Servicing
Corporation (the "Servicer") pursuant to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for appointment as
Subservicers for the servicing and administration of certain Mortgage Loans. No
appointment of any Subservicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.

                  This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.

                  No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.

                  Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive

                                      B-43
<PAGE>

distributions to the extent provided in the Pooling and Servicing Agreement with
respect to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Holder.

                  The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier to occur of (i) the
distribution to the Certificateholders of all amounts required to be distributed
to them thereunder and (ii) at any time when a Qualified Liquidation of the
Trust is effected; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the survivor of the last
lineal descendant of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James, living on the Startup Date.

                  Written notice of the final distribution to be made with
respect to each Class of Certificates shall be given by the Trustee to the
Certificateholders of each Class after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Distribution Date
upon which final distribution on each Class of Certificates will be made upon
presentation and surrender of the Certificates of such Class at the office of
the Trustee therein designated, (ii) the amount of any such final distribution
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable.

                  The final distribution on any Certificate shall only be made
upon presentation of such Certificate to the Trustee.

                  The Holders of a majority of the Percentage Interests
represented by Certificates, upon compliance with the requirements set forth in
the Pooling and Servicing Agreement, have the right to exercise any trust or
power set forth in the Pooling and Servicing Agreement with respect to the
Certificates or the Trust Fund.

                  As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.

                  The Trustee is required to furnish certain information on each
Distribution Date to the Holder of this Certificate, as more fully described in
the Pooling and Servicing Agreement.

                  The Class of Certificates represented by this Certificate are
issuable only as registered Certificates in the minimum Percentage Interest
corresponding to a minimum denomination of $25,000 original principal amount and
integral multiples of $1,000 in excess of $25,000. As provided in the Pooling
and Servicing Agreement, Certificates are exchangeable for new Certificates of
the same Class as this Certificate in authorized denominations evidencing the
same aggregate Percentage Interest.

                  No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                                      B-44

<PAGE>

                  The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.

                                      B-45
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.

                               CITIBANK, N.A.,
                                  not in its individual capacity, but solely in
                                  its capacity as Trustee

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

This is one of the Class R
Certificates referred to in the
within-mentioned Pooling and
Servicing Agreement.

Trustee Authentication

CITIBANK, N.A.,
not in its individual capacity, but solely in its
  capacity as Trustee

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

Date:  December __, 2001

                                      B-46

<PAGE>

         SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
ONLY "RESIDUAL INTERESTS" IN TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"): THE LT-R INTEREST,
WHICH IS THE SOLE RESIDUAL INTEREST IN THE LOWER TIER REMIC, AND THE UT-R
INTEREST, WHICH IS THE SOLE RESIDUAL INTEREST IN THE UPPER TIER REMIC. THESE
RESIDUAL INTERESTS ARE NOT SEPARATELY TRANSFERRABLE.

         THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTA-LITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DIS-QUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.

         A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD HOLDER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE

                                      B-47
<PAGE>

TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE
INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES,
COOPERATIVES TO WHICH PART I OF SUBCHAPTER T OF THE CODE APPLIES AND, EXCEPT AS
PROVIDED IN REGULATIONS, NOMINEES.

         IN ADDITION, FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1997, ALL
PARTNERS OF CERTAIN ELECTING PARTNERSHIPS HAVING 100 OR MORE PARTNERS ("ELECTING
LARGE PARTNERSHIPS") HOLDING A RESIDUAL INTEREST IN A REMIC SHALL BE TREATED AS
DISQUALIFIED ORGANIZATIONS FOR PURPOSES OF THE TAX IMPOSED ON PASS-THROUGH
ENTITIES UNDER SECTION 860E(e)(6) OF THE CODE. HOWEVER, THE ELECTING LARGE
PARTNERSHIP WOULD BE ENTITLED TO EXCLUDE EXCESS INCLUSION INCOME FROM GROSS
INCOME FOR PURPOSES OF DETERMINING THE TAXABLE INCOME OF ITS PARTNERS.

                                      B-48

<PAGE>

                                    EXHIBIT C

                              RESALE CERTIFICATION

_______________, 200_

HomEq Servicing Corporation
4837 Watt Avenue
North Highlands, CA 95660

Citibank, N.A.
111 Wall Street, 14th Floor/Zone 3
New York, NY 10005

         Re:      Class [R][X] [B-2] Certificate issued under the Pooling and
                  Servicing Agreement, RAFC Asset-Backed Trust 2001-1, RAFC
                  Asset Backed Securities, Series 2001-1, dated as of November
                  30, 2001 among HomEq Servicing Corporation (the "Servicer"),
                  Citibank, N.A., as trustee (the "Trustee"), Residential Asset
                  Funding Corporation, as depositor, RAFC Transferor Trust, as
                  transferor, and First Union National Bank as certificate
                  administrator and custodian.

Dear Sirs:

         ________________________________  ("Seller")  intends to transfer  the
captioned  Certificate  to  _______________ ("Purchaser"), for registration in
the name of ____________________________________________________.

         1. In connection with such transfer, and in accordance with Section
4.02 of the captioned Agreement, Seller hereby certifies to you the following
facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Certificate under the Securities Act of 1933,
as amended (the "1933 Act"), or which would render the disposition of the
Certificate a violation of Section 5 of the 1933 Act or require registration
pursuant thereto.

         2. The Purchaser warrants and represents to, and covenants with, the
Seller, the Trustee, the Depositor and the Servicer pursuant to Section 4.02 of
the Pooling and Servicing Agreement that:

                                      C-1
<PAGE>

                  a. The Purchaser agrees to be bound, as Certificateholder, by
all of the terms, covenants and conditions of the Pooling and Servicing
Agreement and the Certificate, and from and after the date hereof, the Purchaser
assumes for the benefit of each of the Servicer and the Seller all of the
Seller's obligations as Certificateholder thereunder;

                  b. The Purchaser understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;

                  c. The Purchaser is acquiring the Certificate for investment
for its own account or the account of another qualified institutional buyer
(within the meaning of Rule 144A) only and not for any other person;

                  d. The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;

                  e. The Purchaser has been furnished with all information
regarding the Certificate that it has requested from the Seller, the Trustee or
the Servicer; and

                  f. Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Certificate,
any interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person
(other than a qualified institutional buyer within the meaning of Rule 144A) in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.

         [The following is to be completed if transfer is being made pursuant to
Rule 144A].

         3. The Purchaser understands and agrees with the Seller that the Seller
is transferring the Certificate pursuant to the exemption from registration
under the 1933 Act provided by Rule 144A thereunder ("Rule 144A") and the
Purchaser hereby represents and warrants to the Seller, the Trustee and the
Servicer that the Purchaser is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Purchaser 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 Purchaser's most recent fiscal year (such amount
being calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies
the criteria in the category marked below.

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

(1)      The Purchaser must own and/or invest on a discretionary basis at least
         $100,000,000 in securities unless Buyer is a dealer, and, in that case,
         Buyer must own and/or invest on a discretionary basis at least
         $10,000,000 in securities.

                                      C-2

<PAGE>

/_ /            Corporation, etc. The Purchaser is a corporation other than a
                bank, savings and loan association or similar institution),
                Massachusetts or similar business trust, partnership, or
                charitable organization described in Section 501(c)(3) of the
                Internal Revenue Code.

/_ /            Bank. The Purchaser (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 Purchaser (a) is a savings and loan
                association, building and loan association, cooperative
                bank, homestead association or similar institution, which
                is supervised and examined by a state or Federal authority
                having supervision over any such institutions or is a
                foreign savings and loan association or equivalent
                institution and (b) has an audited net worth of at least
                $25,000,000 as demonstrated in its latest annual financial
                statements, a copy of which is attached hereto.

/_ /            Broker-dealer. The Purchaser is a dealer registered
                pursuant to Section 15 of the Securities Exchange Act of
                1934.

/_ /            Insurance Company. The Purchaser 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.

          The term "Securities" as used herein does not include (i) securities
of issuers that are affiliated with the Purchaser, (ii) securities that are part
of an unsold allotment to or subscription by the Purchaser (if the Purchaser 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 participation, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.

         For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Purchaser, the Purchaser used
the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph.

         Further, in determining such aggregate amount, the Purchaser may have
included securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investment of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority

                                      C-3
<PAGE>

owned, consolidated subsidiary of another enterprise and the Purchaser is not
itself a reporting company under the Securities Exchange Act of 1934.

         The Purchaser acknowledges that it is familiar with Rule 144A and
understands that you are and will continue to rely on the statements made
herein.

         The Purchaser agrees to notify you of any changes in the information
and conclusions herein. Until such notice is given to you, the Purchaser's
purchase of the Certificate will constitute a reaffirmation of the foregoing
certifications and acknowledgments as of the date of such purchase.

         Further, if the Purchaser is a bank or savings and loan as provided
above, the Purchaser agrees that it will furnish the Seller with updated annual
financial statements promptly after they become available.

         4. The Purchaser warrants and represents to, and covenants with, the
Seller, the Servicer, the Trustee and the Representative that:

                a.   The Purchaser agrees to be bound, as Certificateholder,
by  the restrictions on transfer contained in the Pooling and Servicing
Agreement; and

                b. The Purchaser is not an employee benefit plan (within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) that is subject to Title I of ERISA or a plan (within the
meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"))
(each, a "Plan"), and the Purchaser is not acting on behalf of or investing the
assets of a Plan.

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

                                      C-4
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Resale Certification
to be executed by their duly authorized officers as of the date first above
written.

----------------------------------     ----------------------------------
Seller                                 Purchaser

By:                                   By:
   -------------------------------        -------------------------------
Its:                                  Its:
    ------------------------------        -------------------------------
Taxpayer                              Taxpayer
Identification No.                    Identification No.
                  ----------------                      -----------------

                                      C-5

<PAGE>

                                   EXHIBIT D-1

               FORM OF [TRUSTEE] [CUSTODIAN] INITIAL CERTIFICATION

December __, 2001

Citibank, N.A.
111 Wall Street, 14th Floor/Zone 3
New York, NY 10005

First Union National Bank
Document Custody Division
2450 Del Paso Road, 1st Floor
Sacramento, CA 95834

         Re:      Pooling and Servicing Agreement, RAFC Asset-Backed Trust
                  2001-1, RAFC Asset Backed Securities, Series 2001-1, dated as
                  of November 30, 2001 among HomEq Servicing Corporation (the
                  "Servicer"), Citibank, N.A., as trustee (the "Trustee"),
                  Residential Asset Funding Corporation, as depositor, RAFC
                  Transferor Trust, as transferor, and First Union National
                  Bank, as certificate administrator and custodian.

Gentlemen:

         In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, if any (the "Loan Exception
Report"), it has received an Assignment of Mortgage, or a certified copy
thereof, and a Mortgage Note with respect to each [Initial] [Subsequent]
Mortgage Loan listed in the Mortgage Loan Schedule and the documents contained
therein appear to bear original signatures.

         The [Trustee] [Custodian] has made no independent examination of any
such documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The [Trustee] [Custodian] makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any such documents or any of the Mortgage Loans identified on
the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                  [CITIBANK, N.A.,
                                  as Trustee]

                                  [FIRST UNION NATIONAL BANK,
                                  as Custodian]

                                      D-1

<PAGE>

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

                                      D-2

<PAGE>

                                   EXHIBIT D-2

               FORM OF [TRUSTEE] [CUSTODIAN] INTERIM CERTIFICATION

December __, 2001

HomEq Servicing Corporation
4837 Watt Avenue
North Highlands, CA 95660

Citibank, N.A.
111 Wall Street, 14th Floor/Zone 3
New York, NY 10005

Residential Asset Funding Corporation
301 South College Street
Charlotte, NC 28288-0610

First Union National Bank
Document Custody Division
2450 Del Paso Road, 1st Floor
Sacramento, CA 95834

         Re:      Pooling and Servicing Agreement, RAFC Asset-Backed Trust
                  2001-1, RAFC Asset Backed Securities, Series 2001-1, dated as
                  of November 30, 2001 among HomEq Servicing Corporation (the
                  "Servicer"), Citibank, N.A., as trustee (the "Trustee"),
                  Residential Asset Funding Corporation, as depositor, RAFC
                  Transferor Trust, as transferor, and First Union National
                  Bank, as certificate administrator and custodian.

Gentlemen:

         In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that as to each [Initial] [Subsequent] Mortgage Loan listed in the Mortgage Loan
Schedule (other than any [Initial] [Subsequent] Mortgage Loan paid in full or
any [Initial] [Subsequent] Mortgage Loan listed on the attachment hereto), it
has reviewed the documents delivered to it pursuant to Section 2.04 (other than
items listed in Section 2.04(d)(ii)) of the Pooling and Servicing Agreement and
has determined that (i) all such documents are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged, torn or
otherwise physically altered and relate to such Mortgage Loan , (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule respecting such [Initial] [Subsequent]
Mortgage Loan is correct and (iv) each Mortgage Note has been endorsed as
provided in Section 2.04 of the Pooling and Servicing Agreement. Further,
[except for Mortgaged Properties relating to Mortgage Loans identified on the
Mortgage Loan Schedule by

                                     D-2-1
<PAGE>

an account number beginning with __________ or ________,] each Mortgaged
Property is a Residential Dwelling of the type set forth in the appraisal
obtained in connection with the origination of the related Mortgage Loan , and
for each Mortgage Loan with an original principal balance in excess of $15,000
for which the documents in the possession of the [Trustee] [Custodian] indicate
that the related Originator conducted a drive-by appraisal pursuant to FHLMC
Form 704 or alternative FNMA Form in connection with originating such Mortgage
Loan , such Mortgage Loan (A) had an original principal balance not in excess of
$35,000, and (B) has a Loan-to-Value Ratio less than 50% (based solely on the
LTV included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC
Form 1004 was performed by the related Originator within one year prior to the
origination of such Mortgage Loan . The [Trustee] [Custodian] has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The [Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                     [CITIBANK, N.A.,
                                     as Trustee]

                                     [FIRST UNION NATIONAL BANK,
                                     as Custodian]

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

                                     D-2-2
<PAGE>

                                   EXHIBIT D-3

                FORM OF [TRUSTEE] [CUSTODIAN] FINAL CERTIFICATION

[date]

[Certificate Insurer]

HomEq Servicing Corporation
4837 Watt Avenue
North Highlands, CA 95660

[Certificateholders]

[Representative]

         Re:      Pooling and Servicing Agreement, RAFC Asset-Backed Trust
                  2001-1, RAFC Asset Backed Securities, Series 2001-1, dated as
                  of November 30, 2001 among HomEq Servicing Corporation (the
                  "Servicer"), Citibank, N.A., as trustee (the "Trustee"),
                  Residential Asset Funding Corporation, as depositor, RAFC
                  Transferor Trust, as transferor, and First Union National
                  Bank, as certificate administrator and custodian

Gentlemen:

         In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Trustee] [Custodian], hereby certifies
that, except as noted on the attachment hereto, 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 has reviewed the documents delivered to it
pursuant to Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the
Pooling and Servicing Agreement and has determined that (i) all such documents
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule respecting
such Mortgage Loan is correct and (iv) each Mortgage Note has been endorsed as
provided in Section 2.04 of the Pooling and Servicing Agreement. Further,
[except for Mortgaged Properties relating to Mortgage Loans identified on the
Mortgage Loan Schedule by an account number beginning with _______ or _______,]
each Mortgaged Property is a Residential Dwelling of the type set forth in the
appraisal obtained in connection with the origination of the related Mortgage
Loan, and for each Mortgage Loan with an original principal balance in excess of
$15,000 for which the documents in the possession of the [Trustee] [Custodian]
indicate that the related Originator conducted a drive-by appraisal pursuant to

                                     D-3-1
<PAGE>

FHLMC Form 704 or alternative FNMA Form in connection with originating such
Mortgage Loan, such Mortgage Loan (A) had an original principal balance not in
excess of $35,000, and (B) has a Loan-to-Value Ratio less than 50% (based solely
on the LTV included on the Mortgage Loan Schedule) and/or an appraisal on
FNMA/FHLMC Form 1004 was performed by the related Originator within one year
prior to the origination of such Mortgage Loan . The [Trustee] [Custodian] has
made no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The [Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                       [CITIBANK, N.A.,
                                       as Trustee]

                                       [FIRST UNION NATIONAL BANK,
                                       as Custodian]

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

                                     D-3-2

<PAGE>

                                    EXHIBIT E

                             MORTGAGE LOAN SCHEDULE

                       [on File with Dewey Ballantine LLP]

                                      E-1

<PAGE>

                                    EXHIBIT F

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      HomEq Servicing Corporation
         4837 Watt Avenue
         North Highlands, CA 95660

         First Union National Bank
         Document Custody Division
         2450 Del Paso Road, 1st Floor
         Sacramento, CA 95834

Re:   Pooling and Servicing Agreement, RAFC Asset-Backed Trust 2001-1, RAFC
      Asset Backed Securities, Series 2001-1, dated as of November 30, 2001
      among HomEq Servicing Corporation (the "Servicer"), Citibank, N.A., as
      trustee (the "Trustee"), Residential Asset Funding Corporation, as
      depositor, RAFC Transferor Trust, as transferor, and First Union National
      Bank, as certificate administrator and custodian.

         In connection with the administration of the pool of Mortgage Loans
held by you as [Trustee] [Custodian] for the Certificateholders, we request the
release, and acknowledge receipt, of the (Trustee's Mortgage File/[specify
document]) for the Mortgage Loan described below, for the reason indicated.

Mortgagor's Name, Address & Zip Code:
-------------------------------------

Mortgage Loan Number:
---------------------

Reason for Requesting Documents (check one)
--------------------------------

/_ /          1.       Mortgage Loan Paid in Full
                       (Servicer hereby certifies that all amounts
                       received in connection therewith have been
                       credited to the Principal and Interest Account
                       and remitted to the Trustee for deposit into the
                       Certificate Account pursuant to the Pooling and
                       Servicing Agreement.)

/_ /          2.       Mortgage Loan Liquidated
                       (Servicer hereby certifies that all proceeds of
                       foreclosure, insurance or other liquidation have
                       been finally received and credited to the
                       Principal and Interest Account and remitted to
                       the Trustee for deposit into the Certificate
                       Account pursuant to the Pooling and Servicing
                       Agreement.)

                                     F-2-1

<PAGE>

/_ /          3.       Mortgage Loan in Foreclosure

/_ /          4.       Mortgage Loan Purchased Pursuant to Section 11.01
                       of the Pooling and Servicing Agreement.

/_ /          5.       Mortgage Loan Repurchased or Substituted Pursuant
                       to Article II or III of the Pooling and Servicing
                       Agreement

                       (Servicer hereby certifies that the repurchase price or
                       Substitution Adjustment has been credited to the
                       Principal and Interest Account and remitted to the
                       Trustee for deposit into the Certificate Account pursuant
                       to the Pooling and Servicing Agreement.)

/_ /          6.       Other (explain)_________________________________

                       ________________________________________________

                       ________________________________________________

         If box 1 or 2 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.

         If box 3, 4, 5 or 6 above is checked, upon our return of all of the
above documents to you as [Trustee][Custodian] please acknowledge your receipt
by signing in the space indicated below, and returning this form.

                                   HOMEQ SERVICING CORPORATION

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

                                   Documents returned to [Trustee][Custodian]:

                                   --------------------------------------------
                                        [Trustee] [Custodian]

                                   By:
                                      -----------------------------
                                   Date:
                                        ---------------------------

                                     F-2-2

<PAGE>

                                    EXHIBIT F

                                   [RESERVED]

                                     F-2-3

<PAGE>

                                    EXHIBIT G

                               TRANSFER AFFIDAVIT

STATE OF                   )
                           )        : ss:
COUNTY OF                  )

         The undersigned, being first duly sworn, deposes and says as follows:

         1. The undersigned is a _______________ of __________, the proposed
transferee (the "Transferee") of a Percentage Interest in a Class R Certificate
(the "Certificate") issued pursuant to the Pooling and Servicing Agreement, RAFC
Asset-Backed Trust 2001-1, RAFC Asset Backed Securities, Series 2001-1, dated as
of November 30, 2001 among HomEq Servicing Corporation, as servicer, Citibank,
N.A., as trustee, Residential Asset Funding Corporation, as depositor, RAFC
Transferor Trust, as transferor, and First Union National Bank as certificate
administrator and custodian. Capitalized terms used, but not defined herein
shall have the meanings ascribed to such terms in the Agreement. The Transferee
has authorized the undersigned to make this affidavit on behalf of the
Transferee.

         2. The Transferee is, as of the date hereof, and will be, as of the
date of the transfer, a Permitted Transferee. The Transferee is acquiring its
Percentage Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

         3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.

         4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is a record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

                                      G-1

<PAGE>

         5. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement (incorporated herein by reference) and understands the legal
consequences of the acquisition of a Percentage Interest in the Certificate
including, without limitation, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the transfer to the Transferee contemplated hereby
null and void.

         6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to transfer its Percentage Interest in
the Certificate, and in connection with any transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
transfer its Percentage Interest or cause any Percentage Interest to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transfer
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the transfer is to be made is not a Permitted Transferee.

         7.  The Transferee's taxpayer identification number is _______________.

         8.  Section references and defined terms not defined herein have the
meanings ascribed thereto in the Agreement.

                                      G-2

<PAGE>

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of __________, 200_.

                                          [NAME OF TRANSFEREE]

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

[Corporate seal]

ATTEST:

------------------------------------
[Assistant] Secretary

                                      G-3

<PAGE>

STATE OF                   )
                           )        : ss:
COUNTY OF                  )

         Personally appeared before me the above-named ________, known or proved
to me to be the same person who executed the foregoing instrument and to be the
__________ of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.

         Subscribed and sworn before me this ____ day of
_____________, 200_.

         -------------------
         NOTARY PUBLIC

         My Commission expires the ____
         day of _____________, 200_.

                                      G-4

<PAGE>

                                    EXHIBIT H

                           FORM OF LIQUIDATION REPORT

Customer Name:
Account number:
Original Principal Balance:

1.       Liquidation Proceeds

                  Principal Prepayment          $__________
                  Property Sale Proceeds        ___________
                  Insurance Proceeds            ___________
                  Other (Itemize)               ___________

                  Total Proceeds                                  $____________

2.       Servicing Advances                     $__________
         Monthly Advances                       ___________

                  Total Advances                                  $____________

3.       Net Liquidation Proceeds                                 $____________
         (Line 1 minus Line 2)

4.       Principal Balance of the Mortgage                        $____________
         Loan on date of liquidation

5.       Realized (Loss) or Gain                                  $____________
         (Line 3 minus Line 4)

                                      H-1
<PAGE>

                                    EXHIBIT J

                     SERVICER'S MONTHLY COMPUTER TAPE FORMAT

         The computer tape to be delivered to the Trustee pursuant to Section
6.10 shall contain the following information for each Mortgage Loan as of the
related Record Date:

                  1.       Name of the Mortgagor, address of the Mortgaged
                  Property and Account Number.

                  2.       The LTV as of the origination date of the Mortgage
                  Loan.

                  3.       The Due Date.

                  4.       The Mortgage Loan Original Principal Balance.

                  5.       The Mortgage Interest Rate.

                  6.       The Monthly Payment.

                  7.       The date on which the last payment was received and
                  the amount of such payment segregated into the following
                  categories; (a) total interest received (including Servicing
                  Fee, Contingency Fee and Excess Spread); (b) Servicing Fee and
                  Contingency Fee; (c) Excess Spread; (d) The amount equal to
                  total interest received minus Servicing Fee, Contingency Fee
                  and Excess Spread; (e) principal and Excess Payments received;
                  (f) Curtailments received; and (g) Principal Prepayments
                  received.

                  8.       The Mortgage Loan Principal Balance.

                  9.       The Mortgage Note maturity date.

                  10.      A "Delinquency Flag" noting that the Mortgage Loan is
                  current or delinquent. If delinquent, state the date on which
                  the last payment was received.

                  11.      A "Foreclosure Flag" noting that the Mortgage Loan is
                  the subject of foreclosure proceedings.

                  12.      An "REO Flag" noting that the Mortgage Loan is an REO
                  Property.

                  13. A "Liquidated Mortgage Loan Flag" noting that the Mortgage
                  Loan is a Liquidated Mortgage Loan and the Net Liquidation
                  Proceeds received in connection therewith.

                  14.      Lifetime Cap.

                  15.      Lifetime Floor.

                                      J-1
<PAGE>

                  16.      Periodic Cap.

                  17.      Net Funds Cap.

                  18.      Any additional information reasonably requested by
                  the Trustee.

                                      J-2

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