Document:

EXHIBIT

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                   STRUCTURED ASSET MORTGAGE INVESTMENTS INC.

                                     Seller,

                           WASHINGTON MUTUAL BANK, FA

                         Originator and Master Servicer,

                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                    Trustee,

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

                         POOLING AND SERVICING AGREEMENT

                           Dated as of January 1, 2001

                                   relating to

                      WASHINGTON MUTUAL MORTGAGE LOAN TRUST
                MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-1

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<TABLE>
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                                                 TABLE OF CONTENTS

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ARTICLE I

         DEFINITIONS..............................................................................................2
                  SECTION 1.01      CALCULATIONS RESPECTING MORTGAGE LOANS. .....................................25

ARTICLE II

         CONVEYANCE OF TRUST FUND;
         REPRESENTATIONS AND WARRANTIES..........................................................................26
                  SECTION 2.01      CONVEYANCE OF TRUST FUND.....................................................26
                  SECTION 2.02      ACCEPTANCE BY TRUSTEE........................................................28
                  SECTION 2.03      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
                                    SERVICER AND ORIGINATOR......................................................29
                  SECTION 2.04      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                                    ORIGINATOR WITH RESPECT TO THE MORTGAGE LOANS................................31
                  SECTION 2.05      ISSUANCE OF CERTIFICATES.....................................................39
                  SECTION 2.06      REMIC PROVISIONS.............................................................39

ARTICLE III

         ADMINISTRATION AND SERVICING
         OF MORTGAGE LOANS.......................................................................................42
                  SECTION 3.01      SERVICING STANDARD...........................................................42
                  SECTION 3.02      ENFORCEMENT OF THE OBLIGATIONS OF SUB-SERVICERS..............................43
                  SECTION 3.03      TERMINATION OF THE RIGHTS OF SUB-SERVICERS...................................44
                  SECTION 3.04      LIABILITY OF THE MASTER SERVICER.............................................44
                  SECTION 3.05      RIGHTS OF THE SELLER AND THE TRUSTEE IN RESPECT OF THE
                                    MASTER SERVICER..............................................................45
                  SECTION 3.06      TRUSTEE TO ACT AS MASTER SERVICER............................................45
                  SECTION 3.07      COLLECTION OF MORTGAGE LOAN PAYMENTS.........................................45
                  SECTION 3.08      COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
                                    ESCROW ACCOUNTS..............................................................47
                  SECTION 3.09      PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
                                     ............................................................................48
                  SECTION 3.10      MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES AND
                                    PMI POLICY; COLLECTIONS THEREUNDER...........................................49
                  SECTION 3.11      MAINTENANCE OF HAZARD INSURANCE AND OTHER INSURANCE.
                                                                                                                 51
                  SECTION 3.12      ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
                                    AGREEMENTS...................................................................52
                  SECTION 3.13      REALIZATION UPON DEFAULTED MORTGAGE LOANS....................................53

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                  SECTION 3.14      TRUSTEE TO COOPERATE; RELEASE OF TRUSTEE MORTGAGE FILES.
                                                                                                                 55
                  SECTION 3.15      DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
                                    SERVICER TO BE HELD FOR THE TRUSTEE FOR THE BENEFIT OF THE
                                    CERTIFICATEHOLDERS...........................................................56
                  SECTION 3.16      SERVICING COMPENSATION; COMPENSATING INTEREST................................57
                  SECTION 3.17      REPORTS TO THE SELLER; ACCOUNT STATEMENTS....................................57
                  SECTION 3.18      ANNUAL STATEMENT AS TO COMPLIANCE............................................57
                  SECTION 3.19      ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
                                    REPORT.......................................................................58
                  SECTION 3.20      REPORTS TO TRUSTEE...........................................................58

ARTICLE IV

         ADMINISTRATION OF THE TRUST FUND........................................................................59
                  SECTION 4.01      CERTIFICATE ACCOUNT..........................................................59
                  SECTION 4.02      MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.....................................60

ARTICLE V

         DISTRIBUTIONS TO CERTIFICATEHOLDERS.....................................................................63
                  SECTION 5.01      DISTRIBUTIONS GENERALLY......................................................63
                  SECTION 5.02      DISTRIBUTIONS FROM THE CERTIFICATE ACCOUNT...................................63
                  SECTION 5.03      ALLOCATION OF LOSSES.........................................................65
                  SECTION 5.04      MONTHLY ADVANCES BY THE MASTER SERVICER......................................67
                  SECTION 5.05      ADVANCES FOR ATTORNEYS' FEES.................................................67
                  SECTION 5.06      NONRECOVERABLE ADVANCES......................................................68
                  SECTION 5.07      ADVANCE PROCEDURES...........................................................68

ARTICLE VI

         THE CERTIFICATES........................................................................................69
                  SECTION 6.01      THE CERTIFICATES.............................................................69
                  SECTION 6.02      REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
                                     ............................................................................70
                  SECTION 6.03      MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES............................72
                  SECTION 6.04      PERSONS DEEMED OWNERS........................................................73
                  SECTION 6.05      ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
                                    ADDRESSES....................................................................73
                  SECTION 6.06      MAINTENANCE OF OFFICE OR AGENCY..............................................73
                  SECTION 6.07      BOOK-ENTRY CERTIFICATES......................................................73
                  SECTION 6.08      NOTICES TO CLEARING AGENCY...................................................74
                  SECTION 6.09      DEFINITIVE CERTIFICATES......................................................75

ARTICLE VII

         THE SELLER, MORTGAGE LOAN SELLER AND THE MASTER SERVICER
          .......................................................................................................76
                  SECTION 7.01      LIABILITIES OF THE SELLER, ORIGINATOR AND THE MASTER
                                    SERVICER.....................................................................76
                  SECTION 7.02      MERGER OR CONSOLIDATION OF THE SELLER, THE ORIGINATOR OR
                                    THE MASTER SERVICER..........................................................77
                  SECTION 7.03      LIMITATION ON LIABILITY OF THE SELLER, THE MASTER SERVICER
                                    AND OTHERS...................................................................78
                  SECTION 7.04      MASTER SERVICER NOT TO RESIGN................................................78
                  SECTION 7.05      ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS...............................78
                  SECTION 7.06      ORIGINATOR AND MASTER SERVICER MAY OWN CERTIFICATES.
                                     ............................................................................79

ARTICLE VIII

         DEFAULT.................................................................................................80
                  SECTION 8.01      EVENTS OF DEFAULT............................................................80
                  SECTION 8.02      TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.....................................81
                  SECTION 8.03      NOTIFICATION TO CERTIFICATEHOLDERS...........................................83
                  SECTION 8.04      WAIVER OF EVENTS OF DEFAULT..................................................83

ARTICLE IX

         CONCERNING THE TRUSTEE..................................................................................84
                  SECTION 9.01      DUTIES OF TRUSTEE............................................................84
                  SECTION 9.02      CERTAIN MATTERS AFFECTING THE TRUSTEE........................................85
                  SECTION 9.03      TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
                                     ............................................................................87
                  SECTION 9.04      TRUSTEE MAY OWN CERTIFICATES.................................................87
                  SECTION 9.05      TRUSTEE'S COMPENSATION AND EXPENSES..........................................87
                  SECTION 9.06      ELIGIBILITY REQUIREMENTS FOR TRUSTEE.........................................87
                  SECTION 9.07      RESIGNATION AND REMOVAL OF TRUSTEE...........................................88
                  SECTION 9.08      SUCCESSOR TRUSTEE............................................................88
                  SECTION 9.09      MERGER OR CONSOLIDATION OF TRUSTEE...........................................89
                  SECTION 9.10      APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE................................89
                  SECTION 9.11      OFFICE OF THE TRUSTEE........................................................90
                  SECTION 9.12      TAX RETURNS, 1934 ACT REPORTING, OTHER DATA..................................91

ARTICLE X

         TERMINATION.............................................................................................93
                  SECTION 10.01             TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
                                            MORTGAGE LOANS.......................................................93
                  SECTION 10.02             PROCEDURE UPON OPTIONAL OR OTHER FINAL TERMINATION.
                                             ....................................................................94
                  SECTION 10.03             ADDITIONAL TERMINATION REQUIREMENTS..................................95

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ARTICLE XI

         MISCELLANEOUS PROVISIONS................................................................................96
                  SECTION 11.01             AMENDMENT............................................................96
                  SECTION 11.02             RECORDATION OF AGREEMENT; COUNTERPARTS...............................97
                  SECTION 11.03             GOVERNING LAW........................................................98
                  SECTION 11.04             INTENTION OF PARTIES.................................................98
                  SECTION 11.05             NOTICES..............................................................99
                  SECTION 11.06             SEVERABILITY OF PROVISIONS..........................................100
                  SECTION 11.07             LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS..........................100
                  SECTION 11.08             CERTIFICATES NONASSESSABLE AND FULLY PAID...........................101
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EXHIBIT A         FORM OF CLASS A CERTIFICATE
EXHIBIT B         FORM OF CLASS M-1, M-2 AND M-3 CERTIFICATE
EXHIBIT C         FORM OF CLASS B-1, B-2 AND B-3 CERTIFICATE
EXHIBIT D         FORM OF CLASS R CERTIFICATE
EXHIBIT E         SCHEDULE OF MORTGAGE LOANS
EXHIBIT F-1       FORM OF INITIAL LOAN LIST CERTIFICATION
EXHIBIT F-2       FORM OF INITIAL CERTIFICATION OF TRUSTEE
EXHIBIT F-3       FORM OF FINAL CERTIFICATION OF TRUSTEE
EXHIBIT G         FORM OF REQUEST FOR RELEASE
EXHIBIT H         FORM OF RULE 144A TRANSFER CERTIFICATE
EXHIBIT I         FORM OF ERISA TRANSFER AFFIDAVIT
EXHIBIT J-1       FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
EXHIBIT J-2       FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
EXHIBIT K         FORM OF NOTE ALLONGE
EXHIBIT L         PMI POLICY FROM PMI INSURER

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         THIS POOLING AND SERVICING AGREEMENT, dated as of January 1, 2001, is
hereby executed by and among STRUCTURED ASSET MORTGAGE INVESTMENTS INC., a
Delaware corporation, as seller (the "Seller"), WASHINGTON MUTUAL BANK, FA
("Washington Mutual"), in its capacity as originator (the "Originator") and in
its capacity as master servicer (the "Master Servicer"), and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, as trustee (the
"Trustee"). Capitalized terms used in this Agreement and not otherwise defined
herein will have the meanings assigned to them in Article I below.

                              PRELIMINARY STATEMENT

         The Seller has acquired the Mortgage Loans from EMC Mortgage
Corporation (the "Mortgage Loan Seller") on the Closing Date pursuant to the
Mortgage Loan Purchase Agreement and is the owner of the Mortgage Loans and the
other property being conveyed by it to the Trustee for inclusion in the Trust
Fund. The Seller has duly authorized the execution and delivery of this
Agreement to provide for the conveyance to the Trustee of the Mortgage Loans and
the other property constituting the Trust Fund in exchange for the Certificates.

         All covenants and agreements made by the Seller, the Originator, the
Master Servicer and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit and security
of the Certificateholders. The Seller, the Originator and the Master Servicer
are entering into this Agreement, and the Trustee is accepting the trusts
created hereby and thereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

         The Trustee on behalf of the Trust shall make an election for the
assets constituting the Trust Fund to be treated for federal income tax purposes
as a REMIC. On the Closing Date, all the Classes of Certificates (other than the
Class R Certificates) will be designated "regular interests" in the REMIC and
the Class R Certificates will be designated the "residual interest" in the
REMIC.

         As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $366,031,956.72.

         The parties hereto intend to effect an absolute sale and assignment of
the Mortgage Loans to the Trustee for the benefit of Certificateholders under
the Mortgage Loan Purchase Agreement and this Agreement. However, the Mortgage
Loan Seller and the Seller will hereunder absolutely assign, and as a
precautionary matter grant a security interest in and to, its rights, if any, in
the Trust Fund and the Mortgage Loans to the Trustee on behalf of
Certificateholders to ensure that the interest of the Certificateholders
hereunder in the Mortgage Loans is fully protected.

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

         In consideration of the mutual agreements herein contained, the Seller,
the Master Servicer, the Originator and the Trustee agree as follows:

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                                    ARTICLE I

                                   DEFINITIONS

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

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

         1934 ACT:  The Securities Exchange Act of 1934, as amended.

         ACCRUAL PERIOD: With respect to any Distribution Date and any Class of
Certificates, the calendar month immediately preceding the month of such
Distribution Date.

         ACCRUED CERTIFICATE INTEREST: For any Certificate for any Distribution
Date, will equal the sum of the following:

         (a) interest accrued during the related Accrual Period at the
         applicable Pass-Through Rate on the Current Principal Amount of such
         Certificate immediately prior to such Distribution Date less (i) in the
         case of a Senior Certificate, such Certificate's share of any Net
         Interest Shortfall from the Mortgage Loans and the interest portion of
         any Realized Losses on the Mortgage Loans allocated thereto and (ii) in
         the case of a Subordinate Certificate, such Certificate's share of any
         Net Interest Shortfall and the interest portion of any Realized Losses
         on the Mortgage Loans allocated thereto; and

         (b) such Certificate's pro rata share, based on the Current Principal
         Amount thereof, of any Prepayment Charges on the Mortgage Loans.

Any Net Interest Shortfalls pursuant to clause (a) above will be allocated among
the Certificates in proportion to the amount of Accrued Certificate Interest
that would have been allocated thereto in the absence of such shortfalls. The
interest portion of Realized Losses for the Mortgage Loans will be allocated
sequentially, in the following order, to the Class B-3, Class B-2, Class B-1,
Class M-3, Class M-2 and Class M-1 Certificates, and then to the Class A
Certificates. Accrued Certificate Interest is calculated on the basis of a
360-day year consisting of twelve 30-day months. No Accrued Certificate Interest
will be payable with respect to any Class of Certificates after the Distribution
Date on which the outstanding Current Principal Amount of such Certificate has
been reduced to zero.

         ADVERSE REMIC EVENT:  As defined in Section 2.06(f).

         AGGREGATE EXPENSE RATE: The sum of the Servicing Fee Rate, the Excess
Servicing Fee Rate and the PMI Insurance Premium Rate (if applicable).

         AGGREGATE LOAN BALANCE: The aggregate of the Scheduled Principal
Balances of all Mortgage Loans at the date of determination.

                                        2

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         AGGREGATE VOTING INTERESTS: The aggregate of the Voting Interests of
all Certificates under this Agreement.

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

         APPRAISED VALUE: The appraised value of the Mortgaged Property based
upon the appraisal made for the originator at the time of the origination of the
related Mortgage Loan or the sales price of the Mortgaged Property at the time
of such origination, whichever is less, or with respect to any Mortgage Loan
that represents a refinancing, the lower of the appraised value at origination
or the appraised value of the Mortgaged Property based upon the appraisal made
at the time of such refinancing.

         ASSIGNMENT: An assignment from the Originator, in blank, of the
Mortgage, in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect, if recorded, of
record the absolute sale and assignment of the Mortgage Loan to the Trustee for
the benefit of Certificateholders, which assignment, may be in the form of one
or more blanket assignments covering Mortgages secured by Mortgaged Properties
located in the same county, if permitted by law and accompanied by an Opinion of
Counsel to that effect. An assignment shall include all applicable recording
information, unless the related original Mortgage has been delivered for
recording to the appropriate public recording office but has not yet been
returned to the Originator.

         BANKRUPTCY CODE: The United States Bankruptcy Code, as amended from
time to time (11 U.S.C.).

         BENEFICIAL HOLDER: A Person holding a beneficial interest in any
Certificate through a Participant or an Indirect Participant or a Person holding
a beneficial interest in any Definitive Certificate.

         BLOOMBERG:  Bloomberg L.P.

         BOOK-ENTRY CERTIFICATES: The Class A, Class M-1, Class M-2 or Class M-3
Certificates, ownership and transfers of which shall be made through book
entries, as described in Section 6.07.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in New York or the state in which the Master
Servicer or the Corporate Trust Office are located are authorized or obligated
by law or executive order to be closed.

         CASH LIQUIDATION: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.

                                        3

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         CERTIFICATE: Any Class A, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2, Class B-3 and Class R Certificate executed and authenticated by the
Trustee for the benefit of the Certificateholders in substantially the form or
forms attached as Exhibits hereto.

         CERTIFICATE ACCOUNT: The separate account or accounts created and
maintained by the Trustee pursuant to Section 4.01, in the name of the Trustee
for the benefit of the Certificateholders for deposit of payments and
collections in respect of the Mortgage Loans pursuant to Section 4.01 hereof,
which account or accounts must be an Eligible Account or Accounts.

         CERTIFICATE REGISTER: The register maintained pursuant to Section
6.02(a) hereof.

         CERTIFICATEHOLDER OR HOLDER: The Person in whose name a Certificate is
registered in the Certificate Register.

         CLASS: Collectively, all of the Certificates bearing the same
designation.

         CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior, Class M-1,
         Class M-2 and Class M-3 Principal Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior, Class M-1,
                  Class M-2 and Class M-3 Principal Distribution Amount; and

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior, Class M-1, Class M-2 and Class
                  M-3 Certificates (after taking into account the payment of the
                  Senior, Class M-1, Class M-2 and Class M-3 Principal
                  Distribution Amount for that Distribution Date) and (2) the
                  Current Principal Amount of the Class B-1 Certificates
                  immediately prior to that Distribution Date over (B) the
                  lesser of (x) the product of (1) 99.60% and (2) the aggregate
                  Scheduled Principal Balance of the Mortgage Loans as of the
                  end of the related Due Period, not including any Deferred
                  Interest added to the Scheduled Principal Balance of the
                  Mortgage Loans during the related Due Period, and (y) the
                  amount, if any, by which (a) the aggregate Scheduled Principal
                  Balance of the Mortgage Loans as of the end of the related Due
                  Period, not including any Deferred Interest added to the
                  Scheduled Principal Balance of the Mortgage Loans during the
                  related Due Period, exceeds (b) the Current Principal Amount
                  of the Class B-3 Certificates on the Closing Date.

         CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

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         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior, Class M-1,
         Class M-2, Class M-3 and Class B-1 Principal Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior, Class M-1,
                  Class M-2, Class M-3 and Class B-1 Principal Distribution
                  Amount; and

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior, Class M-1, Class M-2, Class
                  M-3 and Class B-1 Certificates (after taking into account the
                  payment of the Senior, Class M-1, Class M-2, Class M-3 and
                  Class B-1 Principal Distribution Amount for that Distribution
                  Date) and (2) the Current Principal Amount of the Class B-2
                  Certificates immediately prior to that Distribution Date over
                  (B) the lesser of (x) the product of (1) 99.80% and (2) the
                  aggregate Scheduled Principal Balance of the Mortgage Loans as
                  of the end of the related Due Period, not including any
                  Deferred Interest added to the Scheduled Principal Balance of
                  the Mortgage Loans during the related Due Period, and (y) the
                  amount, if any, by which (a) the aggregate Scheduled Principal
                  Balance of the Mortgage Loans as of the end of the related Due
                  Period, not including any Deferred Interest added to the
                  Scheduled Principal Balance of the Mortgage Loans during the
                  related Due Period, exceeds (b) the Current Principal Amount
                  of the Class B-3 Certificates on the Closing Date.

         CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior Principal
         Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior Principal
                  Distribution Amount; and

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior Certificates (after taking into
                  account the payment of the Senior Principal Distribution
                  Amount for that Distribution Date) and (2) the Current
                  Principal Amount of the Class M-1 Certificates immediately
                  prior to that Distribution Date over (B) the lesser of (x) the
                  product of (1) 98.40% and (2) the aggregate Scheduled
                  Principal Balance of the Mortgage Loans as of the end of the
                  related Due Period, not including any Deferred Interest added
                  to the Scheduled Principal Balance of the

                                        5

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                  Mortgage Loans during the related Due Period, and (y) the
                  amount, if any, by which (a) the aggregate Scheduled Principal
                  Balance of the Mortgage Loans as of the end of the related Due
                  Period, not including any Deferred Interest added to the
                  Scheduled Principal Balance of the Mortgage Loans during the
                  related Due Period, exceeds (b) the Current Principal Amount
                  of the Class B-3 Certificates on the Closing Date.

         CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior Principal
         Distribution Amount and the Class M-1 Principal Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior Principal
                  Distribution Amount and the Class M-1 Principal Distribution
                  Amount; and

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior and Class M-1 Certificates
                  (after taking into account the payment of the Senior Principal
                  Distribution Amount and Class M-1 Principal Distribution
                  Amount for that Distribution Date) and (2) the Current
                  Principal Amount of the Class M-2 Certificates immediately
                  prior to that Distribution Date over (B) the lesser of (x) the
                  product of (1) 98.80% and (2) the aggregate Scheduled
                  Principal Balance of the Mortgage Loans as of the end of the
                  related Due Period, not including any Deferred Interest added
                  to the Scheduled Principal Balance of the Mortgage Loans
                  during the related Due Period, and (y) the amount, if any, by
                  which (a) the aggregate Scheduled Principal Balance of the
                  Mortgage Loans as of the end of the related Due Period, not
                  including any Deferred Interest added to the Scheduled
                  Principal Balance of the Mortgage Loans during the related Due
                  Period, exceeds (b) the Current Principal Amount of the Class
                  B-3 Certificates on the Closing Date.

         CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the remaining Principal Remittance Amount
         for that Distribution Date after distribution of the Senior, Class M-1
         and Class M-2 Principal Distribution Amount, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the remaining Principal Remittance Amount for that
                  Distribution Date after distribution of the Senior, Class M-1
                  and Class M-2 Principal Distribution Amount; and

                                        6

<PAGE>

                  (II) the excess of (A) the sum of (1) the aggregate Current
                  Principal Amount of the Senior, Class M-1 and Class M-2
                  Certificates (after taking into account the payment of the
                  Senior, Class M-1 and Class M-2 Principal Distribution Amount
                  for that Distribution Date) and (2) the Current Principal
                  Amount of the Class M-3 Certificates immediately prior to that
                  Distribution Date over (B) the lesser of (x) the product of
                  (1) 99.20% and (2) the aggregate Scheduled Principal Balance
                  of the Mortgage Loans as of the end of the related Due Period,
                  not including any Deferred Interest added to the Scheduled
                  Principal Balance of the Mortgage Loans during the related Due
                  Period, and (y) the amount, if any, by which (a) the aggregate
                  Scheduled Principal Balance of the Mortgage Loans as of the
                  end of the related Due Period, not including any Deferred
                  Interest added to the Scheduled Principal Balance of the
                  Mortgage Loans during the related Due Period, exceeds (b) the
                  Current Principal Amount of the Class B-3 Certificates on the
                  Closing Date.

         CLEARING AGENCY: An organization registered as a "clearing agency"
pursuant to Section 17A of the 1934 Act, which initially shall be DTC.

         CLOSING DATE:  January 31, 2001.

         CODE:  The Internal Revenue Code of 1986, as amended.

         COMPENSATING INTEREST: With respect to any Distribution Date, an amount
equal to interest shortfalls resulting from Principal Prepayments in Full by a
Mortgagor during the related Prepayment Period, but not more than the lesser of
(x) one-twelfth of 0.25% of the aggregate Scheduled Principal Balance of the
Mortgage Loans immediately preceding such Distribution Date and (y) the sum of
the Servicing Fee and the Excess Servicing Fee to which the Master Servicer is
entitled on such Distribution Date.

         CORPORATE TRUST OFFICE: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
shall be administered, which office at the date of the execution of this
Agreement is located at 1761 East St. Andrew Place, Santa Ana, California
92705-4934 Attention: Washington Mutual Mortgage Loan Trust, Mortgage Pass-
Through Certificates, Series 2001-1.

         CURRENT PRINCIPAL AMOUNT: For any Certificate as of any Distribution
Date will equal such Certificate's Initial Current Principal Amount on the
Closing Date, as increased by any Deferred Interest allocated thereto pursuant
to Section 5.02(d), and as reduced by (i) all amounts distributed on previous
Distribution Dates on such Certificate on account of principal, (ii) the
principal portion of all Realized Losses previously allocated to such
Certificate (taking account of its applicable Loss Allocation Limitation) and
(iii) in the case of a Subordinate Certificate, such Certificate's pro rata
share, if any, of the Subordinate Certificate Writedown Amount for previous
Distribution Dates. With respect to any Class of Certificates, the Current
Principal Amount thereof will equal the sum of the Current Principal Amounts of
all Certificates in such Class.

         CURTAILMENT: Any Principal Prepayment made by a Mortgagor which is not
a Principal Prepayment in Full.

                                        7

<PAGE>

         CUSTODIAL ACCOUNT: The deposit account or accounts created and
maintained by the Master Servicer pursuant to Section 3.07(b) hereof in a
depository institution which may be the Master Servicer for the benefit of the
Certificateholders, which account or accounts must be Eligible Accounts.

         CUT-OFF DATE:  January 1, 2001.

         CUT-OFF DATE AGGREGATE LOAN BALANCE: The Aggregate Loan Balance as of
the Cut-off Date.

         DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.

         DEFERRED INTEREST: With respect to each Mortgage Loan and each related
Due Date, the excess, if any, of the amount of interest accrued on such Mortgage
Loan from the preceding Due Date to such Due Date over the amount of interest
included in the Monthly Payment payable on such Due Date.

         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, or that results
in a permanent forgiveness of principal, which valuation in either case results
from a proceeding under the Bankruptcy Code.

         DEFINITIVE CERTIFICATE: A Certificate of any Class issued in
definitive, fully registered, certificated form.

         DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

         DELIVERED: With respect to any Eligible Investment, when the steps
applicable to such item as specified below are completed:

                  (i) if such item is an instrument, delivering such instrument
         to the Trustee endorsed to the Trustee or its nominee or custodian or
         endorsed in blank;

                  (ii) if such item is a certificated security, delivering such
         certificated security to the Trustee in bearer form or in registered
         form issued to the Trustee or endorsed to the Trustee or its nominee or
         custodian or endorsed in blank by an effective endorsement;

                  (iii) if such item is a security entitlement other than a
         United States Security Entitlement, causing a securities intermediary
         (who shall maintain the related financial asset in a quantity
         corresponding to the aggregate of all security entitlements it has
         established with respect to such financial asset) to indicate by book
         entry that such security entitlement has been credited to a securities
         account of the Trustee or its nominee or custodian with such securities
         intermediary;

                                       8

<PAGE>

                  (iv) if such item is a United States Security Entitlement,
         causing a securities intermediary (who shall maintain the related
         financial asset in a quantity corresponding to the aggregate of all
         security entitlements it has established with respect to such financial
         asset) to indicate by book entry that such United States Security
         Entitlement has been credited to a securities account of the Trustee or
         its nominee or custodian with such securities intermediary;

                  (v) if such item is a securities account, causing the
         securities intermediary to indicate by book entry that all security
         entitlements carried in the securities account have been credited to
         such securities account and such securities account is in the name of
         the Trustee or its nominee or custodian with such securities
         intermediary; and

                  (vi) if such item is an uncertificated security, causing the
         issuer of such uncertificated security to register the Trustee or its
         nominee or custodian as the registered owner of such uncertificated
         security.

         DEPOSITORY AGREEMENT: The Letter of Representation by and among DTC,
the Seller and the Trustee with respect to the Book-Entry Certificates.

         DETERMINATION DATE: The 18th day (or if such 18th day is not a Business
Day, the Business Day immediately preceding such 18th day) of the month of the
related Distribution Date.

         DISQUALIFIED ORGANIZATION: Either (i) the United States, (ii) any state
or political subdivision thereof, (iii) any foreign government, (iv) any
international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative described
in section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by section 511
of the Code, (vii) any organization described in section 1381(a)(2)(C) of the
Code, or (viii) any "electing large partnership" described in section 775 of the
Code, or (ix) any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. In addition, a corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof 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.

         DISTRIBUTION DATE: The 25th day of each month or, if such 25th day is
not a Business Day the next succeeding Business Day, commencing in February
2001.

         DOWNGRADE EVENT: The date upon which the long-term unsecured debt
rating of Washington Mutual is downgraded by Moody's below "A2," and by S&P
below "A-".

         DTC:  The Depository Trust Company.

         DUE DATE: The date specified in the Mortgage Note on which Monthly
Payments are due.

                                        9

<PAGE>

         DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.

         ELEVENTH DISTRICT COFI: Except as provided in Section 3.01(d), the
index used to determine the Mortgage Rate for each Mortgage Loan, which is a per
annum rate equal to the monthly weighted average cost of funds for the Eleventh
District savings institutions as announced by the Federal Home Loan Bank of San
Francisco as most recently available as of the related Rate Adjustment Date.

         ELIGIBLE ACCOUNT: Either (i) an account or accounts maintained with a
federal or state- chartered depository institution or trust company (which may
be the Master Servicer or an affiliate of the Master Servicer or which may be
the Trustee or an affiliate of the Trustee) the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the short-term
unsecured debt obligations of such holding company) are rated by each Rating
Agency in its highest short-term rating category, provided that so long as
Washington Mutual is the Master Servicer, any account maintained with the Master
Servicer shall be an Eligible Account if the long-term unsecured debt
obligations of Washington Mutual are rated "A2" by Moody's or "A-" by S&P, (ii)
an account or accounts the deposits in which are fully insured by the FDIC,
provided that any such deposits not so insured shall be otherwise maintained
such that (as evidenced by an Opinion of Counsel delivered to the Trustee and
the Rating Agencies) the applicable Certificateholders have a claim with respect
to the funds in such account or a perfected first priority security interest
against any collateral (which shall be limited to Eligible Investments) securing
such funds that is superior to claims of any other depositors or creditors of
the depository institution or trust company with which such account is
maintained, (iii) a trust account or accounts maintained with the Trustee or the
trust department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity, provided that any such state chartered
depository institution is subject to regulation regarding funds on deposit
substantially similar to the regulations set forth in 12 C.F.R. ss. 9.10(b) or
(iv) any account maintained at any Federal Home Loan Bank.

         ELIGIBLE INVESTMENTS: At any time, any one or more of the following
obligations, instruments and securities:

                  (i) obligations of the United States or any agency thereof,
         provided such obligations are backed by the full faith and credit of
         the United States;

                  (ii) general obligations of or obligations guaranteed by any
         state of the United States or the District of Columbia receiving the
         highest long-term rating of Moody's and S&P, and will not result in the
         downgrading or withdrawal of the rating, if any, then assigned to the
         Certificates by each applicable Rating Agency;

                  (iii) commercial paper (having original maturities of not more
         than 270 days) which is then rated in the highest commercial paper
         rating category of Moody's and S&P, and will not result in the
         downgrading or withdrawal of the rating, if any, then assigned to the
         Certificates by each applicable Rating Agency;

                                       10

<PAGE>

                  (iv) certificates of deposit, demand or time deposits, federal
         funds or bankers' acceptances (in each case having maturities of not
         more than 365 days) issued by any depository institution or trust
         company incorporated under the laws of the United States or of any
         state thereof and subject to supervision and examination by federal
         and/or state banking authorities, provided that the commercial paper
         and/or long-term debt obligations of such depository institution or
         trust company (or in the case of a depository institution or trust
         company that is the principal subsidiary of a holding company, the
         commercial paper or long-term debt obligations of such holding company)
         are then rated in the highest rating category of Moody's and S&P, in
         the case of commercial paper, and in one of the two highest rating
         categories in the case of long-term debt obligations, and will not
         result in the downgrading or withdrawal of the rating, if any, then
         assigned to the Certificates by each applicable Rating Agency, and, in
         the case of short-term debt obligations which have maturities of 30
         days or less, the highest rating assigned by each Rating Agency;

                  (v) repurchase obligations with respect to any security
         described in (i) and (ii) above or any other security issued or
         guaranteed by an agency or instrumentality of the United States, in
         either case entered into with a depository institution or trust company
         (acting as principal) described in (iv) above;

                  (vi) securities bearing interest or sold at a discount issued
         by any corporation incorporated under the laws of the United States or
         any state thereof which, at the time of such investment or contractual
         commitment providing for such investments are then rated in the highest
         rating category of each Rating Agency or in such lower rating category
         as will not result in the downgrading or withdrawal of the rating, if
         any, then assigned to the Certificates by each applicable Rating
         Agency; and

                  (vii) units of taxable money-market portfolios rated in the
         highest rating category by Moody's and S&P and not restricted to
         obligations issued or guaranteed by any agency or instrumentality of
         the United States or entities whose obligations are backed by the full
         faith and credit of the United States and repurchase agreements
         collateralized by such obligations.

PROVIDED, that (A) such obligation or security is held for a temporary period
pursuant to Treasury Regulations Section 1.860G-2(g)(1), and (B) Eligible
Investments shall include only such obligations or securities that are payable
on demand or mature on or before the (i) Business Day immediately preceding the
next Distribution Date with respect to amounts on deposit in the Certificate
Account (except for Eligible Investments described in clauses (iii) and (iv) of
this definition which may mature on the Distribution Date) and (ii) the second
Business Day immediately preceding the next Distribution Date with respect to
amounts on deposit in the Custodial Account. In addition, no Eligible Investment
which incorporates a penalty for early withdrawal will be used unless the
maturity of such Eligible Investment is on or before the Business Day
immediately preceding the next Distribution Date.

         ERISA-RESTRICTED CERTIFICATE: Any Class B-1, Class B-2, Class B-3 and
Class R Certificate.

         ESCROW ACCOUNT:  As defined in Section 3.08.

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<PAGE>

         EVENT OF DEFAULT:  As defined in Section 8.01 hereof.

         EXCESS SERVICING FEE: As to any Distribution Date and each Mortgage
Loan, an amount equal to the product of the Excess Servicing Fee Rate and the
Scheduled Principal Balance of such Mortgage Loan as of the first day of the Due
Period.

         EXCESS SERVICING FEE RATE: For each Mortgage Loan, the excess of (a)
the related Gross Margin less the Servicing Fee Rate over (b) 1.90% per annum;
provided, that, in the event the Index and Gross Margin are adjusted pursuant to
Section 3.01(d), the Excess Servicing Fee Rate shall be the rate per annum in
effect immediately prior to such adjustment.

         FANNIE MAE: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.

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

         FINAL DISTRIBUTION DATE: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01, which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 10.03.

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

         GROSS MARGIN: The fixed percentage set forth in the related Mortgage
Note that is added to the related Index in accordance with the terms of the
related Mortgage Note used to determine the Mortgage Rate for such Mortgage
Loan, as modified pursuant to Section 3.01(d) hereof.

         INDEX: Eleventh District COFI as specified in the related Mortgage Note
for calculation of the Mortgage Rate thereof, as modified pursuant to Section
3.01(d) hereof.

         INDIRECT PARTICIPANTS: Entities, such as banks, brokers, dealers and
trust companies, that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.

         INITIAL CURRENT PRINCIPAL AMOUNT: With respect to the Class A
Certificates in the aggregate, $357,796,100.00. With respect to the Class R
Certificates in the aggregate, $100.00. With respect to the Class M-1
Certificates in the aggregate, $5,307,500.00. With respect to the Class M-2
Certificates in the aggregate, $732,000.00. With respect to the Class M-3
Certificates in the aggregate, $732,000.00. With respect to the Class B-1
Certificates in the aggregate, $732,000.00. With respect to the Class B-2
Certificates in the aggregate, $366,200.00. With respect to the Class B-3
Certificates in the aggregate, $366,056.72. With respect to any single
Certificate, the Initial Current Principal Amount as stated on the face thereof.

                                       12

<PAGE>

         INSURANCE PROCEEDS: Amounts paid pursuant to any insurance policy with
respect to a Mortgage Loan that have not been used to restore the related
property or to reimburse certain expenses.

         INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date, the
sum of (i) all interest collected (other than Payaheads) or advanced in respect
of Monthly Payments on the Mortgage Loans during the related Due Period, less
(x) the Servicing Fee, the Excess Servicing Fee and the PMI Insurance Premium
(if applicable) with respect to the Mortgage Loans, (y) unreimbursed Monthly
Advances to the extent allocable to interest and (z) other amounts due to the
Master Servicer with respect to the Mortgage Loans, to the extent allocable to
interest, (ii) any Compensating Interest paid by the Master Servicer with
respect to the Mortgage Loans with respect to the related Prepayment Period,
(iii) the portion of any Replacement Amount paid with respect to Replacement
Mortgage Loans during the related Prepayment Period allocable to interest, (iv)
any Prepayment Charges on the Mortgage Loans with respect to the related
Prepayment Period, and (v) all Liquidation Proceeds, Insurance Proceeds and
other recoveries collected with respect to such Mortgage Loans during the
related Prepayment Period, to the extent allocable to interest, as reduced by
unreimbursed interest Monthly Advances and other amounts due the Master
Servicer, to the extent allocable to interest.

         LATEST POSSIBLE MATURITY DATE: The latest possible maturity date for
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations is the
Distribution Date immediately following the maturity date for the Mortgage Loan
with the latest maturity date in the Trust Fund.

         LIQUIDATED LOAN: With respect to any Distribution Date, a Mortgage Loan
which, as of the close of business on the Business Day next preceding the
related Determination Date, (a) has been liquidated through deed in lieu of
foreclosure, sale in foreclosure, trustee's sale or other realization as
provided by applicable law of real property subject to the related Mortgage and
any security agreements or (b) with respect to which payment under related
private mortgage insurance or hazard insurance and/or from any public or
governmental authority on account of a taking or condemnation of any such
property has been received; provided, however, that any REO Property shall not
be treated as a Liquidated Loan until such property has been finally liquidated.

         LIQUIDATION EXPENSES: Customary and reasonable "out of pocket" expenses
incurred by the Master Servicer (or the related Sub-Servicer) in connection with
the liquidation of any defaulted Mortgage Loan and not recovered by the Master
Servicer (or the related Sub-Servicer) under a Primary Mortgage Insurance Policy
for reasons other than the Master Servicer's failure to comply with Section 3.10
hereof, such expenses including, without limitation, legal fees and expenses,
any unreimbursed amount expended by the Master Servicer pursuant to Section 3.11
hereof respecting the related Mortgage to the extent not previously reimbursed
under any hazard insurance policy for reasons other than the Master Servicer's
failure to comply with Section 3.11 hereof and any related and unreimbursed
expenditures for real estate property taxes or for property restoration or
preservation.

         LIQUIDATION PROCEEDS: Amounts other than Insurance Proceeds received in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise or amounts received in connection
with any condemnation or partial release of a Mortgaged Property.

                                       13

<PAGE>

         LOAN-TO-VALUE RATIO: As of any date, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the related
Mortgage Loan at the date of determination and the denominator of which is the
Appraised Value of the related Mortgaged Property or, in the case of a
Replacement Mortgage Loan, the appraised value of the related Mortgaged Property
as of the date of its origination.

         LOSS ALLOCATION LIMITATION: As defined in Section 5.03(b).

         MASTER SERVICER: Washington Mutual Bank, FA or any successor under the
terms of this Agreement.

         MASTER SERVICER ADVANCE DATE:  As defined in Section 5.07(a) hereof.

         MASTER SERVICER MORTGAGE FILE: All documents pertaining to a Mortgage
Loan not required to be included in the Trustee Mortgage File and held by the
Master Servicer or any Sub-Servicer.

         MASTER SERVICER REMITTANCE DATE: With respect to each Distribution
Date, the 18th day of the month, or if such 18th day is not a Business Day, the
Business Day immediately prior thereto.

         MONTHLY ADVANCE: The aggregate of the advances made by or on behalf of
the Master Servicer with respect to any Distribution Date pursuant to Section
5.04 hereof.

         MONTHLY PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment on such Mortgage Loan which is allocated to principal (if any)
and interest due during such month as calculated pursuant to the terms of 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
first lien on a fee simple or leasehold estate in real property securing a
Mortgage Note.

         MORTGAGE FILE: For each Mortgage Loan, the Trustee Mortgage File and
the Master Servicer Mortgage File.

         MORTGAGE LOAN: Each of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund, evidenced by a Mortgage Note and secured by a Mortgage,
the mortgage loans so held being identified in the Mortgage Loan Schedule, as
amended from time to time.

         MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement,
dated as of January 1, 2001, by and among the Seller and the Mortgage Loan
Seller, pursuant to which the Seller purchased the Mortgage Loans from the
Mortgage Loan Seller.

         MORTGAGE LOAN REPURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to an Optional Termination of the Trust Fund.

                                       14

<PAGE>

         MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans transferred to the
Trustee as part of the Trust Fund for the Certificates and from time to time
subject to this Agreement (as from time to time amended by the Master Servicer
to reflect the addition of Replacement Mortgage Loans and the deletion of
Deleted Mortgage Loans pursuant to the provisions of this Agreement), attached
hereto as Exhibit E, setting forth the following information with respect to
each Mortgage Loan:

                  (i) the loan number;

                  (ii) the city, state and zip code for each Mortgaged Property;

                  (iii) the original term to maturity;

                  (iv) the remaining term to maturity as of the Cut-off Date;

                  (v) the original principal balance;

                  (vi) the Scheduled Principal Balance as of the Cut-off Date;

                  (vii) the Mortgage Rate;

                  (viii) the Servicing Fee Rate and the Excess Servicing Fee
         Rate, either separately stated or in the aggregate;

                  (ix) the first Due Date;

                  (x) the Monthly Payment in effect as of the Cut-off Date;

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

                  (xii) the Appraised Value of the Mortgaged Property;

                  (xiii) a code indicating whether the Mortgaged Property is
         either (a) a detached single-family dwelling or a de minimis planned
         unit development, (b) a condominium unit or a dwelling in a planned
         unit development, or (c) a two- to four-family residential property;

                  (xiv) a code indicating whether the Mortgaged Property at the
         time of origination was represented to be owner-occupied;

                  (xv) the purpose for which the financing was made;

                  (xvi) a code indicating whether the Mortgage Loan is covered
         by a Primary Mortgage Insurance Policy; and

                  (xvii) a code indicating whether the Mortgage Loan is covered
         by the PMI Policy, which code will be provided by the Seller.

                                       15

<PAGE>

         Such schedule shall also set forth the total of the amounts described
under (vi) above for all of the Mortgage Loans. Such schedule may be in the form
of more than one list collectively setting forth all of the information required
and shall also be in a computer-readable format acceptable to the Trustee.

         MORTGAGE LOAN SELLER: EMC Mortgage Corporation or its successor in
interest.

         MORTGAGE NOTE: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan, including a lost note
affidavit with a copy of the related note.

         MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note,
which is set forth in the related Mortgage Note.

         MORTGAGED PROPERTY:  The underlying property securing a Mortgage Loan.

         MORTGAGOR:  Each obligor on a Mortgage Note.

         MORTGAGOR PREPAYMENTS:  Prepayments in Full or Curtailments.

         NEGATIVE AMORTIZATION LIMIT: On any date of determination, with respect
to a Mortgage Loan, the maximum permitted ratio of the unpaid principal balance
of such Mortgage Loan to the original principal amount of such Mortgage Loan.

         NET INTEREST SHORTFALLS: The sum of (i) Net Prepayment Interest
Shortfalls, (ii) Relief Act Shortfalls and (iii) Deferred Interest.

         NET LIQUIDATION PROCEEDS: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds net of (i) Liquidation Expenses and (ii) any
unreimbursed Monthly Advances or other servicing advances, if any, received and
retained in connection with the liquidation of such Mortgage Loan.

         NET MORTGAGE RATE: As to each Mortgage Loan, a rate per annum equal to
the Mortgage Rate minus the Aggregate Expense Rate.

         NET PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan secured by an REO Property) that was
the subject of a Principal Prepayment during the related Prepayment Period by
the Mortgagor, an amount equal to the excess of (a) one month's interest at the
Mortgage Rate on the Principal Balance of such Mortgage Loan before taking into
account such Principal Prepayment over (b) the sum of (i) the amount of interest
paid by the Mortgagor for such Prepayment Period to the date of such Principal
Prepayment and (ii) the Compensating Interest payable by the Master Servicer on
such Distribution Date.

         NON-PERMITTED FOREIGN HOLDER:  As defined in Section 6.02(g).

         NONRECOVERABLE ADVANCE: The portion of any Monthly Advance or any other
advance previously made or proposed to be made by the Master Servicer that, in
the good faith judgment of

                                       16

<PAGE>

the Master Servicer, will not or, in the case of a current delinquency, would
not be, ultimately recoverable by the Master Servicer from Insurance Proceeds or
Liquidation Proceeds (net of Liquidation Expenses) with respect to the related
Mortgage Loan.

         NON-U.S. PERSON:  Any Person other than a U.S. Person.

         OFFERING DOCUMENTS: Any prospectus (including any prospectus
supplement) or private placement memorandum relating to the offering and sale of
the Certificates.

         OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the
Board, any Vice Chairman of the Board, the President, a Vice Chair, a Group
President, an Executive Vice President, a Senior Executive Vice President,
Senior Vice President, a Vice President, or other authorized officer, or by the
Treasurer, the Secretary, or one of the Assistant Vice Presidents, Assistant
Treasurers or Assistant Secretaries of the Seller, the Originator, the Master
Servicer, as the case may be, or in the case of the Trustee, a Responsible
Officer, and delivered to the Seller, the Originator, the Master Servicer or the
Trustee, as required by this Agreement.

         ONE-YEAR MTA: Except as provided in Section 3.01(d), the index used to
determine the Mortgage Rate for each Mortgage Loan in the event Eleventh
District COFI is no longer available, which is a per annum rate equal to the
twelve-month average, determined by adding together the annual yields for the
most recently available twelve months and dividing by 12, of the annual yields
on actively traded United States Treasury Securities adjusted to a constant
maturity of one year as publicized by the Federal Reserve Board in the Federal
Reserve Statistical Release entitled "Selected Interest Rates (G.13)" as most
recently available as of the date fifteen days prior to the interest rate
adjustment date on such Mortgage Loan.

         OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller or the Master Servicer, reasonably acceptable to the Trustee.
With respect to any opinion dealing with the definition of Eligible Account in
this Article I, Sections 2.04 or 7.04 hereof or with the qualification of a
REMIC or compliance with the REMIC Provisions, such counsel must (i) in fact be
independent of the Seller and the Master Servicer, (ii) not have any direct
financial interest in the Seller or the Master Servicer or in any affiliate of
either of them and (iii) not be connected with the Seller or the Master Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.

         OPTIONAL TERMINATION: The purchase of the Mortgage Loans pursuant to
Section 10.01(a).

         OPTIONAL TERMINATION DATE: The date fixed by the Master Servicer for
the purchase of the Mortgage Loans pursuant to Section 10.01.

         ORIGINATOR:  Washington Mutual Bank, FA or any successor.

         OUTSTANDING MORTGAGE LOAN: As to any date of determination, a Mortgage
Loan (including an REO Property) which was not the subject of a Principal
Prepayment in Full, Cash Liquidation or REO Disposition and which was not
purchased, deleted or substituted for prior to such date of determination
pursuant to Section 2.02 or 2.04.

                                       17

<PAGE>

         PARTICIPANT: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of securities
deposited with DTC.

         PASS-THROUGH RATE: With respect to each Class of Certificates, the
weighted average of the Net Mortgage Rates on the Mortgage Loans, weighted on
the Scheduled Principal Balances thereof.

         PAYAHEAD: With respect to any Mortgage Loan and any Due Date therefor,
any Monthly Payment received by the Master Servicer during any Due Period in
addition to the Monthly Payment due on such Due Date, intended by the related
Mortgagor to be applied on a subsequent Due Date.

         PERCENTAGE INTEREST: The percentage interest (which may be expressed as
a fraction) evidenced by any Certificate, which (a) in the case of each Class of
the Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates, is equal to a fraction, the numerator of which is the initial
Current Principal Amount of such Certificate, and the denominator of which is
equal to the initial Current Principal Amount of all Certificates of the same
Class and (b) in the case of the Class R Certificates, shall be 100%.

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

         PLACEMENT AGENT: Bear, Stearns & Co. Inc.

         PLAN: Any Person which is an employee benefit plan subject to ERISA or
a plan subject to section 4975 of the Code.

         PLAN ASSET REGULATIONS: The Department of Labor regulations set forth
in 29 C.F.R.ss.2510.3- 101.

         PMI INSURANCE PREMIUM: The premium for the PMI Policy, equal to one
month's interest on Scheduled Principal Balance of the Mortgage Loans covered by
the PMI Policy as of the Cut-off Date at the PMI Insurance Premium Rate, payable
by the Trustee on each Distribution Date from amounts on deposit in the
Certificate Account in accordance with Section 3.09(b)(i) of this Agreement.

         PMI INSURANCE PREMIUM RATE: With respect to any Mortgage Loan covered
by the PMI Policy, the rate at which the premium on the PMI Policy accrues,
which is 0.17% per annum.

         PMI INSURER: Mortgage Guaranty Insurance Corporation, or a successor
appointed in accordance with Section 3.10(d) of this Agreement.

         PMI POLICY: The primary guarantee insurance policy of the PMI Insurer
attached hereto as Exhibit L, or any successor PMI Policy.

         PREPAYMENT CHARGE: With respect to any Mortgage Loan, any prepayment
penalties and charges received by the Master Servicer thereon.

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<PAGE>

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

         PRIMARY MORTGAGE INSURANCE POLICY: Each primary policy of mortgage
guaranty insurance with respect to the Mortgage Loans or any replacement policy
therefor, other than the PMI Policy.

         PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of
principal on a Mortgage Loan, including a recovery that takes the form of
Liquidation Proceeds or Insurance Proceeds, that is received in advance of its
scheduled Due Date other than a Payahead.

         PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by a
Mortgagor of the Scheduled Principal Balance of a Mortgage Loan.

         PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date, the
sum of (i) all principal collected (other than Payaheads) or advanced in respect
of Monthly Payments on the Mortgage Loans during the related Due Period, (ii)
all Principal Prepayments in Full or Curtailments received during the related
Prepayment Period, (iii) the outstanding principal balance of each Mortgage Loan
that was purchased from the Trust Fund during the related Prepayment Period,
(iv) the portion of any Replacement Amount paid during the related Prepayment
Period allocable to principal, (v) all Net Liquidation Proceeds, Insurance
Proceeds and other recoveries collected with respect to such Mortgage Loans
during the related Prepayment Period, to the extent allocable to principal, as
reduced, in each case to the extent applicable, by unreimbursed Monthly Advances
and other amounts due to the Master Servicer or the Trustee, to the extent
allocable to principal as determined by the Master Servicer, and (vi) any
amounts received by the Trustee from the Originator or Master Servicer for
deposit to the Certificate Account pursuant to Section 7.01(e).

         PURCHASE PRICE: With respect to any Mortgage Loan required to be
purchased by the Originator or Master Servicer pursuant to Section 2.01, 2.02,
2.04 or 3.12 the sum of (i) 100% of the unpaid principal balance of the Mortgage
Loan on the date of such purchase, (ii) accrued and unpaid interest to the next
Due Date on the Mortgage Loan at a rate equal to the Net Mortgage Rate plus the
PMI Insurance Premium Rate and (iii) the amount of any unreimbursed Monthly
Advances and other advances made by the Master Servicer with respect to such
Mortgage Loan and reimbursable to the Master Servicer hereunder; provided,
however, that if the Master Servicer shall so choose, the Purchase Price with
respect to any Mortgage Loan purchased by the Master Servicer may be net of
advances that would otherwise be reimbursable to the Master Servicer and the
Master Servicer shall have no further entitlement to reimbursement for such
advances. With respect to any Mortgage Loan required or allowed to be purchased,
the Master Servicer or Originator, as applicable, shall deliver to the Trustee
an Officers' Certificate as to the calculation of the Purchase Price.

         QUALIFIED INSURER: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and each
other state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed by the
insurance regulatory authority of the state of its principal place of business
and, to the extent required by applicable law, each such other state, to
transact a mortgage guaranty insurance business in such state and each such
other state and to write the insurance provided by the insurance policy

                                       19

<PAGE>

issued by it and approved as an insurer by Freddie Mac or Fannie Mae and whose
claims-paying ability will not adversely affect the rating on the Certificates.

         RATING AGENCY: Each of Moody's and S&P or any successor thereto. The
ratings of the Rating Agencies of the Certificates do not address the receipt of
Prepayment Charges on the Mortgage Loans.

         REALIZED LOSS: An amount determined by the Master Servicer and
evidenced by an Officers' Certificate delivered to the Trustee, in connection
with any Mortgage Loan equal to (a) with respect to any Liquidated Loan, the
excess of the principal balance of such Liquidated Loan plus interest thereon at
a rate equal to the applicable Net Mortgage Rate from the Due Date as to which
interest was last paid up to the Due Date next succeeding such liquidation over
proceeds, if any, received in connection with such liquidation, after
application of all withdrawals permitted to be made by the Master Servicer from
the related Custodial Account with respect to such Mortgage Loan, (b) with
respect to any Mortgage Loan which has become the subject of a Deficient
Valuation, the excess of the principal balance of the Mortgage Loan over the
principal amount as reduced in connection with the proceedings resulting in the
Deficient Valuation, (c) with respect to any Mortgage Loan which has become the
subject of a Debt Service Reduction, the present value of all monthly Debt
Service Reductions on such Mortgage Loan, assuming that the Mortgagor pays each
Monthly Payment on the applicable Due Date and that no Principal Prepayments are
received with respect to such Mortgage Loan, discounted monthly at the
applicable Mortgage Rate or (d) the amount of any reduction by the Master
Servicer to the principal balance of such Mortgage Loan pursuant to Section
3.01(c) hereof. In determining whether a Realized Loss is a Realized Loss of
principal, Liquidation Proceeds shall be allocated, first, to payment of
expenses related to such Liquidated Mortgage Loan, then to accrued unpaid
interest and finally to reduce the principal balance of the Mortgage Loan.

         RECORD DATE: With respect to each Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
related Distribution Date occurs.

         REFERENCE BANKS:  As defined in Section 4.02(c).

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

         RELIEF ACT SHORTFALLS: With respect to any Distribution Date and any
Mortgage Loan, the amount of any interest that is not collectible from the
Mortgagor during the related Due Period pursuant to the Relief Act or similar
legislation or regulations as in effect from time to time.

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

         REMIC PROVISIONS: Provisions of the federal income tax law relating to
REMICs, which appear at Section 860A through 860G of the Subchapter M of Chapter
1 of the Code and related provisions, and regulations (including proposed
regulations, rulings and administrative pronouncements) promulgated thereunder,
as the foregoing may be in effect from time to time.

                                       20

<PAGE>

         REO ACQUISITION: The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.13.

         REO DISPOSITION: As to any REO Property, a determination by the Master
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds, REO
Proceeds and other payments and recoveries (including proceeds of a final sale)
which the Master Servicer expects to be finally recoverable from the sale or
other disposition of the REO Property.

         REO PROPERTY: Any Mortgaged Property acquired by or in the name of the
Trustee for the benefit of the Certificateholders in foreclosure or by
deed-in-lieu of foreclosure or otherwise treated as having been so acquired
pursuant to the REMIC Provisions.

         REO PROCEEDS: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged Property).

         REPLACEMENT AMOUNT: As defined in the definition of Replacement
Mortgage Loan.

         REPLACEMENT MORTGAGE LOAN: A Mortgage Loan substituted by the Master
Servicer or Originator for a Deleted Mortgage Loan which must, on the date of
such substitution, as confirmed in an Officers' Certificate delivered to the
Trustee, (i) have an outstanding Scheduled Principal Balance, after deduction of
the principal portion of the Monthly Payment due in the month of substitution
(or in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate Scheduled Principal Balance, after such deduction),
not greater than nor materially less than the Scheduled Principal Balance of the
Deleted Mortgage Loan (the amount of any shortage, the "Replacement Amount") to
be deposited by the Originator in the Certificate Account in the month of
substitution as set forth in Section 2.04 of this Agreement and shall be treated
as a Principal Prepayment thereunder); (ii) at the time of substitution have a
Net Mortgage Rate equal to or exceeding the Net Mortgage Rate of the Deleted
Mortgage Loan; (iii) have a Loan- to-Value Ratio no higher than the
Loan-to-Value Ratio of the Deleted Mortgage Loan; (iv) have a remaining term to
maturity no greater than (and not more than one year less than) the Deleted
Mortgage Loan; (v) be of the same or better credit quality classification as
that of the Deleted Mortgage Loan; (vi) comply with each representation and
warranty relating to the Mortgage Loans set forth in Section 2.04 hereof; and
(vi) at the time of substitution have not been delinquent for a period of more
than 30 days or more than once in the twelve months immediately preceding such
date of substitution. In the event that either one mortgage loan is substituted
for more than one Deleted Mortgage Loan or more than one mortgage loan is
substituted for one or more Deleted Mortgage Loans, then (a) the Scheduled
Principal Balance referred to in clause (i) above shall be determined in the
aggregate, (b) the rate referred to in clause (ii) above shall be determined on
a loan-by-loan basis and (c) the Loan-to-Value Ratio referred to in clause (iii)
and the remaining term to maturity referred to in clause (iv) above shall be
determined on a weighted average basis; provided, further, that the final
scheduled maturity date of any Replacement Mortgage Loan shall not exceed the
latest Scheduled Final Distribution Date of any Class of Certificates. Whenever
a Replacement Mortgage Loan is substituted for a Deleted Mortgage Loan pursuant
to this Agreement, the party effecting such substitution shall certify such
qualification in writing to the Trustee.

                                       21

<PAGE>

         REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan, including each standard hazard and,
if applicable, flood insurance policy.

         RESERVE INTEREST RATE:  As defined in Section 4.02.

         RESIDUAL CERTIFICATE:  The Class R Certificate.

         RESPONSIBLE OFFICER: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer or any other officer of the Trustee
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.

         RESTRICTED CERTIFICATE: Any Class B-1, Class B-2 or Class B-3
Certificate.

         RULE 144A: Rule 144A promulgated under the rules of the 1933 Act, as in
effect from time to time.

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

         SCHEDULED FINAL DISTRIBUTION DATE: The Distribution Date occurring in
January 2041.

         SCHEDULED PRINCIPAL BALANCE: With respect to (i) any Mortgage Loan as
of any Distribution Date, the principal balance of such Mortgage Loan at the
close of business on the Cut-off Date, after giving effect to principal payments
due on or before the Cut-off Date, whether or not received, less an amount equal
to principal payments due after the Cut-off Date and on or before the Due Date
in the related Due Period, whether or not received from the Mortgagor or
advanced by the Master Servicer, and all amounts allocable to unscheduled
principal payments (including Principal Prepayments, Liquidation Proceeds,
Insurance Proceeds and condemnation proceeds, in each case to the extent
identified and applied prior to or during the related Prepayment Period) and
(ii) any REO Property as of any Distribution Date, the Scheduled Principal
Balance of the related Mortgage Loan on the Due Date immediately preceding the
date of acquisition of such REO Property by or on behalf of the Trustee (reduced
by any amount applied as a reduction of principal on the Mortgage Loan), plus
(iii) any Deferred Interest allocated to such Mortgage Loan. With respect to any
Mortgage Loan and the Cut-off Date, as specified in the Mortgage Loan Schedule.

         SELLER: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successor in interest.

         SENIOR CERTIFICATE: Any Class A Certificate or Class R Certificate.

         SENIOR ENHANCEMENT PERCENTAGE: With respect to any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the sum of
the Current Principal Amounts of

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<PAGE>

the Subordinate Certificates and the denominator of which is the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the end of the related
Due Period.

         SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to:

         (i) prior to the Stepdown Date or on or after the Stepdown Date if a
         Trigger Event is in effect, the Principal Remittance Amount for that
         Distribution Date, or

         (ii) on or after the Stepdown Date if a Trigger Event is not in effect
         for that Distribution Date, the lesser of:

                  (I) the Principal Remittance Amount for that Distribution
                  Date; and

                  (II) the excess of (A) the aggregate Current Principal Amount
                  of the Senior Certificates immediately prior to that
                  Distribution Date over (B) the lesser of (x) the product of
                  (1) 95.50% and (2) the aggregate Scheduled Principal Balance
                  of the Mortgage Loans as of the end of the related Due Period,
                  not including any Deferred Interest added to the Scheduled
                  Principal Balance of the Mortgage Loans during the related Due
                  Period, and (y) the amount, if any, by which (a) the aggregate
                  Scheduled Principal Balance of the Mortgage Loans as of the
                  end of the related Due Period, not including any Deferred
                  Interest added to the Scheduled Principal Balance of the
                  Mortgage Loans during the related Due Period, exceeds (b) the
                  Current Principal Amount of the Class B-3 Certificates on the
                  Closing Date.

         SERVICING FEE: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of the Servicing Fee Rate and the Scheduled
Principal Balance of such Mortgage Loan as of the first day of the Due Period.

         SERVICING FEE RATE:  For each Mortgage Loan, 0.375% per annum.

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

         SIXTY-PLUS DELINQUENCY PERCENTAGE: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to (x) the aggregate
Scheduled Principal Balance of the Mortgage Loans that are 60 or more days
delinquent in payment of principal and interest for that Distribution Date,
including Mortgage Loans in foreclosure and REO Properties, over (y) the
aggregate Scheduled Principal Balance of all of the Mortgage Loans immediately
preceding that Distribution Date.

         STEPDOWN DATE: The later to occur of (x) the Distribution Date in
February 2004 and (y) the first Distribution Date on which the Senior
Enhancement Percentage is greater than or equal to 4.50%.

                                       23

<PAGE>

         SUBORDINATE CERTIFICATE: Any Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 or Class B-3 Certificate.

         SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As of any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all of the
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses in reduction of the Current Principal Amounts of
such Certificates on such Distribution Date) exceeds (b) the Scheduled Principal
Balances of the Mortgage Loans on the Due Date related to such Distribution
Date. The Subordinate Certificate Writedown Amount will be allocated to the
Subordinate Certificates in inverse order of their numerical Class designations,
until the Current Principal Amount of each such Class has been reduced to zero.

         SUB-SERVICER: Any other entity with respect to any Mortgage Loan under
any Sub-Servicing Agreement, either currently or in the future, applicable to
such Mortgage Loan and any successors and assigns under such Sub-Servicing
Agreement.

         SUB-SERVICING AGREEMENT: Any servicing agreement between the Master
Servicer and a Sub- Servicer pursuant to which the Master Servicer delegates any
of its servicing responsibilities with respect to any of the Mortgage Loans.

         TOTAL DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
sum of the Interest Remittance Amount and Principal Remittance Amount for such
date.

         TRIGGER EVENT: A Trigger Event will have occurred with respect to any
Distribution Date on or after the Stepdown Date if the three-month average of
the Sixty-Plus Delinquency Percentage, as determined on that Distribution Date
and the immediately preceding two Distribution Dates, exceeds the Senior
Enhancement Percentage.

         TRUST: The Trust created pursuant to this Agreement, known as the
"Washington Mutual Mortgage Loan Trust 2001-1."

         TRUST FUND: The corpus of the Trust Fund created by this Agreement
consisting of (a) the Mortgage Loans listed in the Mortgage Loan Schedule,
including all interest and principal received or receivable by the Seller on or
with respect to the Mortgage Loans after the Cut-off Date, but not including (i)
payments of principal and interest due and payable on the Mortgage Loans on or
before the Cut-off Date, and (ii) the Mortgage Files relating to the Mortgage
Loans, (b) REO Property, (c) the Custodial Account, the Certificate Account, and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement, (d) any insurance policies with respect to the Mortgage Loans, (e)
any REO Property, (f) all proceeds of the conversion, voluntary or involuntary,
of any of the foregoing into cash or other liquid property and (g) the Seller's
rights under the Mortgage Loan Purchase Agreement.

         TRUSTEE: Bankers Trust Company of California, N.A., a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, as provided herein.

                                       24

<PAGE>

         TRUSTEE MORTGAGE FILE: The mortgage documents listed in Section
2.01(b)(i)-(v) hereof pertaining to a particular Mortgage Loan and any
additional documents required to be added to the Trustee Mortgage File pursuant
to this Agreement.

         UNITED STATES REGULATIONS: 31 C.F.R. Part 357; 12 C.F.R. Part 615,
Subpart O; 12 C.F.R. Part 912; 12 C.F.R. Part 1511; 24 C.F.R. Part 81; 31 C.F.R.
Part 354; and 18 C.F.R. Part 1314.

         UNITED STATES SECURITIES ENTITLEMENT: A "Security Entitlement" as
defined in a United States Regulation.

         U.S. PERSON: Shall mean (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes) created
or organized in the United States or under the laws of the United States or of
any state thereof, including, for this purpose, the District of Columbia; (iii)
a partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations) provided that, for purposes solely of
the Class R Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are United States Persons; (iv) an estate
whose income is includible in gross income for United States income tax purposes
regardless of its source; or (v) a trust, if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more U.S. Persons have authority to control all substantial decisions of
the trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to continue
to be U.S. Persons.

         VOTING INTERESTS: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
99% of all Voting Interests shall be allocated among the Class A, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates and 1%
shall be allocated to the Class R Certificates. The portion of such 99% Voting
Interests allocated among the Class A, Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 and Class B-3 Certificates shall be based on the fraction,
expressed as a percentage, the numerator of which is the aggregate Current
Principal Amount then outstanding of such Class and the denominator of which is
the Aggregate Loan Balance. Voting Interests shall be allocated among the
Certificates within each such Class in proportion to their outstanding Current
Principal Amounts or Percentage Interest (in the case of the Class R
Certificates).

         WASHINGTON MUTUAL:  Washington Mutual Bank, FA

                                       25

<PAGE>

         SECTION 1.01      CALCULATIONS RESPECTING MORTGAGE LOANS.

         Calculations required to be made pursuant to this Agreement with
respect to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Trustee as supplied to the Trustee by the Master Servicer. The Trustee shall
not be required to recompute, verify or recalculate the information supplied to
it by the Master Servicer.

         SECTION 1.02      CALCULATIONS RESPECTING ACCRUED INTEREST.

         Accrued interest, if any, on any Certificate shall be calculated based
upon a 360-day year consisting of twelve 30-day months.

                                   ARTICLE II

                            CONVEYANCE OF TRUST FUND;
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.01      CONVEYANCE OF TRUST FUND.

         (a) Concurrently with the execution and delivery of this Agreement, the
Seller does hereby transfer, assign, set over, deposit with and otherwise convey
to the Trustee, without recourse, in trust, all the right, title and interest of
the Seller in and to the Mortgage Loans. Such conveyance includes, without
limitation, the right to all distributions of principal and interest due with
respect to the Mortgage Loans after the Cut-off Date, together with all of the
Seller's right, title and interest in and to the Certificate Account and all
amounts from time to time credited to and the proceeds of the Custodial Account,
the Certificate Account, any REO Property and the proceeds thereof, the Seller's
rights under any Insurance Proceeds related to the Mortgage Loans, and the
Seller's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties, to have and to hold, in trust; and
the Trustee declares that it shall hold the Trust Fund, as trustee, in trust,
for the benefit and use of the Holders of the Certificates and for the purposes
and subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, has caused to be executed, authenticated and
delivered to or upon the order of the Seller, in exchange for the Trust Fund,
Certificates in the authorized denominations evidencing the entire ownership of
the Trust Fund.

         Concurrently with the execution and delivery of this agreement, the
Seller does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Purchase Agreement to the Trustee. The Trustee hereby accepts
such assignment, and shall be entitled to exercise all such rights (but shall
not be responsible for any obligations thereunder), of the Seller under the
Mortgage Loan Purchase Agreement as if, for such purpose, it were the Seller.

         (b) In connection with any such transfer and assignment, the Originator
does hereby deliver to, and deposit with, the Trustee or its agents, the
following documents or instruments with respect to each Mortgage Loan so
assigned:

                                       26

<PAGE>

                  (i) the Mortgage Note, endorsed, in blank by facsimile
         signature (which such endorsement may be pursuant to the use of a note
         allonge in the form attached as Exhibit K), with all intervening
         endorsements showing a complete chain of endorsement from the
         originator to the last endorser (or an original lost note affidavit
         from the Originator stating that the Mortgage Note was lost, misplaced
         or destroyed, with respect to such Mortgage Loans identified in the
         Trustee's Certification referenced in Section 2.02), and if the
         Mortgage Note or Mortgage or any other material document or instrument
         relating to the Mortgage Loan has been signed on behalf of the
         Mortgagor by another person, the original power of attorney or other
         instrument that authorized and empowered such person to sign, or a copy
         of the original power of attorney or other instrument;

                  (ii) the original Mortgage, as recorded, with evidence of
         recording indicated thereon establishing the Originator as mortgagee
         thereof;

                  (iii) an original assignment or assignments of Mortgage (other
         than an Assignment) showing an unbroken chain of title from the
         originator to the Originator with evidence of recording indicated
         thereon or a copy of the original certified by the Originator;

                  (iv) the original or a copy, certified by the Originator, of
         each assumption, modification, written assurance or substitution
         agreement, if any, with respect to such Mortgage Loan, as identified on
         the Mortgage Loan Schedule; and

                  (v) an Assignment.

         Notwithstanding the foregoing, in the event that in connection with any
Mortgage Loan the Originator cannot deliver an original recorded counterpart of
any of the documents required to be delivered pursuant to clauses (ii) or (iii)
above with evidence of recording thereon concurrently with the execution and
delivery hereof, the Originator shall deliver to the Trustee a duplicate
original or true copy of such document certified by the Originator or the
applicable public recording office to be a true and complete duplicate original
or copy of the original thereof submitted for recording, or a copy of the
Mortgage certified by a title insurance or escrow company or companies,
evidencing that such Mortgage or assignment of Mortgage has been delivered to
the appropriate public recording office for recordation. In the event that the
Originator cannot deliver a duplicate original or true copy certified as stated
above of such document required to be delivered pursuant to clauses (ii) or
(iii) above, within 90 days of the Closing Date, the Originator shall purchase
the related Mortgage Loan at the Purchase Price therefor or replace the Mortgage
Loan with a Replacement Mortgage Loan if such substitution occurs within the
time periods for substitution set forth in Section 2.04.

         (c) The Originator shall promptly deliver to the Trustee (1) the
original recorded documents referred to in clauses (ii) and (iii) above with
evidence of recording indicated thereon or a photocopy thereof certified by the
appropriate county recorder's office to be a true and complete copy of the
original thereof, upon receipt thereof from the public recording office, and (2)
upon discovery of any defect or omission in the deliveries of any of items (ii)
through (iv) in subsection (b) above with respect to any Mortgage Loan, a
correct and complete document or instrument meeting the requirements of such
item, but in no event shall any such delivery be made later than 90 days
following the Closing Date (unless, in the case of the foregoing clause (1),
such document

                                       27

<PAGE>

has not been returned from the relevant recording office at such time, in which
case the Master Servicer shall make such delivery within 270 days of the Closing
Date; provided, however, that such 270 day period shall be extended to 360 days
upon presentation of an Officer's Certificate of the Originator to the effect
that such document has not yet been returned from the relevant recording office,
and shall be extended for additional thirty-day periods). In the event the
Originator cannot deliver such original document with evidence of recording
indicated thereon within the time period set forth in the preceding sentence,
the Originator shall purchase the related Mortgage Loan at the Purchase Price
therefor or replace the Mortgage Loan with a Replacement Mortgage Loan if such
substitution occurs within the time periods for substitution set forth in
Section 2.04.

         From time to time the Originator or the Master Servicer may forward or
cause to be forwarded to the Trustee for the benefit of the Certificateholders
additional original documents evidencing an assumption or modification of a
Mortgage Loan.

         (d) The Originator will promptly notify, in writing, the Seller, the
Master Servicer and the Trustee of the occurrence of a Downgrade Event.

         Within 90 days of the Closing Date, with respect to any Mortgage Loan
for which the related Mortgage Property is located in the States of Maryland or
Florida, and, with respect to all of the other Mortgage Loans, within 60 days
following the receipt of the notice of a Downgrade Event, the Trustee shall (a)
complete each endorsement referred to in clause (i) of subsection (b) above and
each Assignment referred to in (v) of subsection (b) above by inserting "to the
Trustee for the benefit of the Holders of the Washington Mutual Mortgage Loan
Trust Mortgage Pass-Through Certificates, Series 2001-1" and (b) cause the
Master Servicer to record (and the Master Servicer hereby agrees to record), at
the expense of the Master Servicer, in the appropriate public office for real
property records each original assignment referred to in (v) above with respect
to each Mortgaged Property, and the Trustee shall release any such Assignment to
the Master Servicer for such purpose. The Master Servicer shall promptly deliver
to the Trustee each original Assignment with evidence of recording indicated
thereon or a photocopy thereof certified by the appropriate county recorder's
office to be a true and complete copy of the original thereof, upon receipt
thereof from the public recording official. If any Assignment is returned
unrecorded to the Master Servicer because of any defect therein, the Originator
or the Master Servicer shall cure or correct such defect and cause such
Assignment to be recorded in accordance with this paragraph and if such defect
is not cured within 60 days the Originator shall purchase the Mortgage Loan at
the Purchase Price therefor or replace the Mortgage Loan with a Replacement
Mortgage Loan if such substitution occurs within the time periods for
substitution set forth in Sections 2.04.

         SECTION 2.02      ACCEPTANCE BY TRUSTEE.

         (a) The Trustee will hold the documents referred to in Section
2.01(b)(i)-(v) above and the other documents constituting a part of the Trustee
Mortgage Files delivered to it pursuant to Section 2.01 in trust for the use and
benefit of all present and future Certificateholders. Upon execution and
delivery of this Agreement, the Trustee shall deliver to the Seller, the
Originator and the Master Servicer a certification (upon execution and delivery
of this Agreement, the "Initial Loan List Certification") in the form set forth
as Exhibit F-1 hereto to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule, a Mortgage File has been delivered to the Trustee. If,

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in the course of such review, the Trustee finds that a Mortgage File for any
Mortgage Loan listed on the Mortgage Loan Schedule has not been delivered to the
Trustee, the Trustee shall promptly notify the Originator, the Master Servicer
and the Seller in writing, and request that the Originator correct or cure such
defect. In the event the Originator shall fail to deliver a Mortgage File
reflected in the Initial Loan List Certification within five days of such
Initial Loan List Certification, the Originator shall purchase the Mortgage Loan
at the Purchase Price therefor or replace the Mortgage Loan with a Replacement
Mortgage Loan if such substitution occurs within the time periods for
substitution set forth in Section 2.04(b). Within 30 days after the execution
and delivery of this Agreement, the Trustee shall ascertain whether all
documents required to be delivered to it pursuant to Section 2.01(b) hereof are
in its possession, and shall deliver to the Seller, the Originator and the
Master Servicer a certification (within 30 days after execution and delivery of
this Agreement, the "Initial Certification" and within 90 days after the Initial
Certification, the "Final Certification", respectively) in the forms set forth
as Exhibits F-2 and F-3 hereto to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule: (a) all documents required to be delivered
to the Trustee pursuant to this Agreement are in its possession, (b) such
documents have been reviewed by it and have not been mutilated, damaged,
defaced, torn or otherwise physically altered, and such documents relate to such
Mortgage Loan and (c) each Mortgage Note has been endorsed and each assignment
of Mortgage has been delivered as provided in Section 2.01(b) hereof. The
Trustee shall deliver to the Seller, the Originator and the Master Servicer a
copy of each of the Initial Certification and the Final Certification. If, in
the course of such review, the Trustee finds any document or documents
constituting a part of a Mortgage File which do not meet the requirements of the
foregoing clauses (a)-(c), the Trustee shall promptly notify the Originator, the
Master Servicer and the Seller in writing, and request that the Originator
correct or cure such defect. In the event the Originator shall fail to cure any
document deficiency or defect reflected in the Final Certification within 60
days of such Final Certification, or such longer period of time as may be
permitted in Section 2.01(c), it shall not be the obligation of the Trustee
hereunder to cure the same, and the Originator shall purchase the Mortgage Loan
at the Purchase Price therefor or replace the Mortgage Loan with a Replacement
Mortgage Loan if such substitution occurs within the time periods for
substitution set forth in Section 2.04.

         (b) The Seller agrees that at any time and from time to time upon
written request of the Trustee, the Seller shall promptly and duly execute and
deliver any and all such further documents and assurances, and take such further
actions as the Trustee reasonably may request in order to obtain or more fully
vest the benefits of the assignment intended hereunder (as set forth in Section
2.01 and in Section 2.04) and of the rights and powers herein granted.

         (c) The Trustee shall retain possession and custody of each Trustee
Mortgage File in accordance with and subject to the terms and conditions set
forth herein.

         SECTION 2.03      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                           MASTER SERVICER AND ORIGINATOR.

         Washington Mutual, as Originator and Master Servicer, hereby represents
and warrants to, and covenants with, the Seller and the Trustee that, as of the
date hereof:

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<PAGE>

                  (i) Washington Mutual is a federally chartered savings
         association, validly existing and in good standing under the laws of
         the United States of America and is duly authorized and qualified to
         transact any and all business contemplated by this Agreement in any
         state in which a Mortgaged Property is located or is otherwise not
         required under applicable law to effect such qualification and, in any
         event, is in compliance with the doing business laws of any such state,
         to the extent necessary to ensure the enforceability of each Mortgage
         Loan and the servicing of the Mortgage Loans in accordance with the
         terms of this Agreement;

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

                  (iii) the execution and delivery of this Agreement by
         Washington Mutual, the servicing of the Mortgage Loans by Washington
         Mutual hereunder, the consummation of any other of the transactions
         herein contemplated, and the fulfillment of or compliance with the
         terms hereof are in the ordinary course of business of Washington
         Mutual and will not (A) result in a material breach of any term or
         provision of the charter or bylaws of Washington Mutual or (B)
         materially conflict with, result in a material breach, violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which Washington Mutual
         is a party or by which it may be bound, or any statute, order or
         regulation applicable to Washington Mutual of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over Washington Mutual; and Washington Mutual is not a party to, bound
         by, or in breach or violation of any material indenture or other
         material agreement or instrument, or subject to or in violation of any
         statute, order or regulation of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over it,
         which materially and adversely affects, (1) the ability of Washington
         Mutual to perform its obligations under this Agreement or (2) the
         business, operations, financial condition, properties or assets of the
         Master Servicer taken as a whole;

                  (iv) Washington Mutual is, and will remain, subject to
         supervision and examination by any state or federal authority as may be
         applicable and will remain in good standing and qualified to do
         business where so required by applicable law and is, and will remain an
         approved servicer of conventional mortgage loans for Fannie Mae or
         Freddie Mac;

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<PAGE>

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

                  (vi) Washington Mutual will at all times comply in the
         performance of its obligations under this Agreement with all reasonable
         rules and requirements of the insurer under each Required Insurance
         Policy;

                  (vii) no written information, certificate of an officer,
         statement furnished in writing or written report delivered to the
         Seller, any affiliate of the Seller or the Trustee and prepared by
         Washington Mutual pursuant to this Agreement will contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the information, certificate, statement or report not
         misleading;

                  (viii) except for permits and similar authorizations required
         under the securities or "blue sky" laws, no consent, approval,
         authorization or order of any court or governmental agency or body is
         required for the execution, delivery and performance by Washington
         Mutual of, or compliance by Washington Mutual with, this Agreement or
         the consummation of the transactions contemplated hereby, or if any
         such consent, approval, authorization or order is required, Washington
         Mutual has obtained the same; and

                  (ix) Washington Mutual will service the Mortgage Loans in
         accordance with the standards set forth in this Agreement.

         SECTION 2.04      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                           ORIGINATOR WITH RESPECT TO THE MORTGAGE LOANS.

         (a) The Originator hereby represents and warrants to, and covenants
with, the Seller and the Trustee for the benefit of the Certificateholders that,
as to each Mortgage Loan, as of the Cut-off Date or such other date specifically
set forth herein, and with respect to representation (i) listed below, as of the
Closing Date:

                  (i) The information set forth in the Mortgage Loan Schedule is
         complete, true and correct.

                  (ii) None of the Mortgage Loans (by Scheduled Principal
         Balance) are more than 30 days delinquent; Washington Mutual has not
         advanced funds to, or induced, solicited or knowingly received any
         advance of funds from a party other than the owner of the Mortgaged
         Property subject to the Mortgage, directly or indirectly, for the
         payment of any amount required by the Mortgage Loan.

                  (iii) There are no delinquent taxes, ground rents, water
         charges, sewer rents, assessments, insurance premiums, leasehold
         payments, including assessments payable in future installments or other
         outstanding charges affecting the related Mortgaged Property.

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<PAGE>

                  (iv) The terms of the Mortgage Note and the Mortgage have not
         been impaired, waived, altered or modified in any respect, except by
         written instruments which have been recorded, if necessary to protect
         the interests of the Trustee, and which are included in the Trustee
         Mortgage File, the substance of which waiver, alteration or
         modification has been approved by the primary mortgage guaranty
         insurer, if any, and by the title insurer, to the extent required by
         the related policy and is reflected on the Mortgage Loan Schedule. No
         instrument of waiver, alteration or modification has been executed, and
         no Mortgagor has been released, in whole or in part, except in
         connection with an assumption agreement approved by the primary
         mortgage insurer, if any, and title insurer, to the extent required by
         the policy, and which assumption agreement is part of the Mortgage
         File.

                  (v) The Mortgage Note and the Mortgage are not subject to any
         right of rescission, set-off, counterclaim or defense, including the
         defense of usury, nor will the operation of any of the terms of the
         Mortgage Note and Mortgage, or the exercise of any right thereunder,
         render the Mortgage unenforceable, in whole or in part, or subject to
         any right of rescission, set-off, counterclaim or defense, including
         the defense of usury and no such right of rescission, set-off,
         counterclaim or defense has been asserted with respect thereto.

                  (vi) All buildings upon the Mortgaged Property are insured by
         a generally acceptable insurer against loss by fire, hazards of
         extended coverage and such other hazards as are customary in the area
         where the Mortgaged Property is located. All such insurance policies
         contain a standard mortgagee clause naming the Master Servicer, its
         successors and assigns as mortgagee and all premiums due thereon have
         been paid. If upon origination of the Mortgage Loan, the Mortgaged
         Property was in an area identified in the Federal Register by the
         Federal Emergency Management Agency as having special flood hazards
         (and such flood insurance has been made available) a flood insurance
         policy meeting the requirements of the current guidelines of the
         Federal Insurance Administration is in effect which policy conforms to
         the requirements of Fannie Mae or Freddie Mac. The Mortgage obligates
         the Mortgagor thereunder to maintain all such insurance at Mortgagor's
         cost and expense, and on the Mortgagor's failure to do so, authorizes
         the holder of the Mortgage to maintain such insurance at Mortgagor's
         cost and expense and to seek reimbursement therefor from the Mortgagor.

                  (vii) Any and all requirements of any federal, state or local
         law including, without limitation, environmental, usury, truth in
         lending, real estate settlement procedures, consumer credit protection,
         equal credit opportunity or disclosure laws applicable to the Mortgage
         Loan and the related Mortgaged Property have been complied with.

                  (viii) The Mortgage has not been satisfied, canceled or
         subordinated, or rescinded, in whole or in part, and the Mortgaged
         Property has not been released from the lien of the Mortgage, in whole
         or in part, nor has any instrument been executed that would effect any
         such release, cancellation, subordination or rescission.

                  (ix) The Mortgage is a valid, existing and enforceable first
         lien on the Mortgaged Property, including all improvements on the
         Mortgaged Property subject only to (A) the lien of current real
         property taxes and assessments not yet due and payable, (B) covenants,

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<PAGE>

         conditions and restrictions, rights of way, easements and other matters
         of the public record as of the date of recording being acceptable to
         mortgage lending institutions generally and specifically referred to in
         lender's title insurance policy delivered to the originator of the
         Mortgage Loan and which do not adversely affect the Appraised Value of
         the Mortgaged Property, and (C) other matters to which like properties
         are commonly subject which do not materially interfere with the
         benefits of the security intended to be provided by the Mortgage or the
         use, enjoyment, value or marketability of the related Mortgaged
         Property. Any security agreement, chattel mortgage or equivalent
         document related to and delivered in connection with the Mortgage
         establishes and creates a valid, existing and enforceable first lien
         and first priority security interest on the property described therein
         and the Originator has full right to sell and assign the same to the
         Mortgage Loan Seller.

                  (x) The Mortgage Note and the related Mortgage are genuine and
         each is the legal, valid and binding obligation of the maker thereof,
         enforceable in accordance with its terms, except as the enforceability
         thereof may be limited by bankruptcy, insolvency, or reorganization.

                  (xi) All parties to the Mortgage Note and the Mortgage had
         legal capacity to enter into the Mortgage Loan and to execute and
         deliver the Mortgage Note and the Mortgage, and the Mortgage Note and
         the Mortgage have been duly and properly executed by such parties.

                  (xii) The proceeds of the Mortgage Loan have been fully
         disbursed and there is no requirement for future advances thereunder
         and any and all requirements as to completion of any on-site or
         off-site improvement and as to disbursements of any escrow funds
         therefor have been complied with. All costs, fees and expenses incurred
         in making or closing the Mortgage Loan and the recording of the
         Mortgage were paid, and the Mortgagor is not entitled to any refund of
         any amounts paid or due under the Mortgage Note or Mortgage.

                  (xiii) As of the Closing Date, the Mortgage Note and the
         Mortgage are not assigned or pledged, and immediately prior to the sale
         of the Mortgage Loan to the Mortgage Loan Seller, the Originator was
         the sole owner of record and holder thereof and with full right to
         transfer and sell the Mortgage Loan to the Seller free and clear of any
         encumbrance, equity, lien, pledge, charge, claim or security interest
         and with full right and authority subject to no interest or
         participation of, or agreement with, any other party, to sell and
         assign each Mortgage Loan pursuant to the Mortgage Loan Purchase
         Agreement.

                  (xiv) The Originator or, if the Mortgage Loan was not
         originated by the Originator, the originator is or was (or, during the
         period in which they held and disposed of such interest, were) (A) in
         compliance with any and all applicable licensing requirements of the
         laws of the state wherein the Mortgaged Property is located, and (B)
         either (i) organized under the laws of such state, or (ii) qualified to
         do business in such state, or (iii) federal savings and loan
         associations or national banks having principal offices in such state,
         or (iv) not doing business in such state.

                  (xv) The Mortgage Loan is covered by an ALTA lender's title
         insurance policy acceptable to Fannie Mae or Freddie Mac, issued by a
         title insurer acceptable to Fannie Mae

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<PAGE>

         or Freddie Mac and qualified to do business in the jurisdiction where
         the Mortgaged Property is located, insuring (subject to the exceptions
         contained in (ix)(A) through (C) above) the Originator, its successors
         and assigns as to the first priority lien of the Mortgage in the
         original principal amount of the Mortgage Loan. The original title
         policy (or a copy thereof sufficient to entitle the insured to make a
         claim thereunder) and all riders thereto are in the Master Servicer
         Mortgage File or otherwise maintained by the Master Servicer.
         Additionally, such lender's title insurance policy affirmatively
         insures ingress and egress, and against encroachments by or upon the
         Mortgaged Property or any interest therein. The Originator is the sole
         insured of such lender's title insurance policy, and such lender's
         title insurance policy is in full force and effect and will be in full
         force and effect upon the consummation of the transactions contemplated
         by this Agreement. No claims have been made under such lender's title
         insurance policy, and no prior holder of the related Mortgage,
         including the Originator, has done, by act or omission, anything which
         would impair the coverage of such lender's title insurance policy.

                  (xvi) Except for Mortgage Loans which are delinquent in
         payment not more than 30 days, there is no default, breach, violation
         or event of acceleration existing under the Mortgage or the Mortgage
         Note and no event which, with the passage of time or with notice and
         the expiration of any grace or cure period, would constitute a default,
         breach, violation or event of acceleration, and the Originator has not
         waived any default, breach, violation or event of acceleration.

                  (xvii) There are no mechanics' or similar liens or claims
         which have been filed for work, labor or material (and no rights are
         outstanding that under law could give rise to such lien) affecting the
         related Mortgaged Property which are or may be liens prior to, or equal
         or on parity with, the lien of the related Mortgage.

                  (xviii) All improvements which were considered in determining
         the Appraised Value of the related Mortgaged Property lay wholly within
         the boundaries and building restriction lines of the Mortgaged
         Property, and no improvements on adjoining properties encroach upon the
         Mortgaged Property.

                  (xix) The Mortgage Loan was originated by the Originator.
         Principal payments on the Mortgage Loan commenced no more than
         sixty-two days after funds were disbursed in connection with the
         Mortgage Loan. Each Mortgage Note has a Mortgage Rate that is
         adjustable, based on Eleventh District COFI, in the following manner:
         Monthly Payments are due on the Due Date specified in the Mortgage Loan
         Schedule. Following the first interest rate adjustment date, the
         Mortgage Rate is subject to adjustment monthly on each interest rate
         adjustment date to a new Mortgage Rate (rounded as provided in the
         related Mortgage Note) equal to the Index (determined as of the date
         specified in the related Mortgage Note) plus the Gross Margin as
         specified in the Mortgage Loan Schedule, subject to a maximum lifetime
         interest rate as specified in the Mortgage Loan Schedule. The amount of
         each Monthly Payment is subject to adjustment on the anniversary of the
         first Due Date and annually on the same date thereafter, subject to the
         conditions that (i) the amount of a Monthly Payment will not increase
         or decrease by an amount that is more or less than 7.5% of the current
         Monthly Payment, (ii) on the fifth anniversary of the first Due Date
         and on the

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<PAGE>

         same day every five years thereafter, the Monthly Payment will be
         adjusted, without regard to the limitation in clause (i), to fully
         amortize the then unpaid principal balance over the remaining term to
         maturity and (iii) in the event that, as a result of Deferred Interest,
         the unpaid principal balance at any time would exceed the Negative
         Amortization Limit, the Monthly Payment will be adjusted at such time,
         without regard to the limitation in clause (i), to fully amortize the
         then unpaid principal balance over the remaining term to maturity. Any
         Deferred Interest will be added to the unpaid principal balance of the
         Mortgage Note on each Due Date, unless the Mortgagor (to the extent
         permitted in the Mortgage Note) elects to increase the amount of the
         Monthly Payment to include the amount of Deferred Interest or make a
         payment of the amount of Deferred Interest.

                  (xx) The origination practices used by the Originator and the
         collection practices used by the Master Servicer with respect to each
         Mortgage Note and Mortgage have been in all respects legal, proper,
         prudent and customary in the mortgage origination and servicing
         business. With respect to escrow deposits and escrow payments, if any,
         all such payments are in the possession of, or under the control of,
         the Master Servicer and there exist no deficiencies in connection
         therewith for which customary arrangements for repayment thereof have
         not been made.

                  (xxi) The Mortgaged Property is free of material damage and
         waste and there is no proceeding pending for the total or partial
         condemnation thereof.

                  (xxii) The Mortgage contains customary and enforceable
         provisions such as to render the rights and remedies of the holder
         thereof adequate for the realization against the Mortgaged Property of
         the benefits of the security provided thereby, including, (A) in the
         case of a Mortgage designated as a deed of trust, by trustee's sale,
         and (B) otherwise by judicial foreclosure. There is no other exemption
         available to the Mortgagor which would interfere with the right to sell
         the Mortgaged Property at a trustee's sale or the right to foreclose
         the Mortgage. The Mortgagor has not notified the Master Servicer and
         the Master Servicer has no knowledge of any relief requested or allowed
         to the Mortgagor under the Relief Act.

                  (xxiii) The Mortgage Loan was underwritten generally in
         accordance with the Originator's underwriting standards in effect at
         the time the Mortgage Loan was originated.

                  (xxiv) The Mortgage Note is not secured by any collateral
         except the lien of the corresponding Mortgage and the security interest
         of any applicable security agreement or chattel mortgage referred to in
         (ix) above.

                  (xxv) The Master Servicer Mortgage File contains an appraisal
         of the related Mortgaged Property signed prior to the approval of the
         Mortgage Loan application by a qualified appraiser, duly appointed by
         the originator of the Mortgage Loan, who had no interest, direct or
         indirect in the Mortgaged Property or in any loan made on the security
         thereof, and whose compensation is not affected by the approval or
         disapproval of the Mortgage Loan.

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<PAGE>

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

                  (xxvii) No Mortgage Loan (A) contains provisions pursuant to
         which Monthly Payments are paid or partially paid with funds deposited
         in any separate account established by the Originator, the Mortgagor,
         or anyone on behalf of the Mortgagor or paid by any source other than
         the Mortgagor or (B) contains any provision permitting a temporary
         "buydown" of the related Mortgage Rate. No Mortgage Loan was a
         graduated payment mortgage loan as of the date of its origination. No
         Mortgage Loan has a shared appreciation or other contingent interest
         feature.

                  (xxviii) The Originator has no knowledge of any circumstances
         or condition existing on the Cut-off Date with respect to the Mortgage,
         the Mortgaged Property, the Mortgagor or the Mortgagor's credit
         standing that as of the Cut-off Date causes the Mortgage Loan to be an
         unacceptable investment, causes the Mortgage Loan to become delinquent,
         or adversely affects the value of the Mortgage Loan.

                  (xxix) Each such Mortgage Loan with a Loan-to-Value Ratio at
         origination in excess of 80% is and will be subject to a Primary
         Mortgage Insurance Policy, issued by a Fannie Mae or Freddie Mac
         approved insurer, which provided private mortgage insurance in an
         amount meeting Fannie Mae and Freddie Mac requirements. All provisions
         of such Primary Mortgage Insurance Policy have been and are being
         complied with, such policy is in full force and effect, and all
         premiums due thereunder have been paid. Any Mortgage subject to any
         such Primary Mortgage Insurance Policy obligates the Mortgagor
         thereunder to maintain such insurance and to pay all premiums and
         charges in connection therewith.

                  (xxx) The Mortgaged Property is lawfully occupied under
         applicable law. All inspections, licenses and certificates required to
         be made or issued with respect to all occupied portions of the related
         Mortgaged Property and, with respect to the use and occupancy of the
         same, including but not limited to certificates of occupancy, had been
         made or obtained from the appropriate authorities.

                  (xxxi) No defense against coverage under any private mortgage
         insurance (including, without limitation, any exclusions, denials or
         defenses which would limit or reduce the availability of the timely
         payment of the full amount of the loss otherwise due thereunder to the
         insured) exists arising out of actions, representations, errors,
         omissions, negligence, or fraud of the Originator, and the Originator
         is not aware of any fact that could reasonably lead the Originator to
         believe that any such defense exists arising out of the actions,
         representations, errors, omissions, negligence or fraud of the related
         Mortgagor or any party involved in the application for such coverage.

                  (xxxii) The Assignment is in recordable form, is acceptable
         for recording under the laws of the jurisdiction in which the Mortgaged
         Property is located and includes all

                                       36

<PAGE>

         applicable recording information, except where the related original
         Mortgage has been delivered for recording to the appropriate public
         recording office but has not yet been returned to the Originator.

                  (xxxiii) Any advances made to the Mortgagor prior to the
         Cut-off Date have been consolidated with the outstanding principal
         amount secured by the Mortgage, and the secured principal amount, as
         consolidated, bears a single interest rate and single repayment term.
         The lien of the Mortgage securing the consolidated principal amount is
         expressly insured as having first lien priority by a title insurance
         policy, an endorsement to the policy insuring the mortgagee's
         consolidated interest or by other title evidence acceptable to Fannie
         Mae or Freddie Mac. The consolidated principal amount does not exceed
         the original principal amount of the Mortgage Loan.

                  (xxxiv) If the Mortgaged Property is a condominium unit or a
         planned unit development (other than a de minimis planned unit
         development) such condominium or planned unit development project meets
         the Originator's eligibility requirements.

                  (xxxv) Each Mortgage Loan is a "qualified mortgage" for
         purposes of the REMIC Provisions.

                  (xxxvi) No fraud was committed by the originator of the
         Mortgage Loan and the Originator is not aware of any fact that would
         reasonably lead the Originator to believe that any Mortgagor had
         committed fraud in connection with the origination of such Mortgage
         Loan.

                  (xxxvii) Each Mortgage Loan identified on the Mortgage Loan
         Schedule as being covered by the PMI Policy is covered by the PMI
         Policy.

         (b) Upon the discovery by the Seller, the Originator, the Master
Servicer or the Trustee (or upon notice thereof in writing from a
Certificateholder) of a breach or breaches of any of the representations and
warranties of the Originator made in Section 2.04(a) in respect of any Mortgage
Loan, or any breach of a representation or warranty of the Originator or Master
Servicer set forth in Section 2.03 or any breach of representation or warranty
of the Originator in Section 2 of the Mortgage Loan Purchase Agreement, which
breach or breaches, individually or in the aggregate, materially and adversely
affect the interests of the Certificateholders, the party discovering such
breach shall give prompt written notice to the other parties. The Trustee shall
promptly notify the Originator and Master Servicer of such breach of which a
Responsible Officer has actual knowledge or receives written notice and request
that the Originator or Master Servicer, as the case may be, cure such breach
within 60 days (or if such breach is not capable of being cured within 60 days
and provided the Originator or the Master Servicer, as the case may be is
diligently pursuing the cure thereof, within 120 days) from the date of such
notice, and if the Originator or Master Servicer does not cure such breach in
all material respects, the Originator or Master Servicer, as the case may be,
shall either (i) substitute a Replacement Mortgage Loan or Loans for the related
Mortgage Loan, which substitution must be made as specified in this Section or
(ii) purchase such Mortgage Loan held for the benefit of the Certificateholders
from the Trustee at the Purchase Price therefor.

                                       37

<PAGE>

         The Originator or Master Servicer shall not have any right to
substitute a Replacement Mortgage Loan or Loans for the affected Mortgage Loan
more than two years after the Closing Date if the related Mortgage Loan is a
"defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the
Code, and any substitution must be accompanied by an Officers' Certificate
delivered to the Trustee, certifying that such Replacement Mortgage Loan
conforms to the requirements of this Agreement, and by an Opinion of Counsel to
the effect that such substitution will not cause the Trust Fund to fail to
qualify as a REMIC and will not result in a prohibited transaction tax, which
Opinion of Counsel shall be paid for by the Originator or Master Servicer, as
the case may be. Notwithstanding the foregoing, if any such breach would cause a
Mortgage Loan to be other than a "qualified mortgage loan" as described in
Section 860G(a)(3) of the Code, any substitution or purchase shall occur within
90 days of the discovery of the breach.

         As to any Replacement Mortgage Loan or Loans, the Originator or Master
Servicer shall deliver to the Trustee or its agent for such Replacement Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, and such other documents and
agreements as are required by Section 2.01(b), with the Mortgage Note (i)
endorsed in blank by facsimile signature if no Downgrade Event has occurred or
(ii) if a Downgrade Event has occurred, endorsed by facsimile signature to the
Trustee for the benefit of the Holders of the Washington Mutual Mortgage Loan
Trust Mortgage Pass- Through Certificates, Series 2001-1 (which endorsement, in
either case, may be in the form of a note allonge). As to any Replacement
Mortgage Loan or Loans, the Originator or Master Servicer shall deliver to the
Trustee the related Assignment (i) in blank in recordable form or (ii) if a
Downgrade Event has occurred, assigned to the Trustee for the benefit of the
Holders of the Washington Mutual Mortgage Loan Trust Mortgage Pass-Through
Certificates, Series 2001-1. No substitution will be made in any calendar month
after the Determination Date for such month. Monthly Payments due with respect
to Replacement Mortgage Loans in the month of substitution shall not be part of
the Trust Fund and will be remitted by the Master Servicer to the Originator on
the next succeeding Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Monthly Payment due on such
Deleted Mortgage Loan for such month and thereafter the Originator or Master
Servicer, as the case may be, shall be entitled to retain all amounts received
in respect of such Deleted Mortgage Loan.

         Upon such substitution, the Master Servicer shall amend or cause to be
amended the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Replacement Mortgage Loan or Loans and
shall deliver such amended Mortgage Loan Schedule to the Seller, the Originator
and the Trustee. Upon such substitution, the Replacement Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects and the
Originator shall be deemed to have made, as of the date of substitution, with
respect to the Replacement Mortgage Loan or Loans, the representations and
warranties pertaining to the Mortgage Loans contained in Section 2.04(a) hereof.
Upon receipt of the Trustee Mortgage File pertaining to any Replacement Mortgage
Loans, the Trustee shall release, or cause to be released, the Trustee Mortgage
File held for the benefit of the Certificateholders relating to such Deleted
Mortgage Loan to the Originator or Master Servicer as applicable and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest title (to the extent that such
title was transferred to the Trustee) in the Originator or Master Servicer as
applicable, or its designee, to any Deleted Mortgage Loan substituted for
pursuant to this Section 2.04(b).

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<PAGE>

         In any month in which the Originator or Master Servicer substitutes one
or more Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the
Master Servicer will determine the Replacement Amount (if any) (after
application of scheduled principal portion of the Monthly Payments received in
the month of substitution). Such Replacement Amount shall be deposited into the
Custodial Account by the Originator or Master Servicer in the month of
substitution pursuant to Section 3.07, without any reimbursement thereof. The
Master Servicer shall give notice in writing to the Trustee of such event, which
notice shall be accompanied by a certificate of a Servicing Officer as to the
calculation of such shortage.

         In the event that the Originator or Master Servicer shall have
repurchased a Mortgage Loan, upon receipt by the Trustee of written notification
of the deposit of the Purchase Price, the Trustee shall release, or cause to be
released, the related Trustee Mortgage File held for the benefit of the
Certificateholders to the Originator or Master Servicer as applicable and the
Trustee shall execute and deliver the related instruments of transfer or
assignment, in each case without recourse, as shall be necessary to transfer
title (to the extent that such title was transferred to the Trustee) from the
Trustee for the benefit of the Certificateholders and vest title in the
Originator or Master Servicer, or the designee thereof, as the case may be, to
any Mortgage Loan purchased pursuant to this Section 2.04(b). It is understood
and agreed that the obligation under this Agreement of any Person to repurchase
or substitute any Mortgage Loan as to which such breach has occurred and is
continuing shall constitute the sole and exclusive remedy respecting such breach
available to Certificateholders or the Trustee on their behalf.

         SECTION 2.05      ISSUANCE OF CERTIFICATES.

         The Trustee acknowledges the assignment to it of the Mortgage Loans
together with the assignment to it of all other assets included in the Trust
Fund. Concurrently with such assignment and delivery, the Trustee, pursuant to
the written request of the Seller executed by an officer of the Seller, has
executed the Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2,
Class B-3 and Class R Certificates and caused them to be authenticated and
delivered to or upon the order of the Seller in authorized denominations which
evidence ownership of the Trust Fund. The rights of the Holders of such
Certificates to receive distributions from the Trust Fund and all ownership
interests of the Holders of the Class A, Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3 and Class R Certificates in such distributions shall
be as set forth in this Agreement.

         SECTION 2.06      REMIC PROVISIONS.

         (a) As set forth in the Preliminary Statement hereto, the Trustee shall
elect to treat the Trust Fund as a REMIC in accordance with the REMIC
Provisions. The Trustee shall make such election on Form 1066 or other
appropriate federal tax or information return for the taxable year ending on the
last day of the calendar year in which the Certificates are issued. For the
purposes of such election, each Class of Certificates, other than the Class R
Certificates, is hereby designated as a regular interest in the REMIC, and the
Class R Certificates are hereby designated as the sole residual interest in the
REMIC.

         (b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code.

                                       39

<PAGE>

         (c) The Trustee shall pay any and all tax related expenses (not
including taxes) of the REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder (including its
duties as tax return preparer). The Trustee shall be entitled to reimbursement
of expenses to the extent provided in clause (i) above from the Certificate
Account.

         (d) The Trustee shall prepare, sign and timely file, all of the REMIC's
federal and state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.

         (e) The Trustee or its designee shall perform as directed by the Master
Servicer on behalf of the REMIC all reporting and other tax compliance duties
that are the responsibility of such REMIC under the Code, the REMIC Provisions,
or other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority. Among its other duties, if required by the Code, the
REMIC Provisions, or other such guidance, the Trustee shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate to
any disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.

         (f) The Trustee, the Master Servicer and the Holders of Certificates
shall take any action or cause the REMIC to take any action necessary to create
or maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Master Servicer nor the Holder of any Residual Certificate
shall take any action, cause the REMIC to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of such REMIC as
a REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to the REMIC or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Master Servicer, or their
respective designees, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to such REMIC, and no such
Person shall take any such action or cause such REMIC to take any such action as
to which the Trustee or the Master Servicer has advised it in writing that an
Adverse REMIC Event could occur.

                                       40

<PAGE>

         (g) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on the REMIC by federal or state governmental authorities. To
the extent that such Trust taxes are not paid by a Residual Certificateholder,
the Trustee shall pay any remaining REMIC taxes out of current or future amounts
otherwise distributable to the Holder of the Residual Certificate in the REMIC
or, if no such amounts are available, out of other amounts held in the
Certificate Account, and shall reduce amounts otherwise payable to holders of
regular interests in the REMIC.

         (h) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to the REMIC on a calendar year and on an accrual
basis.

         (i) Within 30 days after the Closing Date, the Trustee shall prepare
and file with the Internal Revenue Service Form 8811, "Information Return for
Real Estate Mortgage Investment Conduits (REMIC) and Issuers of Collateralized
Debt Obligations" for the REMIC.

         (j) Neither the Trustee nor the Master Servicer shall sell, dispose of
or substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article X of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) nor
acquire any assets for the Trust Fund, nor sell or dispose of any investments in
the Custodial Account or the Certificate Account for gain nor accept any
contributions to the Trust Fund after the Closing Date (a) unless it has
received an Opinion of Counsel that such sale, disposition, substitution or
acquisition will not affect adversely the status of the Trust Fund as a REMIC or
(b) unless the Master Servicer has determined in its sole discretion to
indemnify the Trust Fund against such tax.

         (k) In order to enable the Trustee to perform its duties as set forth
herein, the Seller shall provide, or cause to be provided to the Trustee, within
ten days after the Closing Date, all information or data that the Trustee
determines to be relevant for tax purposes to the valuations and offering prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flows of the Certificates and the Mortgage Loans
and the Trustee shall be entitled to rely upon any and all such information and
data in the performance of its duties set forth herein. Thereafter, the Master
Servicer shall provide, promptly upon request therefor, any such additional
information or data that the Trustee may from time to time reasonably request in
order to enable the Trustee to perform its duties as set forth herein and the
Trustee shall be entitled to rely upon any and all such information and data in
the performance of its duties set forth herein. The Seller shall indemnify the
Trustee and hold it harmless for any loss, liability, damage, claim or expense
of the Trustee arising from any failure of the Seller to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis. The
Master Servicer shall indemnify the Trustee and hold it harmless for any loss,
liability, damage, claim or expense of the Trustee arising from any failure of
the Master Servicer to provide, or to cause to be provided, accurate information
or data to the Trustee on a timely basis. The indemnification provisions
hereunder shall survive the termination of this Agreement and shall extend to
any co-trustee appointed pursuant to this Agreement.

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<PAGE>

         (l) The Department of Labor has granted an administrative exemptions to
Bear, Stearns & Co. Inc. (Prohibited Transaction Exemption 90-30, 55 F.R.
21455), as amended (the "Exemption") from certain of the prohibited transaction
rules of ERISA and the Code.

                                       42

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         SECTION 3.01      SERVICING STANDARD.

         (a) For and on behalf of the Trustee and the Certificateholders, the
Master Servicer shall service and administer the Mortgage Loans in accordance
with prudent mortgage loan servicing standards and procedures generally accepted
in the mortgage banking industry and generally in a manner consistent with
Fannie Mae guidelines except as otherwise expressly provided in this Agreement.
In connection with such servicing and administration, the Master Servicer shall
have full power and authority, acting alone and/or through any Sub-Servicer as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents (including, without limitation, estoppel
certificates), (ii) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, (iv) to consent to any subordinate financings to be
secured by any Mortgaged Property to the extent that such consent is required
pursuant to the terms of the related Mortgage, (v) to consent to the application
of any proceeds of insurance policies or condemnation awards to the restoration
of the applicable Mortgaged Property or otherwise, and (vi) subject to the
provisions of Section 3.07 and 3.13, to effectuate foreclosure or other
conversion of the ownership of the Mortgage Property securing any Mortgage Loan;
provided, however, that the Master Servicer shall take no action that is
materially inconsistent with or materially prejudices the interest of the
Trustee or the Certificateholders in any Mortgage Loan or the rights and
interest of the Seller, the Trustee and the Certificateholders under the terms
of this Agreement unless such action is specifically called for by the terms
hereof.

         (b) Without limiting the generality of the foregoing, but subject to
the terms hereof, the Master Servicer, in its own name or in the name of the
Trustee, is hereby authorized and empowered by the Seller and the Trustee, when
the Master Servicer believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Trustee, the Certificateholders or any of them, any
and all instruments of modification, satisfaction, cancellation or assignment,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans, and with respect to the Mortgaged Properties
held for the benefit of the Certificateholders. The Master Servicer shall
promptly notify the Trustee of any such execution and delivery. The Trustee for
the benefit of the Certificateholders shall execute any powers of attorney and
other documents necessary or appropriate to enable the Master Servicer to
service and administer the Mortgage Loans.

         (c) Notwithstanding anything in this Agreement to the contrary, the
Master Servicer shall not (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer,
imminent) permit any modification with respect to any Mortgage Loan (i) that
would change the Net Mortgage Rate or, reduce or increase the principal balance

                                       43

<PAGE>

(except for increases resulting from the addition of Deferred Interest and
reductions resulting from actual payments of principal) or (ii) that would both
constitute a sale or exchange of such Mortgage Loan within the meaning of
Section 1001 of the Code (including any proposed, temporary or final regulations
promulgated thereunder) (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is a Principal Prepayment made (or treated
as made) by the Mortgagor of the entire principal balance of a Mortgage Loan)
and cause the Trust Fund to fail to qualify as a REMIC under the Code.

         (d) If an Index of Eleventh District COFI is not available with respect
to any Mortgage Loan, the Master Servicer will choose an Index of One-Year MTA
for that Mortgage Loan. If neither an Index of Eleventh District COFI nor
One-Year MTA is available with respect to any Mortgage Loan, the Master Servicer
will select an alternative Index which is based on comparable information. In
such event, the Master Servicer will also determine a new Gross Margin. The new
Gross Margin will be the difference between the average of the last available
Index for the most recent three-year period which ends on the last date the last
available Index was available plus the Gross Margin on the last date the last
available Index was available and the average of the new Index for the most
recent three year period which ends on that date (or, if not available for such
three-year period, for such time as it is available), rounded as provided in the
Mortgage Note.

         SECTION 3.02      ENFORCEMENT OF THE OBLIGATIONS OF SUB-SERVICERS.

         (a) For purposes of this Agreement, the Master Servicer shall be deemed
to have received the payments on the Mortgage Loans referred to in Sections 3.07
and 3.08 hereof when the related Sub-Servicer, if any, has received such
payments and shall remain obligated to deposit such payments in accordance with
Sections 3.07 and 3.08 hereof, regardless of whether such payments are remitted
by the Sub-Servicer to the Master Servicer. The Master Servicer and the related
Sub- Servicer may enter into amendments to any applicable Sub-Servicing
Agreement; provided, however, that any such amendments shall be consistent with
and shall not violate the provisions of this Agreement.

         (b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Seller, the Trustee and the Certificateholders, shall
supervise, administer, monitor and oversee the servicing of the Mortgage Loans
that are not serviced by it directly, and shall enforce the obligations of each
Sub-Servicer, if any, under the related Sub-Servicing Agreement. Such
enforcement shall include, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, as appropriate, and the pursuit of
other appropriate remedies, and shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys fees against the party against whom
such enforcement is directed. The Master Servicer shall not waive any event of
default by a Sub-Servicer under a Sub-Servicing Agreement which is a failure to
remit any payment required to be made by such Sub-Servicer that would result in
an Event of Default under this Agreement.

                                       44

<PAGE>

         (c) During the term of this Agreement, the Master Servicer shall
consult fully with each of the Sub-Servicers as may be necessary from time to
time to perform and carry out the Master Servicer's obligations hereunder and
receive, review and evaluate all reports, information and other data that are
provided to the Master Servicer by each Sub-Servicer and otherwise exercise
reasonable efforts to cause each Sub-Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by it under
its Sub-Servicing Agreement.

         SECTION 3.03      TERMINATION OF THE RIGHTS OF SUB-SERVICERS.

         If the Master Servicer terminates the rights of a Sub-Servicer under
any Sub-Servicing Agreement, the Master Servicer shall service the Mortgage
Loans directly pursuant to and in accordance with the terms of this Agreement,
or at the Master Servicer's election, enter into a substitute servicing
agreement with another mortgage loan servicing company reasonably acceptable to
the Master Servicer under which such mortgage loan servicing company shall
assume, satisfy, perform and carry out all liabilities, duties, responsibilities
and obligations that are to be, or otherwise were to have been, satisfied,
performed and carried out by the terminated Sub-Servicer, regardless of whether
such liabilities, duties, responsibilities or obligations shall have accrued
before or after the termination of the rights of such Sub-Servicer; provided,
however, that any such substitute servicer and any such substitute servicing
shall satisfy the requirements of Sections 3.01 and 3.02. If the Master Servicer
does not elect to enter into a substitute servicing agreement with a successor
servicer, the Master Servicer shall nevertheless service the Mortgage Loans
directly pursuant to and in accordance with the terms of this Agreement, until a
substitute Sub-Servicer has been appointed and designated and a substitute
servicing agreement has been entered into by the Master Servicer and such
substitute Sub-Servicer. Each Sub-Servicing Agreement shall provide that any
successor to the Master Servicer shall be able to terminate the Sub-Servicer and
the Master Servicer (and not the successor Master Servicer) shall be liable for
the payment of any termination fee.

         SECTION 3.04      LIABILITY OF THE MASTER SERVICER.

         Notwithstanding the provisions of any Sub-Servicing Agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer or a Sub- Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and liable
to the Seller, the Trustee and the Certificateholders for the servicing and
administering of the Mortgage Loans included in the Trust Fund in accordance
with (and subject to the limitations contained within) the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.

                                       45

<PAGE>

         SECTION 3.05      RIGHTS OF THE SELLER AND THE TRUSTEE IN RESPECT
                           OF THE MASTER SERVICER.

         The Master Servicer shall afford the Seller and the Trustee, without
charge but only upon reasonable notice and during normal business hours, access
to all records and documentation in the Master Servicer's possession regarding
the Mortgage Loans and to all accounts, insurance policies and other matters in
the Master Servicer's possession relating to this Agreement and access to
officers of the Master Servicer responsible for its obligations hereunder. The
Seller may, but is not obligated to, enforce the obligations of the Master
Servicer hereunder. The Seller shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer hereunder or otherwise.

         SECTION 3.06      TRUSTEE TO ACT AS MASTER SERVICER.

         In the event that the Master Servicer shall for any reason no longer be
the Master Servicer hereunder (including by reason of an Event of Default), the
Trustee shall thereupon assume all of the rights and obligations of the Master
Servicer hereunder arising thereafter (except that the Trustee shall not be
liable for losses in connection with Eligible Investments required to be paid by
the Master Servicer pursuant to Section 3.07 or 4.01 hereof, obligated to make
Monthly Advances if prohibited by applicable law, liable for any actions or
omissions of the predecessor Master Servicer, nor obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder as substitute Master
Servicer, including pursuant to Section 2.04 hereof and except that the Trustee
makes no representations and warranties hereunder, including pursuant to Section
2.04 hereof). If the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of any Event of Default), the Trustee (or
any other successor master servicer) may, at its sole option, succeed to any
rights and obligations of the Master Servicer under any Sub-Servicing Agreement
and shall be deemed to have assumed the Master Servicer's interest therein;
provided, however, that the Master Servicer shall not thereby be relieved of any
liability or obligations under this Agreement, any Sub- Servicing or substitute
servicing agreement arising prior to the date of such succession, including,
without limitation, payment of any termination fee that may become due to a
Sub-Servicer upon termination of the Sub-Servicing Agreement.

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

         SECTION 3.07      COLLECTION OF MORTGAGE LOAN PAYMENTS.

         (a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans held in its own portfolio and serviced by the
Master Servicer. Consistent with the foregoing, the Master Servicer may in its
discretion (a) waive any late payment charge and (b) subject to Section 3.01,
only upon determining that the coverage of such Mortgage Loan by any related
Primary Mortgage Insurance Policy will not be affected, extend

                                       46

<PAGE>

the due dates for payments due on a Mortgage Note for a period not greater than
365 days, but in no event beyond the maturity date of any Mortgage Loan. In the
event of any such arrangement described in clause (b) of the preceding sentence,
the Master Servicer shall continue to make timely Monthly Advances on the
related Mortgage Loan, pursuant to and in accordance with Section 5.04 of this
Agreement (but subject to any limitations contained therein), during the
scheduled period in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangements. The Master
Servicer covenants and agrees that the Master Servicer shall waive a Prepayment
Charge only under the following circumstances: (i) such waiver would, in the
reasonable judgement of the Master Servicer, maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan and, if such waiver is made in connection with a refinancing of the related
Mortgage Loan, such refinancing is related to a default or a reasonably
foreseeable default, or (ii) such waiver is otherwise required by applicable law
or, upon the advice of counsel to the Master Servicer, would expose the Master
Servicer to liability under applicable law.

         (b) The Master Servicer shall establish and maintain, in its name on
behalf of the Certificateholders, the Custodial Account. The Master Servicer
shall deposit into the Custodial Account within two Business Days of receipt by
the Master Servicer, or receipt from the Sub- Servicers except as otherwise
specifically provided herein, the following payments and collections received or
made by it subsequent to the Cut-off Date (other than in respect of principal of
and interest and any other payments on the Mortgage Loans due on or before the
Cut-off Date):

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

                  (ii) all payments on account of interest on the Mortgage
         Loans, including Prepayment Charges, less the Servicing Fee and the
         Excess Servicing Fee;

                  (iii) all Insurance Proceeds and Liquidation Proceeds, other
         than proceeds to be applied to the restoration or repair of the
         Mortgaged Property or released to the Mortgagor in accordance with the
         Master Servicer's normal servicing procedures, net of Liquidation
         Expenses, unpaid servicing compensation and unreimbursed Monthly
         Advances;

                  (iv) any amount of any losses required to be deposited by the
         Master Servicer pursuant to Section 3.07(c) in connection with any
         losses on Eligible Investments;

                  (v) any amounts required to be deposited by the Master
         Servicer pursuant to Section 3.11 hereof;

                  (vi) all proceeds of any purchase by the Originator or the
         Master Servicer, as the case may be, of any Mortgage Loans or property
         acquired in respect of the Mortgage Loans pursuant to Sections 2.01,
         2.02, 2.03, 2.04, 3.12 or 10.01 hereof and any Replacement Amounts
         required to be deposited in connection with the substitution of
         Replacement Mortgage Loans pursuant to Sections 2.01, 2.02, 2.03, 2.04
         or 3.12 hereof; and

                                       47

<PAGE>

                  (vii) any other amounts required to be deposited in the
         Custodial Account pursuant to this Agreement including, without
         limitation, the amounts required to be deposited therein pursuant to
         Section 3.13 hereof.

         The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, the Servicing Fee, the Excess Servicing Fee, late
payment charges and assumption fees and any excess interest charges payable by
the Mortgagor by virtue of any default or other non-compliance by the Mortgagor
with the terms of the Mortgage or any other instrument or document executed in
connection therewith or otherwise, if collected, need not be remitted or
deposited into the Custodial Account by the Master Servicer. In the event that
the Master Servicer shall remit or deposit any amount not required to be
remitted or deposited and not otherwise subject to withdrawal pursuant to
Section 3.09 hereof, it may at any time withdraw such amount from the Custodial
Account on the following Distribution Date, any provision herein to the contrary
notwithstanding. All funds deposited in the Custodial Account shall be held by
the Master Servicer in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.09. In
no event shall the Trustee incur liability for withdrawals from the Custodial
Account at the direction of the Master Servicer.

         (c) Any investments of amounts on deposit in the Custodial Account
shall be made by the Master Servicer in Eligible Investments, which shall mature
not later than the second Business Day preceding the Distribution Date following
the date of such investment (except that if such Eligible Investment is an
obligation of the institution that maintains the Custodial Account, then such
Eligible Investment shall mature not later than such Distribution Date). All
such Eligible Investments shall be made in the name of the Trustee for the
benefit of the Certificateholders. All income and gain net of any losses
realized from any such investment shall be for the benefit of the Master
Servicer and shall be subject to withdrawal at its direction from time to time.
The amount of any losses net of any gains incurred by the Master Servicer in
respect of any such investments shall be remitted to the Trustee or deposited in
the Custodial Account out of the Master Servicer's own funds promptly following
the date the same are realized.

         (d) The Master Servicer shall promptly give notice to the Trustee, the
Rating Agencies and the Seller of the location of the Custodial Account and of
any change thereof.

         SECTION 3.08      COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
                           ESCROW ACCOUNTS.

         (a) In addition to the Custodial Account, the Master Servicer shall
establish and maintain one or more custodial accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Master Servicer) for the payment of taxes, assessments and
hazard insurance premiums or comparable items for the account of the Mortgagors.
Escrow Accounts shall be Eligible Accounts. All costs incurred by the Master
Servicer or by the related Sub-Servicer in effecting the timely payments of
taxes and assessments on the Mortgaged Properties and related insurance premiums
shall not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Scheduled Principal Balance under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.

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         (b) Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or Primary Mortgage Insurance Policy premiums, condominium or PUD
association dues, or comparable items, to reimburse the Master Servicer pursuant
to Section 3.10 hereof (with respect to the Primary Mortgage Insurance Policy)
and this Section 3.08 (with respect to taxes and assessments) and Section 3.11
hereof (with respect to hazard insurance), 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 Escrow Account or to clear and terminate the Escrow Account
at the termination of this Agreement in accordance with Section 10.01 hereof. As
part of its servicing duties, the Master Servicer shall, and the Sub-Servicers
shall, pursuant to any Sub-Servicing Agreement, be required to, pay to the
Mortgagors interest on funds in the Escrow Account, to the extent required by
law.

         (c) The Master Servicer shall, with respect to each Mortgage Loan, to
the extent any related Sub-Servicer does not do so, advance the payments
referred to in Section 3.08(b) that are not timely paid by the Mortgagors;
provided, however, that the Master Servicer shall be required to so advance only
to the extent that such advances, in the good faith judgment of the Master
Servicer, will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise out of the related Mortgage Loan; and provided
further, that such payments shall be advanced when the tax, premium or other
cost for which such payment is intended is due.

         SECTION 3.09      PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.

         (a) The Master Servicer may (and, with respect to clauses (v) and (vii)
below, shall), from time to time, make, to the extent required or authorized
hereunder, withdrawals from the Custodial Account for the following purposes:

                  (i) to pay to the Master Servicer from funds on deposit in the
         Custodial Account earnings on or investment income with respect to
         funds in the Custodial Account less losses referred to in Section
         3.07(iv);

                  (ii) to reimburse the Master Servicer for advances made
         pursuant to Sections 3.01, 3.08, 3.10, 3.11, 3.13, 5.04 and 5.05
         hereof, such right of reimbursement pursuant to this subclause (ii)
         being limited to amounts received in respect of the particular Mortgage
         Loan (including, for this purpose, Insurance Proceeds, Liquidation
         Proceeds, amounts representing proceeds of other insurance policies, if
         any, covering the related Mortgaged Property, rental and other income
         from REO Property and proceeds of any purchase or repurchase of the
         related Mortgage Loan);

                  (iii) to reimburse the Master Servicer for any Nonrecoverable
         Advances made in respect of any Mortgage Loan;

                  (iv) to reimburse the Master Servicer from Liquidation
         Proceeds for Liquidation Expenses and, to the extent that Liquidation
         Proceeds after such reimbursement are in excess of the Scheduled
         Principal Balance of the related Mortgage Loan together with accrued
         and unpaid interest thereon at a rate equal to the Mortgage Rate, to
         pay out of such excess the amount of any unpaid servicing compensation
         to the Master Servicer with respect to any

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<PAGE>

         Mortgage Loan, which may include any unpaid servicing compensation to a
         Sub-Servicer (for disbursement in accordance with Section 3.16 hereof);

                  (v) to pay to the Originator or the Master Servicer, as the
         case may be, with respect to each Mortgage Loan or property acquired in
         respect thereof that has been purchased pursuant to Sections 2.01,
         2.02, 2.04 or 3.12 hereof all amounts received thereon and not taken
         into account in determining the Purchase Price of such repurchased
         Mortgage Loan;

                  (vi) to reimburse the Master Servicer or the Seller for
         expenses incurred by and reimbursable to the Master Servicer or the
         Seller pursuant to Section 7.03 hereof or Section 9.10(f);

                  (vii) to withdraw any amount deposited in the Custodial
         Account pursuant to Section 3.07 and not required to be deposited
         therein; and

                  (viii) to clear and terminate the Custodial Account upon
         termination of this Agreement pursuant to Section 10.01 hereof.

         The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to such subclauses (ii) through
(v).

         (b) On or prior to the Master Servicer Remittance Date, after payment
of items (i) through (viii) of Section 3.09(a), the Master Servicer shall
withdraw from the Custodial Account and remit the following:

                  (i) to the Trustee, in immediately available funds, an amount
                  equal to the Total Distribution Amount and the PMI Insurance
                  Premium for such Distribution Date, which the Trustee, upon
                  receipt thereof, shall deposit in the Certificate Account.

         SECTION 3.10      MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES
                           AND PMI POLICY; COLLECTIONS THEREUNDER.

         (a) The Master Servicer shall not take, or permit any Sub-Servicer to
take, any action that would result in loss of coverage under any applicable
Primary Mortgage Insurance Policy for any loss which, but for the actions of the
Master Servicer or Sub-Servicer, would have been covered thereunder.

         (b) The Master Servicer shall keep in full force and effect each
Primary Mortgage Insurance Policy applicable to a Mortgage Loan being serviced
by it until the principal balance of the related Mortgage Loan, in the case of a
Mortgage Loan having a Loan-to-Value Ratio at origination in excess of 80%, is
reduced to (i) 80% or less of the Appraised Value or (ii) 80% or less of its
current value based on a new appraisal. The Master Servicer agrees to pay to the
extent the related Mortgagor does not do so, the premiums for each Primary
Mortgage Insurance Policy on a timely basis and shall use its best reasonable
efforts to cause itself or the Sub-Servicer to be named

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<PAGE>

as loss payee; provided, however, that the Master Servicer shall be required to
pay such premiums only to the extent that such advances, in the good faith
judgment of the Master Servicer, will be recoverable by the Master Servicer out
of Insurance Proceeds, Liquidation Proceeds or otherwise out of the related
Mortgage Loan. In the event that the insurer under any Primary Mortgage
Insurance Policy shall cease to be qualified to transact a mortgage guaranty
insurance business under the laws of the state of its organization or any other
state that has jurisdiction over such insurer (or if such insurer's
claims-paying ability shall adversely affect the rating on the Class A
Certificates) or such Primary Mortgage Insurance Policy is cancelled or
terminated for any reason, the Master Servicer shall exercise its best
reasonable efforts to obtain, or to cause the related Sub-Servicer to obtain,
from another Qualified Insurer, a replacement policy comparable to such Primary
Mortgage Insurance Policy at the expense of the Mortgagor. The Master Servicer
shall not consent to the cancellation or refusal to renew any such Primary
Mortgage Insurance Policy applicable to any Mortgage Loan, which is in effect at
the date of the initial issuance of the Certificates and is required to be kept
in force hereunder unless the replacement Primary Mortgage Insurance Policy for
such cancelled or non-renewed policy is maintained with an insurer with a rating
not lower than the insurer issuing the Primary Mortgage Insurance Policy in
effect at the date of the initial issuance of the Certificates or whose
claims-paying will not adversely affect the rating on the Certificates or unless
any such cancellation or refusal, or consent thereto, will not adversely affect
the rating on the Certificates. In connection with any assumption and
modification agreement entered into by the Master Servicer or a Sub-Servicer
pursuant to Section 3.12, the Master Servicer shall obtain a replacement Primary
Mortgage Insurance Policy, as provided above.

         (c) The Master Servicer shall cooperate with the PMI Insurer and shall
use its best efforts to furnish to the PMI Insurer all reasonable information in
the possession of the Master Servicer or to which the Master Servicer has access
with respect to each Mortgage Loan.

         (d) In the event of a default by the PMI Insurer under the PMI Policy
(a "Replacement Event"), the Master Servicer shall use its best efforts to
obtain a substitute lender-paid primary mortgage insurance policy (a "Substitute
PMI Policy"); PROVIDED, HOWEVER, that the Master Servicer shall not be
obligated, and shall have no liability for failing, to obtain a Substitute PMI
Policy unless such Substitute PMI Policy can be obtained on the following terms
and conditions: (i) the Certificates shall be rated no lower than the rating
assigned by each Rating Agency to the Certificates immediately prior to such
Replacement Event, as evidenced by a letter from each Rating Agency addressed to
the Seller, the Master Servicer and the Trustee, (ii) the timing and mechanism
for drawing on such new Substitute PMI Policy shall be reasonably acceptable to
the Master Servicer and the Trustee and (iii) the premiums under the proposed
Substitute PMI Policy shall not exceed such premiums under the existing PMI
Policy.

         (e) In connection with its activities as administrator and servicer of
the Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
and on behalf of the Trustee for the benefit of the Certificateholders, claims
to the insurer under any Primary Mortgage Insurance Policies and claims to the
PMI Insurer with respect to the PMI Policy and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policies or the PMI Policy respecting defaulted Mortgage
Loans. Pursuant to Section 3.07 hereof, any amounts collected by the Master
Servicer under any Primary Mortgage Insurance Policy or the PMI Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.09 hereof.

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         SECTION 3.11      MAINTENANCE OF HAZARD INSURANCE AND OTHER INSURANCE.

         (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the replacement cost of improvements securing such Mortgage Loan or its
Scheduled Principal Balance, whichever is less.

         (b) Each policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee clause complying in
all material respects in form and substance to applicable Fannie Mae guidelines.
The Master Servicer shall cause to be maintained on property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, liability
insurance and, to the extent described below, flood insurance. Pursuant to
Section 3.07 hereof, any amounts collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the terms of the applicable Mortgage or the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.09 hereof.

         Any cost incurred by the Master Servicer or the related Sub-Servicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the Scheduled Principal Balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Master Servicer out of payments by the related Mortgagor
or out of Insurance Proceeds or Liquidation Proceeds to the extent permitted by
Section 3.09 hereof. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area, the Master Servicer shall cause flood insurance to be maintained. Such
flood insurance shall be in an amount equal to the lesser of (i) the unpaid
Scheduled Principal Balance of the related Mortgage Loan or (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program, if the area in which such Mortgaged Property
is located is participating in such program. Notwithstanding anything in this
paragraph to the contrary, the Master Servicer shall be required to pay the
costs of maintaining any insurance contemplated by this Section 3.11 only to the
extent that such advances, in the good faith judgment of the Master Servicer,
will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise out of the related Mortgage Loan.

         (c) In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of Section 3.11(a), it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers, and
provided that the provider of such blanket policy is rated by A.M. Best Company
A:V or higher and the claims-paying ability of such provider is rated in one of
the three highest rating categories by at least one nationally recognized
statistical rating organization. If such policy contains a deductible clause,
the Master Servicer shall, to the extent that there shall not have been
maintained on the related Mortgaged Property a policy complying with the first
sentence of Section 3.11(a) and there shall have been a loss that would have
been covered by such policy, remit to the Trustee for deposit in the Custodial

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<PAGE>

Account the amount not otherwise payable under the blanket policy because of
such deductible clause, accompanied by a certificate of a Servicing Officer
describing the calculation of such amount. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
present, on behalf of itself, the Seller, the Trustee or its agent for the
benefit of the Certificateholders, claims under any such blanket policy.

         SECTION 3.12 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.

         (a) Except as otherwise provided in this Section 3.12(a), when any
property subject to a Mortgage has been conveyed by the Mortgagor, the Master
Servicer shall, to the extent that it has knowledge of such conveyance, enforce
any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. In the event that the Master Servicer or
the related Sub-Servicer is prohibited by law from enforcing any such
due-on-sale clause, or if coverage under any Required Insurance Policy would be
adversely affected, the Master Servicer is authorized, subject to Section
3.12(b), to take or enter into an assumption and modification agreement from or
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.12(b), is also
authorized with the prior approval of the insurers under any Required Insurance
Policies 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.
Notwithstanding the foregoing, the Master Servicer shall not be deemed to be in
default under this Section 3.12(a) by reason of any transfer or assumption which
the Master Servicer is restricted by law from preventing, for any reason
whatsoever.

         (b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.12(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, if an
assumption is permitted under Section 3.12(a) and such Person is to enter into
an assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage held for the benefit of the Certificateholders that requires
the signature of the Trustee, or if an instrument of release signed by the
Trustee is required releasing the Mortgagor from liability on the Mortgage Loan,
the Master Servicer shall deliver or cause to be delivered to the Trustee for
signature the assumption agreement with the Person to whom the Mortgaged
Property is to be conveyed and such modification agreement or supplement to the
Mortgage Note or Mortgage or other instruments as are reasonable or necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with
any applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. The Master Servicer shall also deliver or cause to be
delivered to the Trustee with the foregoing documents a letter explaining the
nature of such documents and the reason or reasons why the Trustee's signature
is required.

         With such letter, the Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer certifying that: (i) a Servicing Officer has
examined and approved such documents as to

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<PAGE>

form and substance, (ii) the Trustee's execution and delivery thereof will not
conflict with or violate any terms of this Agreement or cause the unpaid balance
and interest on the Mortgage Loan to be uncollectible in whole or in part, (iii)
any required consents of insurers under any Required Insurance Policies have
been obtained and (iv) subsequent to the closing of the transaction involving
the assumption or transfer (A) the Mortgage Loan will continue to be secured by
a first mortgage lien pursuant to the terms of the Mortgage, (B) such
transaction will not adversely affect the coverage under any Required Insurance
Policies, (C) the Mortgage Loan will fully amortize over the remaining term
thereof or, if the Mortgage Loan provided that the amortization period on which
the Monthly Payments were based was a longer period, such period has not been
extended, (D) the interest rate on the Mortgage Loan will not be altered nor
will the term of the Mortgage Loan be increased as a result of such assumption
or transfer and (E) if the seller/transferor of the Mortgaged Property is to be
released from liability on the Mortgage Loan, the Master Servicer used the same
underwriting standards in evaluating the creditworthiness of the
purchaser/transferee as were used in making the original Mortgage Loan, and,
based on such underwriting criteria, such release will not (based on the Master
Servicer's good faith determination) adversely affect the collectibility of the
Mortgage Loan. Upon receipt of such certificate, the Trustee for the benefit of
the Certificateholders shall execute any necessary instruments for such
assumption or substitution of liability. Upon the closing of the transactions
contemplated by such documents, the Master Servicer shall cause the originals of
the assumption agreement, the release (if any), or the modification or
supplement to the Mortgage Note or Mortgage to be delivered to the Trustee or
its agent for the benefit of the Certificateholders and deposited with the
Trustee Mortgage File for such Mortgage Loan. Any fee collected by the Master
Servicer for entering into an assumption or substitution of liability agreement
will be retained by the Master Servicer as additional servicing compensation.

         In the event that the Master Servicer, in connection with any such
assumption or modification agreement or supplement to the Mortgage Note, is
unable to deliver the certificate of the Servicing Officer set forth above, the
Master Servicer shall purchase, or cause the related Sub-Servicer to purchase,
the related Mortgage Loan in the manner, and at the Purchase Price, set forth in
Section 2.04(b) hereof.

         SECTION 3.13      REALIZATION UPON DEFAULTED MORTGAGE LOANS.

         (a) The Master Servicer shall foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which, in the reasonable judgment of the
Master Servicer, no satisfactory arrangements can, in accordance with prudent
lending practices, be made for collection of delinquent payments pursuant to
Section 3.01 hereof. In connection with such foreclosure or other conversion,
the Master Servicer shall follow such practices and procedures as it shall deem
necessary or advisable, as shall be normal and usual in its general mortgage
servicing activities and for its own portfolio and as are in accordance with the
requirements of the insurer under any Required Insurance Policy and shall
deliver to the Trustee a liquidation report with respect to the related Mortgage
Loan on the form of report customarily prepared by the Master Servicer. In
particular, the Master Servicer will service each Mortgage Loan in a manner that
preserves the right to proceed against all collateral securing such Mortgage
Loan (e.g., in accordance with any applicable "single action" rule). The Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration, repair, protection or maintenance of any
property unless it shall determine in its sole

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<PAGE>

discretion that such expenses will be recoverable to it as Liquidation Expenses
either through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 3.09(a)
hereof) or through Insurance Proceeds (respecting which it shall have similar
priority). The Master Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.09 hereof.

         (b) In the event that any Mortgaged Property becomes an REO Property,
the deed or certificate of sale shall be taken in the name of the Trustee for
the benefit of the Certificateholders, or its nominee, on behalf of the
Certificateholders. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall either itself or through an agent selected by the Master
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property on such
terms and conditions and for such periods as the Master Servicer deems to be in
the best interest of the Master Servicer and the Certificateholders.
Notwithstanding anything herein to the contrary, in the event that the Trust
Fund acquires any REO Property as aforesaid or otherwise in connection with a
default or imminent default on a Mortgage Loan, the Master Servicer, on behalf
of the Trust Fund, shall dispose of such REO Property within three full years
after the taxable year of its acquisition by the Trust Fund for purposes of
Section 860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable state (including any state in which such property is located) law to
maintain the status of any REMIC as a REMIC under applicable state law and avoid
taxes resulting from such property failing to be foreclosure property under
applicable state law) or, at the expense of the Trust Fund, request, more than
60 days before the day on which such grace period would otherwise expire, an
extension of such grace period unless the Master Servicer obtains for the
Trustee an Opinion of Counsel, addressed to the Trustee and the Master Servicer,
to the effect that the holding by the Trust Fund of such REO Property subsequent
to such period will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code, or cause any REMIC to fail
to qualify as a REMIC under the Code at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such REO Property
(subject to any conditions contained in such Opinion of Counsel). The Master
Servicer shall be entitled to be reimbursed from the Custodial Account for any
costs incurred in obtaining such Opinion of Counsel. Notwithstanding any other
provision of this Agreement, no REO Property acquired by the Trust Fund shall be
rented (or allowed to continue to be rented) or otherwise used by or on behalf
of the Trust Fund in such circumstances or manner or pursuant to any terms that
would (i) cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or (ii) subject any REMIC
to the imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Section 860G(c) of the Code,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
Fund with respect to the imposition of any such taxes.

         (c) The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the

                                       55

<PAGE>

management of any Mortgaged Properties acquired through foreclosure or other
judicial proceeding on behalf of the Certificateholders, net of reimbursement to
the Master Servicer for expenses incurred (including any taxes) in connection
with such management, advances made by the Master Servicer pursuant to Sections
3.01, 3.08, 3.10, 3.11, 3.13, 5.04 or 5.05 in connection with the related
Mortgage Loan or REO Property and Liquidation Expenses incurred by the Master
Servicer in connection with the related Mortgage Loan, shall be applied to the
payment of principal of and interest on the related defaulted Mortgage Loans
(with interest accruing and principal amortizing as though such Mortgage Loans
were still current) and all such income shall be deemed, for all purposes in
this Agreement, to be payments on account of principal of and interest on the
related Mortgage Notes and shall be deposited into the Custodial Account.

         (d) Prior to obtaining or causing the Trustee to obtain a deed as a
result of or in lieu of foreclosure, or otherwise acquiring (or causing the
Trustee to acquire) possession of or title to any Mortgaged Property, if the
Master Servicer determines that obtaining a deed or otherwise acquiring title or
possession of such Mortgaged Property would likely subject the Master Servicer,
the Trustee or the Trust Fund to substantial liability in respect of
environmental conditions concerning the Mortgaged Property, (a) the Master
Servicer shall (i) notify the Trustee and the Seller of such determination and
(ii) refrain from obtaining or directing the Trustee to obtain a deed as a
result of or in lieu of foreclosure or otherwise acquiring title or possession
to such Mortgaged Property and (b) the obligations of the Master Servicer to
make advances, including, without limitation, Monthly Advances, in connection
with the Mortgage Loan in question shall cease as of the date that the Master
Servicer makes such determination.

         SECTION 3.14      TRUSTEE TO COOPERATE; RELEASE OF TRUSTEE MORTGAGE
                           FILES.

         Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, and upon notification by the Master Servicer
in the form of a certification (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Custodial Account have been or
will be so deposited) of a Servicing Officer and a Request for Release of the
Trustee Mortgage File in the form of Exhibit G hereto the Trustee shall promptly
release the related Trustee Mortgage File to the Master Servicer, and the
Trustee shall execute and deliver to the Master Servicer the request for
reconveyance, deed of reconveyance or release, satisfaction or assignment of
mortgage or such instrument releasing the lien of the Mortgage, and, in each
case, such other documents or instruments as may be reasonably required in
connection therewith, as directed by the Master Servicer, together with the
Mortgage Note with written evidence of cancellation thereon. The provisions of
the immediately preceding sentence shall not, in any manner, limit or impair the
right of the Master Servicer to execute and deliver, on behalf of the Trustee,
the Certificateholders or any of them, any and all instruments of satisfaction,
cancellation or assignment, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account but shall be paid by the Master Servicer. From time to time and as shall
be appropriate for the servicing or foreclosure of any Mortgage Loan, including,
without limitation, for such purpose, collection under any policy of flood
insurance, any fidelity bond or errors or omissions policy, or for

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<PAGE>

the purposes of effecting a partial or total release of any Mortgaged Property
from the lien of the Mortgage or the making of any corrections to the Mortgage
Note or the Mortgage or any of the other documents included in the Trustee
Mortgage File, the Trustee shall, upon request of the Master Servicer and the
delivery to the Trustee of a Request for Release signed by a Servicing Officer,
in the form of Exhibit G hereto, release the Trustee Mortgage File to the Master
Servicer. If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property, the Master Servicer shall
deliver to the Trustee, for signature as appropriate, any court pleadings,
requests for trustee's sale or other documents necessary to effectuate such
foreclosure or any legal action brought to obtain judgment against the Mortgagor
on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity, together with a certificate
of a Servicing Officer requesting that such pleadings or documents be executed
by the Trustee. A Servicing Officer shall certify as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate the insurance coverage under any Required
Insurance Policy or invalidate or otherwise affect the lien of the Mortgage
except for the termination of such lien upon completion of the foreclosure.

         SECTION 3.15      DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
                           MASTER SERVICER TO BE HELD FOR THE TRUSTEE FOR THE
                           BENEFIT OF THE CERTIFICATEHOLDERS.

         Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee to the extent required by this Agreement
all documents and instruments coming into the possession of the Master Servicer
from time to time and shall account fully to the Trustee for the benefit of the
Certificateholders for any funds received by the Master Servicer or which
otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. All Master Servicer Mortgage
Files or Trustee Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, including but not limited to, any funds on deposit in the
Custodial Account, shall be held by the Master Servicer for and on behalf of the
Trustee for the benefit of the Certificateholders and shall be and remain the
sole and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Master Servicer Mortgage File or Trustee Mortgage File or
any funds that are deposited in the Custodial Account or any Escrow Account, or
any funds that otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of setoff against any Master Servicer
Mortgage File or Trustee Mortgage File or any funds collected on, or in
connection with, a Mortgage Loan, except, however, that the Master Servicer
shall be entitled to set off against and deduct from any such funds any amounts
that are properly due and payable to the Master Servicer under this Agreement
subject to the terms of this Agreement.

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         SECTION 3.16      SERVICING COMPENSATION; COMPENSATING INTEREST.

         (a) As compensation for its activities hereunder, the Master Servicer
shall be entitled to (i) retain from the Monthly Payments the Servicing Fee and
the Excess Servicing Fee for each Mortgage Loan and (ii) retain from the
Custodial Account or withdraw from the Custodial Account the amounts specified
in subclause (i) of Section 3.09(a) hereof as payable to it.

         (b) Additional servicing compensation in the form of assumption fees,
modification fees, late payment charges or otherwise or any excess interest
charges payable by the Mortgagor by virtue of any default or other
non-compliance by the Mortgagor with the terms of the Mortgage or any other
instrument or document executed in connection therewith or otherwise shall be
retained by the Master Servicer to the extent not required to be deposited in
the Custodial Account pursuant to Section 3.07 hereof. To the extent provided in
this Agreement, the Master Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
the payment of premiums for Primary Mortgage Insurance Policies, to the extent
such premiums are not required to be paid or have not been paid by the related
Mortgagor or the related Sub-Servicer, payment of any premiums for hazard
insurance, as required by Section 3.11 hereof and maintenance of the other forms
of insurance coverage required by Section 3.11 hereof, the payment of servicing
compensation to any Sub-Servicers pursuant to any Sub-Servicing Agreement and
the payment of the expenses of the Trustee to the extent provided in Section
9.05), and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.09, 3.13, 4.01 and 5.05 hereof.

         (c) Notwithstanding any other provision herein, the amount of servicing
compensation that the Master Servicer shall be entitled to receive for its
activities hereunder for the period ending on each Distribution Date shall be
reduced (but not below zero) by an amount equal to Compensating Interest (if
any) for such Distribution Date. The Master Servicer shall, within one Business
Day of each Distribution Date, remit to the Trustee (but without duplication of
any Compensating Interest taken into account in any Monthly Advance made on such
date) the Compensating Interest due on such Distribution Date.

         SECTION 3.17      REPORTS TO THE SELLER; ACCOUNT STATEMENTS.

         Within five Business Days following each Distribution Date, the Master
Servicer shall deliver to the Trustee a statement setting forth the status of
the Custodial Account, if any, as of the close of business on such Distribution
Date showing, for the period covered by such statement, the aggregate of
deposits in or withdrawals from the Custodial Account, if any, for each category
of deposit specified in Section 3.07 hereof and each category of withdrawal
specified in Section 3.09 hereof. The Master Servicer shall forward a copy of
such statement to the Rating Agencies.

         SECTION 3.18      ANNUAL STATEMENT AS TO COMPLIANCE.

         The Master Servicer shall deliver to the Seller and the Trustee on or
before March 31 of each year, commencing March 31, 2002, an Officers'
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the Master Servicer during the year ended on the preceding
December 31 and of the performance of the Master Servicer under this Agreement
has been made under such officer's supervision, (b) to the best of such
officer's knowledge, based on such review, the Master

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Servicer has fulfilled all its obligations under this Agreement in all material
respects throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof, (c) a Servicing Officer has conducted
an examination of the activities of each Sub-Servicer during the immediately
preceding year and its performance under any Sub-Servicing Agreement, and (d) to
the best of such Servicing Officer's knowledge, based on such examination, each
Sub-Servicer has performed and fulfilled its duties, responsibilities and
obligations under such Sub-Servicing Agreement in all material respects
throughout such year, or if there has been a default in the performance or
fulfillment of any such duties, responsibilities or obligations, specifying each
such default known to such Servicing Officer and the nature and status thereof.
The Master Servicer shall forward a copy of each such statement to the Rating
Agencies.

         SECTION 3.19      ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
                           REPORT.

         On or before March 31 of each year, beginning with the first March 31
that occurs at least eleven months after the Cut-off Date, the Master Servicer,
at its expense, shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Seller and the Trustee for the benefit of the
Certificateholders to the effect that such firm has examined certain documents
substantially similar to this Agreement and records relating to the servicing of
mortgage loans serviced by the Master Servicer or any successor master servicer
that are substantially similar to the Mortgage Loans and that, on the basis of
an examination conducted substantially in compliance with the Uniform Single
Audit Program for Mortgage Bankers or the Audit Program for Mortgages serviced
for Freddie Mac, such servicing has been conducted in compliance with such
agreements except for such significant exceptions or errors in records that, in
the opinion of such firm, the Uniform Single Audit Program for Mortgage Bankers
or the Audit Program for Mortgages serviced for Freddie Mac requires it to
report. In rendering such statement such firm may rely, as to matters relating
to direct servicing of Mortgage Loans by Sub-Servicers, if any, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Audit Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for Freddie Mac (rendered within one year of such statement)
of independent public accounts with respect to the related Sub-Servicer. The
Master Servicer shall forward a copy of each such report to the Rating Agencies.

         SECTION 3.20      REPORTS TO TRUSTEE.

         On or prior to each Determination Date, the Master Servicer shall cause
to be delivered to the Trustee a monthly servicing report in electronic format
containing the information necessary to enable the Trustee to make the
distribution required by Section 5.02 and prepare the information set forth in
Section 4.02(a). The Trustee may conclusively rely on information provided by
the Master Servicer and shall have no obligation to recompute, recalculate, or
verify the accuracy of such information.

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                                   ARTICLE IV

                        ADMINISTRATION OF THE TRUST FUND

     SECTION 4.01 CERTIFICATE ACCOUNT.

     (a) The Trustee shall establish, prior to the Closing Date, and shall
maintain, in the name of the Trustee on behalf of the Holders of interests in
the Trust Fund, the Certificate Account, which shall be an Eligible Account,
into which the Trustee upon receipt from the Master Servicer shall deposit all
payments remitted by the Master Servicer and any amounts required to be remitted
by the Seller pursuant to the terms hereof. All distributions to be made from
time to time to Holders of interests in the Trust Fund out of funds in the
Certificate Account shall be made by or on behalf of the Trustee. The
Certificate Account shall relate solely to the Certificates issued hereunder and
funds in the Certificate Account shall be held separate and apart from and shall
not be commingled with any monies including, without limitation, other monies of
the Trustee held under this Agreement. Funds held in the Certificate Account and
may be invested by the Trustee in Eligible Investments selected by the Trustee
for the benefit of the Trustee or shall remain uninvested. All income and gain
net of any losses realized from any such investment shall be for the benefit of
the Trustee and shall be subject to withdrawal at the Trustee's direction from
time to time. The amount of any losses net of any gains incurred by the Trustee
in respect of any such investments shall be deposited in the Certificate Account
out of the Trustee's own funds immediately as realized.

     (b) The Trustee shall make, to the extent required or authorized hereunder,
withdrawals from the Certificate Account for the following purposes:

          (i) as directed by the Master Servicer, to withdraw any amount
     deposited in the Certificate Account and not required to be deposited
     therein;

          (ii) to reimburse the Master Servicer for any unreimbursed
     Nonrecoverable Advance;

          (iii) on the 26th of each month, or if such 26th day is not a Business
     Day, the immediately following Business Day, to pay to the PMI Insurer the
     PMI Insurance Premium for such date;

          (iv) to make required distributions pursuant to Section 5.02; and

          (v) to pay to the Seller or the Master Servicer any amount to which it
     is entitled pursuant to Section 7.03.

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     SECTION 4.02 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

     (a) Not later than each Distribution Date, the Trustee shall prepare (on
the basis of information obtained by the Master Servicer) and the Trustee shall
make available at its website, http://www-apps.gis.deutsche-bank.com/invr, or,
upon written request, cause to be forwarded by first-class mail to each
Certificateholder, the Master Servicer, the Seller, Bloomberg, and the Rating
Agencies a statement setting forth the following information as to each Class of
Certificates to the extent received from the Master Servicer.

          (i) the aggregate amount of the distribution to be made on such
     Distribution Date to the Holders of each Class of Certificates, to the
     extent applicable, allocable to principal on the Mortgage Loans, including
     Liquidation Proceeds and Insurance Proceeds, stating separately the amount
     attributable to scheduled principal payments and unscheduled payments in
     the nature of principal;

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

          (iii) (A) the aggregate amount of any Monthly Advances required to be
     made by or on behalf of the Master Servicer with respect to such
     Distribution Date, (B) the aggregate amount of such Monthly Advances
     actually made, and (C) the amount, if any, by which (A) above exceeds (B)
     above;

          (iv) the Aggregate Loan Balance as of the close of business on the
     last day of the related Due Period, after giving effect to payments
     allocated to principal reported under clause (i) above;

          (v) the Current Principal Amount of each Class of Certificates, to the
     extent applicable, as of such Distribution Date after giving effect to
     payments allocated to principal reported under clause (i) above, separately
     identifying any reduction of any of the foregoing Current Principal Amounts
     due to Realized Losses;

          (vi) any Realized Losses realized with respect to the Mortgage Loans
     in (x) in the applicable Prepayment Period and (y) in the aggregate since
     the Cut-off Date;

          (vii) the amount of the Servicing Fees and the Excess Servicing Fees
     retained by the Master Servicer during the Due Period to which such
     distribution relates;

          (viii) the number and aggregate Scheduled Principal Balance of
     Mortgage Loans, as reported to the Trustee by the Master Servicer, (a)
     remaining outstanding as of the end of the prior calendar month, and (b)
     delinquent 30 to 59 days on a contractual basis, (c) delinquent 60 to 89
     days on a contractual basis, (d) delinquent 90 or more days on a
     contractual basis, and (e) as to which foreclosure proceedings have been
     commenced, in the case of the foregoing clauses (b) and (c), as of the
     Determination Date and in the case of the foregoing clauses (a), (d) and
     (e), as of the close of business on the last Business Day of the
     immediately preceding month;

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          (ix) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
     comparable provision) of each REO Property as of the close of business on
     the last Business Day of the calendar month immediately preceding the month
     in which such Distribution Date occurs;

          (x) with respect to any Mortgage Loan that became an REO Property
     during the preceding calendar month, the principal balance of such Mortgage
     Loan and the number of such Mortgage Loans as of the close of business on
     the Distribution Date in such preceding month;

          (xi) with respect to replacement of Mortgage Loans in the preceding
     calendar month, the Scheduled Principal Balance of each Deleted Mortgage
     Loan and of each Replacement Mortgage Loan;

          (xii) the aggregate outstanding Net Prepayment Interest Shortfalls, if
     any, for each Class of Certificates, after giving effect to the
     distribution made on such Distribution Date; and

          (xiii) the Pass-Through Rate applicable to such Distribution Date with
     respect to each Class of Certificates.

     In the case of information furnished pursuant to subclauses (i), (ii) and
(vi) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.

     (b) Upon reasonable advance notice in writing, if required by federal
regulation, the Trustee will provide to each Certificateholder that is a savings
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 and the Master Servicer shall cooperate with the Trustee in
providing such information; provided, however, that the Trustee shall be
entitled to be reimbursed by each such Certificateholder for the Trustee's
actual expenses incurred in providing such reports and access. The Trustee will
provide to any Certificateholder upon request the outstanding Current Principal
Amounts as of the date requested and, if then known by the Trustee, the
outstanding Current Principal Amount after giving effect to any distribution to
be made on the next following Distribution Date.

     (c) Upon the written request of any Certificateholder, the Trustee, as soon
as reasonably practicable, shall provide the Certificateholder with such
information as has been provided by the Seller to the Trustee, for purposes of
satisfying applicable information reporting requirements under Rule 144A.

     (d) Within 90 days, or such shorter period as may be required by statute or
regulation, after the end of each calendar year, the Trustee shall send to each
Person who at any time during the calendar year was a Certificateholder of
record, and make available to each Beneficial Holder (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report

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summarizing the items provided to Certificateholders pursuant to Section 4.02(a)
on an annual basis as may be required to enable such Holders to prepare their
federal income tax returns. Such information shall include the amount of
original issue discount accrued on each Class of Certificates and information
regarding the expenses of the Trust Fund. The Master Servicer shall provide the
Trustee with such information as is necessary for the Trustee to prepare such
reports.

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                                    ARTICLE V

                       DISTRIBUTIONS TO CERTIFICATEHOLDERS

     SECTION 5.01 DISTRIBUTIONS GENERALLY.

     (a) Subject to Section 10.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions in
accordance with this Article V. Such distributions shall be made by check mailed
to each Certificateholder's address as it appears on the Certificate Register of
the Certificate Registrar (which shall initially be the Trustee) or, upon
written request made to the Trustee at least five Business Days prior to the
related Record Date by any Certificateholder owning an aggregate initial Current
Principal Amount of at least $1,000,000, or, in the case of a Class R
Certificate, a Percentage Interest of 100%, by wire transfer in immediately
available funds to an account specified in the request and at the expense of
such Certificateholder; provided, however, that the final distribution in
respect of any Certificate shall be made only upon presentation and surrender of
such Certificate at the Corporate Trust Office. Wire transfers will be made at
the expense of the Holder requesting such wire transfer by deducting a wire
transfer fee from the related distribution. Notwithstanding such final payment
of principal of any of the Certificates, the Residual Certificate will remain
outstanding until the termination of the REMIC and the payment in full of all
other amounts due with respect to such Certificates and at such time such final
payment in retirement of any Residual Certificate will be made only upon
presentation and surrender of such Certificate at the Corporate Trust Office or
at the office of the Trustee's New York presenting agent. If any payment
required to be made on the Certificates is to be made on a day that is not a
Business Day, then such payment will be made on the next succeeding Business
Day.

     (b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Current Principal Amounts (or Percentage Interests).

     SECTION 5.02 DISTRIBUTIONS FROM THE CERTIFICATE ACCOUNT.

     (a) On each Distribution Date the Trustee shall withdraw from the
Certificate Account the Total Distribution Amount for such date, shall allocate
such amount to the interests issued in respect of the Trust Fund and shall
distribute such amount as specified in this Section.

     (b) On each Distribution Date, the Trustee shall distribute the Interest
Remittance Amount for such date in the following order of priority:

          (i) to the Senior Certificates, pro rata, Accrued Certificate Interest
     for such Class and such Distribution Date, plus any unpaid Accrued
     Certificate Interest remaining unpaid from any prior Distribution Date;

          (ii) to the Class M-1 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date;

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          (iii) to the Class M-2 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date;

          (iv) to the Class M-3 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date;

          (v) to the Class B-1 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date;

          (vi) to the Class B-2 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date;

          (vii) to the Class B-3 Certificates, Accrued Certificate Interest for
     such Class and such Distribution Date, plus any unpaid Accrued Certificate
     Interest remaining unpaid from any prior Distribution Date; and

          (viii) any remaining Interest Remittance Amount to the Class R
     Certificates.

     (c) On each Distribution Date, the Trustee shall distribute the Principal
Remittance Amount for such date as follows:

          (i) to the holders of the Class R Certificates and Class A
     Certificates, in that order, to the extent of the Principal Remittance
     Amount, the Senior Principal Distribution Amount, in reduction of the
     Current Principal Amounts thereof, until the Current Principal Amounts
     thereof have been reduced to zero;

          (ii) to the holders of the Class M-1 Certificates, to the extent of
     the portion of the Principal Remittance Amount remaining after the
     distribution in clause (i) above, the Class M-1 Principal Distribution
     Amount, in reduction of the Current Principal Amount thereof, until the
     Current Principal Amount thereof has been reduced to zero;

          (iii) to the holders of the Class M-2 Certificates, to the extent of
     the portion of the Principal Remittance Amount remaining after
     distributions in clauses (i) and (ii) above, the Class M-2 Principal
     Distribution Amount, in reduction of the Current Principal Amount thereof,
     until the Current Principal Amount thereof has been reduced to zero;

          (iv) to the holders of the Class M-3 Certificates, to the extent of
     the portion of the Principal Remittance Amount remaining after
     distributions in clauses (i) through (iii) above, the Class M-3 Principal
     Distribution Amount, in reduction of the Current Principal Amount thereof,
     until the Current Principal Amount thereof has been reduced to zero;

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          (v) to the holders of the Class B-1 Certificates, to the extent of the
     portion of the Principal Remittance Amount remaining after the
     distributions in clauses (i) through (iv) above, the Class B-1 Principal
     Distribution Amount, in reduction of the Current Principal Amount thereof,
     until the Current Principal Amount thereof has been reduced to zero;

          (vi) to the holders of the Class B-2 Certificates, to the extent of
     the portion of the Principal Remittance Amount remaining after the
     distributions in clauses (i) through (v) above, the Class B-2 Principal
     Distribution Amount, in reduction of the Current Principal Amount thereof,
     until the Current Principal Amount thereof has been reduced to zero; and

          (vii) to the holders of the Class B-2, Class B-1, Class M-3, Class
     M-2, Class M-1, Class A and Class B-3 Certificates, in that order, the
     Principal Remittance Amount remaining after the distributions in clauses
     (i) through (vi) above, in reduction of the Current Principal Amounts
     thereof, until the Current Principal Amounts thereof have been reduced to
     zero; and

          (viii) to the holders of the Class R Certificates.

     Notwithstanding the foregoing, on any Distribution Date on which the Class
Principal Amount of each Class of Certificates having a higher priority of
distribution has been reduced to zero, any remaining Principal Remittance Amount
will be distributed to the remaining Certificates in the order of priority set
forth above until the Class Principal Amount of each such Class has been reduced
to zero.

     (d) On or prior to each Determination Date, the Master Servicer shall
determine the amount of any Deferred Interest in respect of each Mortgage Loan
that occurred during the immediately preceding calendar month and provide such
information to the Trustee pursuant to Section 3.20. With respect to any
Distribution Date, the aggregate amount of Deferred Interest, if any, that is
added to the Scheduled Principal Balance of the Mortgage Loans on the Due Date
occurring in the month in which such Distribution Date occurs will be added to
the Current Principal Amounts of the Certificates on a pro rata basis based on a
fraction, the numerator of which is the Current Principal Amount of each such
Class and the denominator of which is the aggregate Current Principal Amount of
such Classes of Certificates, in each case immediately prior to such
Distribution Date. Deferred Interest allocated to any Certificate on any
Distribution Date will be added to the Current Principal Amount thereof on such
Distribution Date and will thereafter bear interest at the then applicable
Pass-Through Rate.

     SECTION 5.03 ALLOCATION OF LOSSES.

     (a) On each Distribution Date, Realized Losses will be allocated to the
Class A, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates, in the following order of priority:

          (i) to the Class B-3 Certificates, until the Current Principal Amount
     thereof has been reduced to zero;

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          (ii) to the Class B-2 Certificates, until the Current Principal Amount
     thereof has been reduced to zero;

          (iii) to the Class B-1 Certificates, until the Current Principal
     Amount thereof has been reduced to zero;

          (iv) to the Class M-3 Certificates, until the Current Principal Amount
     thereof has been reduced to zero;

          (v) to the Class M-2 Certificates, until the Current Principal Amount
     thereof has been reduced to zero;

          (vi) to the Class M-1 Certificates, until the Current Principal Amount
     thereof has been reduced to zero; and

          (vii) to the Class A Certificates, until the Current Principal Amount
     thereof has been reduced to zero.

     (b) Notwithstanding the foregoing, no such allocation of any Realized Loss
shall be made on a Distribution Date to any Class of Certificates to the extent
that such allocation would result in the reduction of the aggregate Current
Principal Amounts of all the Certificates as of such Distribution Date, after
giving effect to all distributions and prior allocations of Realized Losses on
such date, to an amount less than the aggregate Scheduled Principal Balance of
all of the Mortgage Loans as of the first day of the month of such Distribution
Date (such limitation, the "Loss Allocation Limitation").

     (c) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.

     (d) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.

     (e) On each Distribution Date, the Trustee shall determine the Subordinate
Certificate Writedown Amount based solely on the information received from the
Master Servicer. Any such Subordinate Certificate Writedown Amount shall effect
a corresponding reduction in the Current Principal Amount of the Current
Principal Amounts of the Subordinate Certificates, in the reverse order of their
numerical Class designations, and then the Senior Certificates, pro rata based
on their respective Current Principal Amounts, which reduction shall occur on
such Distribution Date after giving effect to distributions made on such
Distribution Date.

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     SECTION 5.04 MONTHLY ADVANCES BY THE MASTER SERVICER.

     (a) Subject to the conditions of this Article V, the Master Servicer, as
required below, on each Master Servicer Advance Date shall make an advance (a
"Monthly Advance") to the Certificate Account, in the amount, if any, of the
aggregate Monthly Payments less Net Prepayment Interest Shortfalls and Relief
Act Shortfalls, after adjustment of the interest portion of each such Monthly
Payment to the Mortgage Rate less the sum of the Servicing Fee Rate and the
Excess Servicing Fee Rate, on the Mortgage Loans that were due on the Due Date
but that were not received and remitted to the Certificate Account on or prior
to such Master Servicer Advance Date. The Master Servicer shall be obligated to
make any such Monthly Advance only to the extent that such advance, in the good
faith judgment of the Master Servicer, will not be a Nonrecoverable Advance.

     (b) On the Determination Date immediately preceding the related
Distribution Date, the Master Servicer shall determine whether and to what
extent any Mortgagor has failed to make any Monthly Payment due on the Due Date
and whether such deficiencies, if advanced by the Master Servicer, would be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it is
not obligated to make the entire Monthly Advance because all or a lesser portion
of such Monthly Advance would not be recoverable by the Master Servicer from
related Insurance Proceeds or Liquidation Proceeds (net of Liquidation
Expenses), the Master Servicer shall deliver to the Trustee, not less than one
Business Day after the related Determination Date, for the benefit of the
Certificateholders, a certificate of a Servicing Officer setting forth the
reasons for such determination.

     (c) In lieu of making all or a portion of any Monthly Advance, the Master
Servicer may cause to be made an appropriate entry in its records relating to
the Custodial Account that funds in such account, including but not limited to
any amounts received in respect of scheduled principal and interest on any
Mortgage due after the related Due Period, in excess of the Total Distribution
Amount (plus the PMI Insurance Premium and less the amount of such Monthly
Advance) for the related Distribution Date have been used by the Master Servicer
in discharge of its obligation to make any such Monthly Advance. Any funds so
applied shall be replaced by the Master Servicer by deposit, in the manner set
forth above, in the Custodial Account no later than the next Master Servicer
Advance Date to the extent that funds in the Custodial Account on such date are
less than the amounts required to be distributed on the related Distribution
Date. The Master Servicer shall be entitled to be reimbursed from the Custodial
Account and the Certificate Account for all Monthly Advances of its own funds
made pursuant to this Section as provided in Section 3.09 and 4.01.

     SECTION 5.05 ADVANCES FOR ATTORNEYS' FEES.

     The Master Servicer shall make advances from time to time for attorneys'
fees and court costs incurred, or which reasonably can be expected to be
incurred, for the foreclosure of any Mortgage Loan or for any transaction in
which the Trustee for the benefit of the Certificateholders is expected to
receive a deed-in-lieu of foreclosure, unless the Master Servicer has made a
good faith determination that such advances would be Nonrecoverable Advances. If
the Master Servicer shall make a good faith determination that such advances
would not be so recoverable, the Master Servicer shall promptly deliver to the
Trustee a Certificate of a Servicing Officer setting forth the reasons for

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such determination. The Master Servicer shall be entitled to reimbursement for
any such advance as provided in Section 3.09 hereof.

     SECTION 5.06 NONRECOVERABLE ADVANCES.

     The determination by the Master Servicer that it has made a Nonrecoverable
Advance shall be evidenced by a certificate of a Servicing Officer promptly
delivered to the Trustee setting forth the reasons for such determination.
Following the Trustee's receipt of such certificate, the Master Servicer shall
be entitled to reimbursement for such Nonrecoverable Advance as provided in
Section 3.09 and 4.01 hereof.

     SECTION 5.07 ADVANCE PROCEDURES.

     (a) If, on any Determination Date, the Master Servicer determines to make a
Monthly Advance in accordance with Section 5.04, it shall make such Monthly
Advance on or before noon, New York time, on the Business Day prior to the
related Distribution Date (the "Master Servicer Advance Date"). The Master
Servicer shall notify the Trustee of the aggregate amount of Monthly Advances
for a Distribution Date on or before three Business Days prior to such
Distribution Date. Any such Monthly Advance shall be included with the
distribution on the related Distribution Date pursuant to Section 5.02.

     (b) In the event that the Master Servicer fails to make a Monthly Advance
required to be made pursuant to Section 5.04 on or before the close of business,
on the Master Servicer Advance Date, the Trustee shall on or before 12 noon, New
York time on the next Business Day provide notice to the Master Servicer, by
telephone and by writing (which may be by telecopy) of such failure and the
amount of such failure and that continuance of such failure for a period of one
Business Day thereafter will be an Event of Default.

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                                   ARTICLE VI

                                THE CERTIFICATES

     SECTION 6.01 THE CERTIFICATES.

     (a) The Certificates shall be in substantially the forms set forth in
Exhibits A, B, C and D hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement or as may in the reasonable judgment of the Trustee or the Seller be
necessary, appropriate or convenient to comply, or facilitate compliance, with
applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which any of the
Certificates may be listed, or as may, consistently herewith, be determined by
the officers executing such Certificates, as evidenced by their execution
thereof.

     (b) The Definitive Certificates shall be printed, typewritten, lithographed
or engraved or produced by any combination of these methods or may be produced
in any other manner permitted by the rules of any securities exchange on which
any of the Certificates may be listed, all as determined by the officers
executing such Certificates, as evidenced by their execution thereof.

     (c) Each Class of Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held in the dollar
denominations in Current Principal Amount specified in this paragraph. Each
Class of Class A Certificates will be issued in minimum denominations of a
$1,000 Current Principal Amount and integral multiples of $1 in excess thereof.
Each Class of Class M Certificates will be issued in minimum denominations of a
$25,000 Current Principal Amount and integral multiples of $1 in excess thereof.
Each Class of Class B Certificates will be maintained in definitive, fully
registered form in minimum denominations of $100,000 Current Principal Amount
and integral multiples of $1 in excess thereof. The Class R Certificates will be
issued as a single Certificate and maintained in definitive, fully registered
form in a minimum denomination equal to 100% of the Percentage Interest of such
Class. One Certificate of each Class of Certificates other than the Class R
Certificates may be issued in any denomination in excess of the minimum
denomination.

     (d) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trust Fund by the Trustee by a Responsible Officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trust Fund, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication executed by the Trustee by manual signature, and such certificate
of authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.

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     SECTION 6.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.

     (a) The Trustee shall maintain, or cause to be maintained, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. Upon surrender for
registration of transfer of any Certificate, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in like aggregate interest and of the
same Class.

     (b) At the option of a Certificateholder, Certificates (other than
Book-Entry Certificates which shall be subject to Section 6.07 hereof) may be
exchanged for other Certificates of authorized denominations and the same
aggregate interest in the Trust Fund and of the same Class, upon surrender of
the Certificates to be exchanged at the office or agency of the Trustee in the
City of New York at 123 Washington Street, New York, New York 10006, where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee will give prompt written notice to Certificateholders of any change in
the location of the any such office or agency. The Certificate Register will be
kept in Santa Ana, California at the offices of the Trustee located at the
Corporate Trust Office and may be kept in an electronic form capable of printing
out a hard copy of the Certificate Register. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing.

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

     (d) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein. With
respect to the transfer and registration of transfer of a Restricted Certificate
to a transferee that takes delivery in the form of a Definitive Certificate, the
Trustee shall register the transfer of a Restricted Certificate if the requested
transfer is (x) to the Seller or the Placement Agent, an affiliate (as defined
in Rule 405 under the 1933 Act) of the Seller or the Placement Agent or (y)
being made to a "qualified institutional buyer" (a "QIB") as defined in Rule
144A under the 1933 Act by a transferor that has provided the Trustee with a
certificate in the form of Exhibit H hereto.

     (e) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) in the case of a Class B-1, Class B-2 or Class B-3 Certificate, a
certificate substantially in the form of Exhibit I hereto from such transferee
or (B) an Opinion of Counsel satisfactory to the Trustee, the Master Servicer
and the Seller to the effect that the purchase and holding of such a Certificate
will not constitute or result in the assets of the Trust Fund being deemed to be
"plan assets" subject to the prohibited transactions provisions of ERISA or
Section 4975 of the Code and will not subject the Trustee, the Master Servicer
or the Seller to any obligation in addition to those undertaken in the
Agreement; provided,

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however, that the Trustee will not require such certificate or opinion in the
event that, as a result of a change of law or otherwise, counsel satisfactory to
the Trustee has rendered an opinion to the effect that the purchase and holding
of an ERISA-Restricted Certificate by a Plan or a Person that is purchasing or
holding such a Certificate with the assets of a Plan will not constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code. The
preparation and delivery of the certificate and opinions referred to above shall
not be an expense of the Trust Fund, the Trustee or the Seller. Notwithstanding
the foregoing, no opinion or certificate shall be required for the initial
issuance of the ERISA-Restricted Certificates.

     (f) As a condition of the registration of transfer or exchange of any
Certificate, the Trustee may require the certified taxpayer identification
number of the owner of the Certificate and the payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith;
provided, however, that the Trustee shall have no obligation to require such
payment or to determine whether or not any such tax or charge may be applicable.
No service charge shall be made to the Certificateholder for any registration,
transfer or exchange of Certificate.

     (g) Notwithstanding anything to the contrary contained herein, no Residual
Certificate may be owned, pledged or transferred, directly or indirectly, by or
to (i) a Disqualified Organization or (ii) an individual, corporation or
partnership or other person unless such person (A) is not a Non- U.S. Person or
(B) is a Non-U.S. Person that holds a Residual Certificate in connection with
the conduct of a trade or business within the United States and has furnished
the transferor and the Trustee with an effective Internal Revenue Service Form
W-8ECI or successor form at the time and in the manner required by the Code (any
such person who is not covered by clause (A) or (B) above is referred to herein
as a "Non-permitted Foreign Holder").

     Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit J-1 representing and warranting, among other things, that such
transferee is neither a Disqualified Organization, an agent or nominee acting on
behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder (any
such transferee, a "Permitted Transferee") and the proposed transferor shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit J-2. In addition, the Trustee may (but shall have no obligation to)
require, prior to and as a condition of any such transfer, the delivery by the
proposed transferee of an Opinion of Counsel, addressed to the Seller and the
Trustee satisfactory in form and substance to the Seller, that such proposed
transferee or, if the proposed transferee is an agent or nominee, the proposed
beneficial owner, is not a Disqualified Organization, agent or nominee thereof,
or Non- permitted Foreign Holder. Notwithstanding the registration in the
Certificate Register of any transfer, sale, or other disposition of a Residual
Certificate to a Disqualified Organization, an agent or nominee thereof, or
Non-permitted Foreign Holder, such registration shall be deemed to be of no
legal force or effect whatsoever and such Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. The Trustee shall not be
under any liability to any person for any registration or transfer of a Residual
Certificate to a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder or for the maturity of any payments due on such
Residual Certificate to the Holder thereof or for taking any other action with
respect to such Holder under the provisions of the Agreement, so

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long as the transfer was effected in accordance with this Section 6.02(g),
unless the Trustee shall have actual knowledge at the time of such transfer or
the time of such payment or other action that the transferee is a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder. The
Trustee shall be entitled to recover from any Holder of a Residual Certificate
that was a Disqualified Organization, agent or nominee thereof, or Non-permitted
Foreign Holder at the time it became a Holder or any subsequent time it became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either such
times (and all costs and expenses, including but not limited to attorneys' fees,
incurred in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Trustee shall be paid and delivered to the last
preceding Holder of such Residual Certificate.

     If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 6.02(g), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 6.02(g), the
last preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of such
Residual Certificate. The Trustee shall be under no liability to any Person for
any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 6.02(g), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered upon receipt of the affidavit described in the preceding
paragraph of this Section 6.02(g).

     (h) Each Holder of a Residual Certificate, by such Holder's acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this section.

     SECTION 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

     If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Master Servicer and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and interest in the Trust Fund. In connection with the issuance of any new
Certificate under this Section 6.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 6.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.

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     SECTION 6.04 PERSONS DEEMED OWNERS.

     Subject to the provisions of Section 6.07 with respect to any Book-Entry
Certificates, prior to due presentation of a Certificate for registration of
transfer, the Master Servicer, the Trustee, and any agent of the Master Servicer
or the Trustee may treat the person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving distributions as
provided in this Agreement and for all other purposes whatsoever, and neither
the Master Servicer, the Trustee nor any agent of the Master Servicer or the
Trustee shall be affected by any notice to the contrary.

     SECTION 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.

     (a) If three or more Certificateholders (i) request in writing from the
Trustee a list of the names and addresses of Certificateholders, (ii) state that
such Certificateholders desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and (iii)
provide a copy of the communication which such Certificateholders propose to
transmit, then the Trustee shall, within ten Business Days after the receipt of
such request, afford such Certificateholders access during normal business hours
to a current list of the Certificateholders. The expense of providing any such
information requested by a Certificateholder shall be borne by the
Certificateholders requesting such information and shall not be borne by the
Trustee. Every Certificateholder, by receiving and holding a Certificate, agrees
that the Trustee shall not be held accountable by reason of the disclosure of
any such information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.

     (b) The Master Servicer, so long as it is the Master Servicer hereunder,
shall have unlimited access to a list of the names and addresses of the
Certificateholders which list shall be provided by the Trustee promptly upon the
request of the Master Servicer.

     SECTION 6.06 MAINTENANCE OF OFFICE OR AGENCY.

     The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange of the Certificates. The Trustee
initially designates its office at 123 Washington Street as its office for such
purpose. All notices and demands to or upon the Trustee in respect of this
Agreement may be served at the Corporate Trust Office as provided in Section
9.11. The Trustee will give prompt written notice to the Certificateholders of
any change in the location of any such office or agency.

     SECTION 6.07 BOOK-ENTRY CERTIFICATES.

     (a) Each class of Book-Entry Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates, to be delivered to DTC, the initial Clearing Agency,
by, or on behalf of, the Seller. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of DTC, and no
Beneficial Holder will receive a definitive certificate representing such
Beneficial Holder's interest in the Book-Entry Certificates, except as provided
in Section 6.09. Unless and until Definitive Certificates have been issued to
the Beneficial Holders pursuant to Section 6.09:

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          (i) the provisions of this Section 6.07 shall be in full force and
     effect with respect to such Book-Entry Certificates;

          (ii) the Seller and the Trustee may deal with the Clearing Agency for
     all purposes with respect to such Book-Entry Certificates (including the
     making of distributions on such Certificates) as the sole Holder of such
     Certificates;

          (iii) to the extent that the provisions of this Section 6.07 conflict
     with any other provisions of this Agreement, the provisions of this Section
     6.07 shall control;

          (iv) the rights of the Beneficial Holders of such Book-Entry
     Certificates shall be exercised only through the Clearing Agency and the
     Participants and shall be limited to those established by law and
     agreements between such Beneficial Holders and the Clearing Agency and/or
     the Participants. Pursuant to the Depository Agreement, unless and until
     Definitive Certificates are issued pursuant to Section 6.09, the initial
     Clearing Agency will make book- entry transfers among the Participants and
     receive and transmit distributions of principal and interest on the related
     Certificates to such Participants; and

          (v) any transferee of a beneficial interest in a Restricted
     Certificate in the form of a Book-Entry Certificate will be deemed to have
     made one of the representations set forth in Exhibit H hereto and if any
     purported transferee shall become a registered Holder of a Restricted
     Certificate in violation of such representations, then the last preceding
     qualified transferee shall be deemed restored to all rights as Holder
     thereof retroactive to the date of such transfer of such Restricted
     Certificate.

     (b) For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of each Class of
such Book-Entry Certificates evidencing a specified percentage of the aggregate
unpaid principal amount of such Certificates, such direction or consent may be
given by the Clearing Agency at the direction of Beneficial Holders owning such
Certificates evidencing the requisite percentage of principal amount of such
Certificates. The Clearing Agency may take conflicting actions with respect to
each Class of such Book-Entry Certificates to the extent that such actions are
taken on behalf of the Beneficial Holders.

     SECTION 6.08 NOTICES TO CLEARING AGENCY.

     Whenever notice or other communication to the Holders of each Class of
Book-Entry Certificates is required under this Agreement, unless and until
Definitive Certificates shall have been issued to the related Certificateholders
pursuant to Section 6.09, the Trustee shall give all such notices and
communications specified herein to be given to Holders of each Class of the
Book-Entry Certificates to the Clearing Agency which shall give such notices and
communications to the related Participants in accordance with its applicable
rules, regulations and procedures.

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     SECTION 6.09 DEFINITIVE CERTIFICATES.

     If (a) the Seller advises the Trustee in writing that the Clearing Agency
is no longer willing or able to properly discharge its responsibilities under
the Depository Agreement with respect to the Certificates and the Trustee or the
Seller is unable to locate a qualified successor, (b) the Seller, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
with respect to any or all of the Book-Entry Certificates through the Clearing
Agency or (c) after the occurrence of an Event of Default, Holders of each Class
of Book-Entry Certificates evidencing not less than 66-2/3% of the aggregate
Current Principal Amount of such Class of the Book-Entry Certificates advise the
Trustee in writing that the continuation of a book-entry system with respect to
the such Certificates through the Clearing Agency is no longer in the best
interests of the Holders of such Certificates with respect to such Class of the
Book-Entry Certificates, the Trustee shall notify all Holders of such
Certificates of the occurrence of any such event and the availability of
Definitive Certificates. Upon surrender to the Trustee of the such Certificates
by the Clearing Agency, accompanied by registration instructions from the
Clearing Agency for registration, the Trustee shall authenticate and deliver the
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Holders of
Definitive Certificates as Certificateholders hereunder.

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                                   ARTICLE VII

            THE SELLER, MORTGAGE LOAN SELLER AND THE MASTER SERVICER

     SECTION 7.01 LIABILITIES OF THE SELLER, ORIGINATOR AND THE MASTER SERVICER.

     (a) The Seller, Originator and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.

     (b) It is understood and agreed that the obligation under this Agreement of
the Originator or the Master Servicer to repurchase or substitute any Mortgage
Loan as to which any breach of representation or warranty or other obligation
contained in Section 2.01, 2.02, 2.03, 2.04 or 3.12 of this Agreement or in
Section 2 of the Mortgage Loan Purchase Agreement has occurred and is continuing
shall constitute the sole and exclusive remedy respecting such breach available
to the Seller, the Certificateholders or the Trustee on their behalf so long as
the Originator repurchases or substitutes any such Mortgage Loan. Neither the
Certificateholders nor the Trustee on their behalf shall be entitled to any
consequential damages.

     (c) Without limiting the effect of Section 7.01(b), the Master Servicer
shall defend and indemnify the Trust Fund, the Trustee, the Seller, the
Certificate Registrar, the Originator and the Certificateholders against any and
all costs, expenses, losses, damages, claims or liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, arising from
third party claims or actions (including penalties or fees imposed by any
governmental or regulatory body or agency) in respect of any breach of the
Master Servicer's covenants, representations or warranties set forth herein or
in respect of any action taken or omitted by the Master Servicer with respect to
any Mortgage Loan constituting a failure by the Master Servicer to perform its
obligations under this Agreement. This indemnity shall survive any Event of
Default (but a Master Servicer's obligations under this Section 7.01 shall not
relate to any actions of any predecessor or subsequent Master Servicer after an
Event of Default) and any payment of the amount owing under, or any repurchase
by the Master Servicer of, any such Mortgage Loan.

     (d) Without limiting the effect of Section 7.01(b), the Originator shall
defend and indemnify the Trust Fund, the Trustee, the Seller, the Certificate
Registrar, the Master Servicer and the Certificateholders against any and all
costs, expenses, losses, damages, claims or liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, arising from third
party claims or actions (including penalties or fees imposed by any governmental
or regulatory body or agency) in respect of any breach of the Originator's
covenants, representations or warranties set forth herein or in respect of any
action taken or omitted by the Originator with respect to any Mortgage Loan
constituting a failure by the Originator to perform its obligations under this
Agreement. This indemnity shall survive any payment of the amount owing under,
or any repurchase by the Originator of, any such Mortgage Loan.

     (e) Any amounts received by the Trustee from the Originator or Master
Servicer on behalf of the Trust Fund pursuant to this Article VII shall be
deposited in the Certificate Account and

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shall be distributed as part of the Total Distribution Amount. If either the
Originator or the Master Servicer has made any indemnity payments to the Trustee
pursuant to this Article VII and the Trustee thereafter collects any of such
amounts from others, the Trustee will repay such amounts collected to the
Originator or Master Servicer, as applicable, together with any interest
collected thereon.

     SECTION 7.02 MERGER OR CONSOLIDATION OF THE SELLER, THE ORIGINATOR OR THE
                  MASTER SERVICER.

     (a) Subject to Section 7.02(b), the Seller, the Originator and the Master
Servicer will each do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises (charter and
statutory) and will each obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
or any of the Mortgage Loans and to perform its respective duties under this
Agreement.

     (b) Any of the Originator, the Master Servicer or the Seller may merge or
consolidate with any Person, and any Person into which the Originator, the
Master Servicer or the Seller may be merged or consolidated, or any Person
resulting from any merger or consolidation to which the Originator or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Originator, Master Servicer or the Seller, shall be the successor of the
Originator, the Master Servicer or the Seller, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Master Servicer
shall be qualified to sell mortgage loans to, and to service mortgage loans on
behalf of, Fannie Mae or Freddie Mac.

     (c) Notwithstanding anything else in this Section 7.02 or in Section 7.04
hereof to the contrary, the Master Servicer may assign its rights and delegate
its duties and obligations under this Agreement (except for the obligation of
the Master Servicer or Originator to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including pursuant to Section 2.01, 2.02 or 2.04
hereof, which shall remain with Washington Mutual hereunder); provided, however,
that the Master Servicer gives the Seller and the Trustee notice of such
assignment; and provided further, that such purchaser or transferee accepting
such assignment and delegation shall be an institution that is a Fannie Mae and
Freddie Mac approved seller/servicer in good standing, which has a net worth of
at least $15,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Seller and the Trustee an agreement accepting such
delegation and assignment, which contains an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer, with like effect as if originally named as a party to this
Agreement. In the case of any such assignment and delegation, the Master
Servicer shall be released from its obligations under this Agreement (except as
provided above), except that the Master Servicer shall remain liable for all
liabilities and obligations incurred by it as Master Servicer hereunder prior to
the satisfaction of the conditions to such assignment and delegation set forth
in the preceding sentence.

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     SECTION 7.03 LIMITATION ON LIABILITY OF THE SELLER, THE MASTER SERVICER AND
                  OTHERS.

     Neither the Seller nor the Master Servicer nor any of the directors,
officers, employees or agents of the Seller or the Master Servicer shall be
under any liability to the Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Seller or the Master Servicer against any breach of
representations or warranties made by it herein or protect the Seller or the
Master Servicer or any such person from any liability which would otherwise be
imposed by reasons of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Seller, the Master Servicer and any director, officer,
employee or agent of the Seller or the Master Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Seller, the Master Servicer
and any director, officer, employee or agent of the Seller or the Master
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Seller nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to their respective duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, that
either the Seller or the Master Servicer may in its discretion undertake any
such action that it may deem necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and interests of the Trustee and
the Certificateholders hereunder.

     SECTION 7.04 MASTER SERVICER NOT TO RESIGN.

     The Master Servicer shall not resign from the obligations and duties
imposed upon it hereunder except upon determination that such obligations and
duties hereunder are no longer permissible under applicable law or except in
connection with a permitted assignment pursuant to Section 7.02. Any such
determination that the Master Servicer's obligations are no longer permissible
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee. The Master Servicer shall give notice of any proposed resignation to
the Trustee, the Certificateholders and the Rating Agencies. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
master servicer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with Section 8.02 hereof or shall affect any
obligation of the Originator hereunder.

     SECTION 7.05 ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.

     The Master Servicer shall, for so long as it acts as master servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
master servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of Fannie Mae or Freddie Mac for
persons performing

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servicing for mortgage loans purchased by Fannie Mae or Freddie Mac. In the
event that any such policy or bond ceases to be in effect, the Master Servicer
shall obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.

     SECTION 7.06 ORIGINATOR AND MASTER SERVICER MAY OWN CERTIFICATES.

     Each of the Originator and the Master Servicer in its individual or any
other capacity may become the owner or pledgee of Certificates with the same
rights as it would have if it were not the Originator or the Master Servicer, as
the case may be.

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                                  ARTICLE VIII

                                     DEFAULT

     SECTION 8.01 EVENTS OF DEFAULT.

     (a) "Event of Default," wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

          (i) any failure by the Master Servicer to remit to the Trustee any
     payment other than a Monthly Advance required to be made by the Master
     Servicer under the terms of this Agreement, which failure shall continue
     unremedied for a period of three Business Days after the date upon which
     written notice of such failure shall have been given to the Master Servicer
     by the Trustee or the Seller or to the Master Servicer and the Trustee by
     the Holders of Certificates having not less than 25% of the Voting
     Interests evidenced by the Certificates; or

          (ii) any failure by the Master Servicer to observe or perform in any
     material respect any other of the covenants or agreements on the part of
     the Master Servicer contained in this Agreement (except as set forth in
     (iii) below) which failure (A) materially affects the rights of the
     Certificateholders and (B) shall continue unremedied for a period of 60
     days after the date on which written notice of such failure shall have been
     given to the Master Servicer by the Trustee or the Seller, or to the Master
     Servicer and the Trustee by the Holders of Certificates evidencing not less
     than 25% of the Voting Interests evidenced by the Certificates; or

          (iii) if a representation or warranty set forth in Section 2.03 hereof
     shall prove to be materially incorrect as of the time made in any respect
     that materially and adversely affects interests of the Certificateholders,
     and the circumstances or condition in respect of which such representation
     or warranty was incorrect shall not have been eliminated or cured, or any
     affected Mortgage Loan shall not have been substituted for or repurchased,
     within 60 days (or, if such breach is not capable of being cured within 60
     days and is not subject to the remedies set forth in Section 2.04 and
     provided that the Master Servicer believes in good faith that such breach
     can be cured and is diligently pursuing the cure thereof, within 120 days)
     after the date on which written notice thereof shall have been given to the
     Master Servicer and Originator by the Trustee for the benefit of the
     Certificateholders or by the Seller; or

          (iv) a decree or order of a court or agency or supervisory authority
     having jurisdiction in the premises for the appointment of a conservator or
     receiver or liquidator in any insolvency, readjustment of debt, marshalling
     of assets and liabilities or similar proceedings, or for the winding-up or
     liquidation of its affairs, shall have been entered

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     against the Master Servicer and such decree or order shall have remained in
     force undischarged or unstayed for a period of 60 days; or

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

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

          (vii) either Rating Agency shall lower or withdraw the outstanding
     rating of the Certificates because the existing or prospective financial
     condition or mortgage loan servicing capability of the Master Servicer is
     insufficient to maintain such outstanding rating; or

          (viii) any failure of the Master Servicer to make any Monthly Advance
     in the manner and at the time required to be made from its own funds
     pursuant to this Agreement and after receipt of notice from the Trustee
     pursuant to Section 5.04, which failure continues unremedied after the
     close of business on the Business Day immediately following the
     Distribution Date.

     (b) If an Event of Default due to the actions or inaction of the Master
Servicer described in clauses (i) through (vii) of Section 8.01(a) shall occur,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Trustee shall, if so directed by the Holders of
Certificates evidencing not less than 25% of the Voting Interests evidenced by
the Certificates, by notice in writing to the Master Servicer (with a copy to
the Rating Agencies), terminate all of the rights and obligations of the Master
Servicer under this Agreement (other than rights to reimbursement for Monthly
Advances or other advances previously made, as provided in Section 3.09 or
4.01).

     (c) If an Event of Default described in clause (viii) shall occur, the
Trustee shall, prior to the next Distribution Date, terminate the rights and
obligations of the Master Servicer hereunder (other than rights to reimbursement
for Monthly Advances or other advances previously made, as provided in Section
3.09 or 4.01) and succeed to the rights and obligations of the Master Servicer
hereunder pursuant to Section 8.02, including the obligation to make Monthly
Advances on such Distribution Date pursuant to the terms hereof.

     SECTION 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

     (a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof or resigns pursuant to Section 7.04
hereof, subject to the provisions of Section 3.06 hereof, the Trustee shall be
the successor in all respects to the Master Servicer in its capacity as master
servicer under this Agreement and with respect to the transactions set forth or
provided

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for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof, provided that neither the Trustee nor any other successor to
the Master Servicer pursuant to this Section 8.02 shall be deemed to have made
any representation or warranty made by the Master Servicer, shall be obligated
to effect any repurchase or substitute of any Mortgage Loan, or shall have any
responsibility for an act or omission of any predecessor Master Servicer. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that the Master Servicer would have been entitled to charge
to the related Custodial Account if the Master Servicer had continued to act
hereunder (except that the terminated Master Servicer shall retain the right to
be reimbursed for advances (including, without limitation, Monthly Advances)
theretofore made by the Master Servicer with respect to which it would be
entitled to be reimbursed if it had not been so terminated as Master Servicer).

     Notwithstanding the foregoing, if the Trustee has become the successor to
the Master Servicer in accordance with this Section 8.02, the Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution, the appointment of which does not adversely affect
the then current rating of the Certificates, as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer. Pending appointment of a successor
to the Master Servicer hereunder, the Trustee, unless the Trustee is prohibited
by law from so acting, shall act in such capacity as provided herein. 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 Master Servicer hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.

     (b) The Master Servicer that has been terminated shall, at the request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Sub-Servicing Agreement and the
related Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Sub-Servicing Agreement to the assuming party.

     (c) The Master Servicer shall cooperate with the Trustee and any successor
Master Servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Master Servicer to the Custodial Account or
thereafter received with respect to the Mortgage Loans and the Master Servicer
Mortgage Files.

     (d) Neither the Trustee nor any other successor master servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by (a) the
failure of the Master Servicer to (i) deliver, or any delay in delivering, cash,
documents or records to it, (ii) cooperate as required by this Agreement, or
(iii) deliver the Master Servicer Mortgage Files to the Trustee as required by
this Agreement, or (b) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.

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     (e) Any successor to the Master Servicer as master servicer shall during
the term of its service as master servicer maintain in force the policy or
policies that the Master Servicer is required to maintain pursuant to Section
7.05 hereof. No termination of the Master Servicer shall have any affect on the
obligations of the Originator hereunder.

     SECTION 8.03 NOTIFICATION TO CERTIFICATEHOLDERS.

     (a) Upon any termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agencies.

     (b) Within 2 Business Days after its notice of the occurrence of any Event
of Default, the Trustee shall transmit by mail to all Certificateholders and the
Rating Agencies notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default shall have been cured or waived.

     SECTION 8.04 WAIVER OF EVENTS OF DEFAULT.

     The Holders representing at least 66-2/3% of the Voting Interests of
Certificates affected by a default or Event of Default hereunder may waive any
default or Event of Default, provided, however, that (a) a default or Event of
Default under clause (i) or (viii) of Section 8.01(a) may be waived only by
Holders of Certificates of 100% of the Class affected by such default or Event
of Default and (b) no waiver pursuant to this Section 8.04 shall affect the
Holders of Certificates in the manner set forth in Section 11.01(b)(i), (ii) or
(iii). Upon any such waiver of a default or Event of Default by the Holders
representing the requisite percentage of Voting Interests of Certificates
affected by such default or Event of Default, such default or Event of Default
shall cease to exist and shall be deemed to have been remedied for every purpose
hereunder. No such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon except to the extent
expressly so waived.

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                                   ARTICLE IX

                             CONCERNING THE TRUSTEE

     SECTION 9.01 DUTIES OF TRUSTEE.

     (a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default that may have occurred, undertakes
with respect to the Trust Fund to perform such duties and only such duties as
are specifically set forth in this Agreement. In case an Event of Default has
occurred and remains uncured and not 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 their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. Any
permissive right of the Trustee set forth in this Agreement shall not be
construed as a duty.

     (b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform to the
requirements of this Agreement. The Trustee shall have no duty to recompute,
recalculate or verify the accuracy of any resolution, certificate, statement,
opinion, report, document, order or other instrument so furnished to the
Trustee.

     (c) 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 misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability which would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:

          (i) prior to the occurrence of an Event of Default, and after the
     curing or waiver of all such Events of Default that 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 personally
     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 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 which it reasonably believed in good faith to be genuine and
     to have been duly executed by the proper authorities respecting any matters
     arising hereunder;

          (ii) the Trustee shall not be personally liable for an error of
     judgment made in good faith by a Responsible Officer or Responsible
     Officers of the Trustee, unless the Trustee was negligent or acted in bad
     faith or with willful misfeasance;

          (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 Holders of Certificates evidencing not
     less than 25% of the Voting Interests allocated to each Class

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     of Certificates relating to the time, method and place of conducting any
     proceeding for any remedy available to the Trustee, or exercising any trust
     or power conferred upon the Trustee, under this Agreement; and

          (iv) no provision of this Agreement shall require the Trustee to
     expend or risk its own funds or otherwise incur any financial liability in
     the performance of any of its duties hereunder or in the exercise of any of
     its rights or powers if it shall have reasonable grounds for believing that
     repayment of such funds or adequate indemnity against such risk or
     liability is not reasonably assured to it.

     (d) Except with respect to an Event of Default described in clause (i) of
Section 8.01(a), the Trustee shall not be deemed to have knowledge of any Event
of Default or event which, with notice or lapse of time, or both, would become
an Event of Default, unless a Responsible Officer of the Trustee shall have
received written notice thereof from the Master Servicer, the Seller or a
Certificateholder, or a Responsible Officer of the Trustee has actual notice
thereof, and in the absence of such notice no provision hereof requiring the
taking of any action or the assumption of any duties or responsibility by the
Trustee following the occurrence of any Event of Default or event which, with
notice or lapse of time or both, would become an Event of Default, shall be
effective as to the Trustee.

     (e) The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall use its best efforts to remit to the Master Servicer, upon
receipt, any such complaint, claim, demand, notice or other document (i) which
is delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.

     SECTION 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.

     (a) Except as otherwise provided in Section 9.01:

          (i) the Trustee may request and rely upon and shall be protected in
     acting or refraining from acting upon any resolution, Officers'
     Certificate, certificate of Servicing Officers, 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;

          (ii) the Trustee may consult with counsel or 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 any litigation hereunder or in relation hereto at the request, order
     or direction of any of the Certificateholders, pursuant

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     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 or waived), to exercise such of the rights and powers vested in it by
     this Agreement, and to use the same degree of care and skill in their
     exercise as a prudent person would exercise or use under the circumstances
     in the conduct of such person's own affairs;

          (iv) 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 or waiving of all Events of Default that 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 so to do by Holders of
     Certificates evidencing not less than 25% of the Voting Interests allocated
     to each Class of 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
     investigation shall be paid by the Master Servicer in the event that such
     investigation relates to an Event of Default by the Master Servicer, if an
     Event of Default by the Master Servicer shall have occurred and is
     continuing, and otherwise by the Certificateholders requesting the
     investigation;

          (vi) the Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through affiliates,
     agents or attorneys;

          (vii) the Trustee shall not be required to expend its own funds or
     otherwise incur any financial liability in the performance of any of its
     duties hereunder if it shall have reasonable grounds for believing that
     repayment of such funds or adequate indemnity against such liability is not
     assured to it; and

          (viii) the Trustee shall not be liable for any loss on any investment
     of funds pursuant to this Agreement.

     (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.

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     SECTION 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.

     The recitals contained herein shall be taken as the statements of the
Seller or the Master Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, the Certificates or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Seller, the Originator or the Master Servicer of any
funds paid to the Seller, the Originator or the Master Servicer in respect of
the Mortgage Loans or deposited in or withdrawn from the Certificate Account by
the Seller, the Originator or the Master Servicer.

     SECTION 9.04 TRUSTEE MAY OWN CERTIFICATES.

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

     SECTION 9.05 TRUSTEE'S COMPENSATION AND EXPENSES.

     (a) As compensation for its services hereunder, the Trustee shall be
entitled to reimbursement of its expenses in accordance with a separate fee
letter.

     (b) The Trustee and any director, officer, employee or agent of the Trustee
shall be indemnified by the Master Servicer and held harmless against any loss,
liability or expense (i) incurred in connection with any legal action relating
to this Agreement or the Certificates, or the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
any of the Trustee's duties hereunder or by reason of reckless disregard of the
Trustee's obligations and duties hereunder and (ii) resulting from the exercise
of any power of attorney granted by the Trustee to the Master Servicer in
accordance with this Agreement. Such indemnity shall survive the termination of
this Agreement or the resignation or removal of the Trustee hereunder.

     SECTION 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

     The Trustee hereunder shall at all times be a corporation or association
having its principal office in a state and city acceptable to the Seller and the
Master Servicer and organized and doing business under the laws of such state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or 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 9.06 the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.07 hereof.

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     SECTION 9.07 RESIGNATION AND REMOVAL OF TRUSTEE.

     (a) The Trustee may at any time resign and be discharged from the trusts
hereby created by (i) giving written notice of resignation to the Seller, the
Originator and the Master Servicer and by mailing notice of resignation by first
class mail, postage prepaid, to the Certificateholders at their addresses
appearing on the Certificate Register, and to the Rating Agencies, not less than
60 days before the date specified in such notice when, subject to Section 9.08,
such resignation is to take effect, and (ii) acceptance by a successor trustee
in accordance with Section 9.08 meeting the qualifications set forth in Section
9.06. If no successor trustee shall have been so appointed and have accepted
appointment within 30 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.

     (b) If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 hereof and shall fail to resign after
written request thereto by the Master Servicer, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a 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, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, (iv) the continued use
of the Trustee would result in a downgrading of the rating by the Rating
Agencies of any Class of Certificates with a rating or (v) the Trustee breaches
any of its obligations or representations hereunder, then the Seller, with the
consent of the Master Servicer, may remove the Trustee and, with the consent of
the Master Servicer, appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee and
one copy to the successor trustee. The Trustee may also be removed at any time
by the Holders of Certificates evidencing not less than 50% of the Voting
Interests evidenced by the Certificates. Notice of any removal of the Trustee
and acceptance of appointment by the successor trustee shall be given to the
Rating Agencies by the Master Servicer.

     (c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.08 hereof.

     SECTION 9.08 SUCCESSOR TRUSTEE.

     (a) If the Trustee resigns pursuant to Section 9.07, the Seller, with the
consent of the Master Servicer, shall appoint a successor trustee that satisfies
the requirements of Section 9.06. Any successor trustee appointed as provided in
Section 9.07 hereof shall execute, acknowledge and deliver to the Seller and the
Master Servicer 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 Seller 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.

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     (b) No successor trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.06 hereof and shall not adversely
affect the then current rating of the Certificates.

     (c) Upon acceptance of appointment by a successor trustee as provided in
this Section 9.08, the Master Servicer shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Master Servicer fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Seller.

     SECTION 9.09 MERGER OR CONSOLIDATION OF TRUSTEE.

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

     SECTION 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

     (a) Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the applicable Certificateholders, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 9.10,
such powers, duties, obligations, rights and trusts as the Master Servicer and
the Trustee may consider necessary or desirable. If the Master Servicer shall
not have joined in such appointment within fifteen days after the receipt by it
of a request to do so, or in the case an Event of Default shall have occurred
and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08.

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

          (i) all rights, powers, duties and obligations conferred or imposed
     upon the Trustee, except for any obligation of the Trustee under this
     Agreement to advance funds on behalf of the Master Servicer, shall be
     conferred or imposed upon and exercised or performed by the Trustee and
     such separate trustee or co-trustee jointly (it being understood that such
     separate trustee or co-trustee is not authorized to act separately without
     the Trustee

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     joining in such act), except to the extent that under any law of any
     jurisdiction in which any particular act or acts are to be performed by the
     Trustee (whether as Trustee hereunder or as successor to the Master
     Servicer), 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 singly by such
     separate trustee or co-trustee, but solely at the direction of the Trustee;

          (ii) no trustee hereunder shall be held personally liable by reason of
     any act or omission of any other trustee hereunder; and

          (iii) the Master Servicer and the Trustee acting jointly may at any
     time accept the resignation of or remove any separate trustee or
     co-trustee.

     (c) 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 IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Master Servicer and the Seller.

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

     (e) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.

     (f) The Master Servicer shall pay what it determines in its sole discretion
to be the reasonable compensation of any co-trustee required to be appointed
hereunder, provided that any such expenditure shall be a reimbursable expense of
the Master Servicer from funds on deposit in the Custodial Account pursuant to
Section 3.09(a)(vii).

     SECTION 9.11 OFFICE OF THE TRUSTEE.

     The office of the Trustee for purposes of receipt of notices and demands is
the Corporate Trust Office.

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<PAGE>

     SECTION 9.12 TAX RETURNS, 1934 ACT REPORTING, OTHER DATA.

     (a) The Trustee shall prepare or cause to be prepared on behalf of the
Trust Fund, based upon the information furnished by the Master Servicer or
calculated by the Trustee in accordance with this Agreement pursuant to
instructions given by the Seller, and shall file federal tax returns and
appropriate state income tax returns and such other returns as may be required
by applicable law relating to the Trust Fund and shall forward copies to the
Seller of all such returns and Form 1099 information and such other information
within the control of the Trustee as the Seller may reasonably request in
writing, and shall forward to each Certificateholder such forms and furnish such
information within the control of the Trustee as are required by the Code and
the REMIC Provisions to be furnished to them, and will prepare and disseminate
to Certificateholders Form 1099s (or otherwise furnish information within the
control of the Trustee) to the extent required by applicable law.

     (b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application on IRS Form SS-4.

     (c) Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Securities and Exchange
Commission via the Electronic Data Gathering and Retrieval System ("EDGAR"), a
Form 8-K with a copy of the statement to the Certificateholders for such
Distribution Date as an exhibit thereto. The Trustee shall, in accordance with
industry standards and only when instructed by the Seller, file a Form 15
Suspension Notice with respect to the Trust Fund, if applicable. Prior to March
31 of each calendar year commencing March 31, 2001, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Seller hereby grants to the Trustee a limited power of attorney
to execute and file each such document on behalf of the Seller. Such power of
attorney shall continue until either the earlier of (i) receipt by the Trustee
from the Seller of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Seller agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Securities and Exchange Commission. The Trustee
shall have no responsibility to file any items other than those specified in
this Section 9.12(c); provided, however, the Trustee will cooperate with the
Seller in connection with any additional filings with respect to the Trust Fund
as the Seller deems necessary under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Copies of all reports filed by the Trustee under
the Exchange Act shall be sent to: the Seller c/o Bear, Stearns & Co. Inc.,
Attn: Managing Director-Analysis and Control, One Metrotech Center North,
Brooklyn, New York 11202-3859. Fees and expenses incurred by the Trustee in
connection with this Section 9.12(c) shall not be reimbursable from the Trust
Fund.

     (d) The Trustee will provide all information to Bloomberg that is necessary
to have the information regarding the Certificates and the transaction posted on
Bloomberg and the Trustee will provide Bloomberg with all necessary information
(including information regarding the Mortgage Loans) for Bloomberg to update
information necessary regarding the Certificates and the transaction on
Bloomberg.

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<PAGE>

     (e) The Trustee is hereby designated as agent for the majority interest
Class R Holder, who shall be the "tax matters person" within the meaning of
Treas. Reg.ss.1.860F-4(d) for the REMIC.

                                       93

<PAGE>

                                    ARTICLE X

                                   TERMINATION

     SECTION 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE
                   LOANS.

     (a) The obligations and responsibilities of the Master Servicer, the
Originator, the Seller and the Trustee created hereby with respect to the Trust
Fund created hereby shall terminate upon the earlier of:

          (i) the repurchase by the Seller or its designee at its election, of
     all Mortgage Loans and all property acquired in respect of any Mortgage
     Loan remaining in the Trust Fund, which repurchase right the Seller or its
     designee may exercise at its sole and exclusive election as of any
     Distribution Date (such applicable Distribution Date being herein referred
     to as the "Optional Termination Date") following the Distribution Date on
     which the aggregate Scheduled Principal Balance of the Mortgage Loans at
     the time of the repurchase is less than or equal to 10% of the aggregate
     Scheduled Principal Balance of the Mortgage Loans as of the Cut-off Date;
     and

          (ii) the later of (A) twelve months after the maturity of the last
     Mortgage Loan remaining in the Trust Fund, (B) the liquidation (or any
     advance with respect thereto) of the last Mortgage Loan remaining in the
     Trust Fund and the disposition of all REO Property and (C) the distribution
     to Certificateholders of all amounts required to be distributed to them
     pursuant to this Agreement.

In no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Mr. Joseph P.
Kennedy, former Ambassador of the United States to Great Britain, living on the
date of execution of this Agreement. Any termination of the Trust Fund pursuant
to clause (i) above shall be carried out in such a manner so that the
termination of the REMIC included therein shall qualify as a "qualified
liquidation" under the REMIC Provisions.

     (b) The Mortgage Loan Repurchase Price for any such Optional Termination of
the Trust Fund shall be equal to the Aggregate Loan Balance of the Mortgage
Loans as of the date of repurchase, together with accrued and unpaid interest
thereon from the date to which such interest was paid or advanced at the sum of
the applicable Net Mortgage Rate plus the PMI Insurance Premium Rate (if
applicable) with respect to each Mortgage Loan to, but not including, the first
day of the month of such repurchase, plus any sums on account of such Mortgage
Loan that have been advanced by the Master Servicer and are reimbursable to the
Master Servicer hereunder (including the Scheduled Principal Balance of each
Mortgage Loan that was secured by any REO Property). The Trustee shall give
notice to the Rating Agencies of the Seller's election to purchase the Mortgage
Loans pursuant to this Section 10.01 and of the Optional Termination Date.

                                       94

<PAGE>

     SECTION 10.02 PROCEDURE UPON OPTIONAL OR OTHER FINAL TERMINATION.

     (a) In case of any Optional Termination pursuant to Section 10.01, the
Seller or its designee shall, at least twenty days prior to the date notice is
to be mailed to the affected Certificateholders pursuant to Section 10.02(c),
notify the Trustee of such Optional Termination Date and of the Mortgage Loan
Repurchase Price.

     (b) Any repurchase of the Mortgage Loans by the Seller or its designee
shall be made on an Optional Termination Date by deposit of the Mortgage Loan
Repurchase Price into the Certificate Account before the Distribution Date on
which such repurchase is effected. Upon receipt by the Trustee of an Officers'
Certificate of the Seller or its designee certifying as to the deposit of such
repurchase price into the Certificate Account, the Seller or its designee shall
prepare and the Trustee and each co-trustee and separate trustee, if any, then
acting as such under this Agreement, shall, upon request and at the expense of
the Seller or its designee execute and deliver all such instruments of transfer
or assignment, in each case without recourse, as shall be necessary, to vest
title in the Seller or its designee in the Mortgage Loans so repurchased and
shall transfer or deliver to the Seller or its designee the repurchased Mortgage
Loans. Any distributions on the Mortgage Loans received by the Trustee
subsequent to (or with respect to any period subsequent to) the Optional
Termination Date shall be promptly remitted by it to the Seller or its designee.

     (c) Notice of the Distribution Date on which the Seller or its designee
anticipates that the final distribution shall be made (whether upon Optional
Termination or otherwise), shall be given promptly by the Seller or its designee
to the Trustee and by the Trustee by first class mail to Holders of the affected
Certificates. Such notice shall be mailed no earlier than the 15th day and not
later than the 10th day preceding the Optional Termination Date or date of final
distribution, as the case may be. Such notice shall specify (i) the Distribution
Date upon which final distribution on the affected Certificates will be made
upon presentation and surrender of such Certificates at the office or agency
therein designated, (ii) the amount of such final distribution and (iii) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, such distribution being made only upon presentation and surrender of
such Certificates at the office or agency maintained for such purposes (the
address of which shall be set forth in such notice).

     (d) In the event that any Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining such Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject to
the Trust Fund. If, after such actions have been taken, such Certificates have
not been surrendered for cancellation, the Trustee shall pay over all such
remaining funds to the Seller.

                                       95

<PAGE>

     SECTION 10.03 ADDITIONAL TERMINATION REQUIREMENTS.

     (a) In the event the Seller or its designee exercises its purchase option
pursuant to Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has received an
Opinion of Counsel to the effect that the failure of the Trust Fund to comply
with the requirements of this Section will not (i) result in the imposition of
taxes on a "prohibited transaction" of the Trust Fund, as described in Section
860F of the Code, or (ii) cause the Trust Fund 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 set forth in
     the notice given by the Seller or its designee under Section 10.02, the
     Trustee shall adopt a plan of complete liquidation of the Trust Fund and
     specify the first day of the applicable 90-day liquidation period in a
     statement attached to the Trust Fund's final tax return pursuant to
     Treasury Regulations Section 1.860F-1, and satisfy (or cause to be
     satisfied) all of the requirements of a qualified liquidation under the
     REMIC Provisions; and

          (ii) at or after the time of adoption of any such plan of complete
     liquidation for the Trust Fund at or prior to the Final Distribution Date,
     the Trustee shall sell all of the assets (if any) of the Trust Fund to the
     Seller or its designee for cash; provided, however, that in the event that
     a calendar quarter ends after the time of adoption of such a plan of
     complete liquidation but prior to the final Distribution Date, the Trustee
     shall not sell any of the assets of the Trust Fund prior to the close of
     that calendar quarter.

     (b) By its acceptance of a Class R Certificate, the Holders thereof hereby
agree to adopt such a plan of complete liquidation and to take such other action
in connection therewith as may be reasonably required to liquidate and otherwise
terminate the Trust Fund.

                                       96

<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

     SECTION 11.01 AMENDMENT.

     (a) This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Originator and the Trustee without the consent of any of
the Certificateholders,

          (i) to cure any ambiguity,

          (ii) to correct or supplement any provisions herein that may be
     inconsistent with any other provisions herein or that may be inconsistent
     with information provided in the Offering Documents,

          (iii) to modify, eliminate or add to any of its provisions to such
     extent as shall be necessary or desirable to maintain the qualification of
     the Trust Fund as a REMIC at all times that any Certificate is outstanding
     or to avoid or minimize the risk of the imposition of any tax on the Trust
     Fund pursuant to the Code that would be a claim against the Trust Fund,
     provided that the Trustee has received an Opinion of Counsel to the effect
     that (A) such action is necessary or desirable to maintain such
     qualification or to avoid or minimize the risk of the imposition of any
     such tax and (B) such action will not adversely affect the status of the
     Trust Fund as a REMIC or adversely affect in any material respect the
     interests of any Certificateholder,

          (iv) to make any other provisions with respect to matters or questions
     arising under this Agreement that are not materially inconsistent with the
     provisions of this Agreement, provided that such action shall not adversely
     affect in any material respect the interests of any Certificateholder or
     adversely affect the status of the Trust Fund as a REMIC as evidenced by an
     Opinion of Counsel or written confirmation received by each Rating Agency
     then rating the Certificates that such amendment to this Agreement will not
     result in a downgrade of the current rating then assigned to any Class of
     Certificates affected by such amendment, or

          (v) To add appropriate restrictions and legends to any of the Class A,
     Class M-1, Class M-2 or Class M-3 Certificates that are no longer
     registered under the 1933 Act.

     (b) This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Originator and the Trustee with the consent of the Holders
of Certificates evidencing, in the aggregate, not less than 66-2/3% of the
Voting Interests of all the 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 of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on or with respect to Mortgage Loans are required to be distributed
with respect to any Certificate without the consent of the Holder of such
Certificate,

                                       97

<PAGE>

(ii) adversely affect in any material respect the interests of the Holders of a
Class of Certificates in a manner other than as set forth in (i) above without
the consent of the Holders of Certificates evidencing not less than 66-2/3% of
the Voting Interests of such Class, (iii) reduce the aforesaid percentages of
Voting Interests, the holders of which are required to consent to any such
amendment without the consent of 100% of the Holders of Certificates of the
Class affected thereby, (iv) change the percentage of the Scheduled Principal
Balance of the Mortgage Loans specified in Section 10.01(a) relating to optional
termination of the Trust Fund without the consent of 100% of the Holders of
Certificates, (v) modify the provisions of this Section 11.01 without the
consent of 100% of the Holders of Certificates, or (vi) terminate this Agreement
or the Trust Fund created hereunder other than as provided in Article X hereof
without the consent of 100% of the Holders of Certificates.

     It shall not be necessary for the consent of Certificateholders 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. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.

     (c) Promptly after the execution of any amendment to this Agreement, the
Trustee shall furnish written notification of the substance of such amendment to
each Certificateholder and the Rating Agencies.

     (d) Prior to the execution of any amendment to this Agreement, the Trustee
shall receive an Opinion of Counsel that any such amendment is authorized by and
permitted hereunder and that it will not adversely affect the status of the
Trust Fund as a REMIC.

     SECTION 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.

     (a) This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. Such recordation,
if any, shall be effected by the Master Servicer at its expense on direction of
the Trustee, but only upon direction of the Trustee accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders of the Trust Fund.

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

                                       98

<PAGE>

     SECTION 11.03 GOVERNING LAW.

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

     SECTION 11.04 INTENTION OF PARTIES.

     (a) It is the express intent of the Seller, the Master Servicer and the
Trustee that the conveyance by the Seller to the Trustee as provided for in
Section 2.01 of the Seller's right, title and interest in and to the Mortgage
Loans be, and be construed as, an absolute sale and assignment by the Seller to
the Trustee of the Mortgage Loans for the benefit of the Certificateholders.
Further, it is not intended that either conveyance be deemed to be a pledge of
the Mortgage Loans by the Seller to the Trustee to secure a debt or other
obligation. However, in the event that the Mortgage Loans are held to be
property of the Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then it is intended that (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the New York Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction; (ii) the
conveyances provided for in Section 2.01 shall be deemed to be a grant by the
Seller to the Trustee on behalf of the Certificateholders, to secure payment in
full of the Secured Obligations (as defined below), of a security interest in
all of the Seller's right (including the power to convey title thereto), title
and interest, whether now owned or hereafter acquired, in and to the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Trustee Mortgage Files, and all
accounts, general intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of credit, advices of
credit and investment property consisting of the Trust Fund, arising from or
relating to (A) the Mortgage Loans, including with respect to each Mortgage
Loan, the Mortgage Note and related Mortgage, and all other documents in the
related Trustee Mortgage Files, and including any Replacement Mortgage Loans;
(B) pool insurance policies, hazard insurance policies and any bankruptcy bond
relating to the foregoing, if applicable; (C) the Certificate Account; (D) the
Custodial Account; (E) all amounts payable on or after the Cut-off Date to the
holders of the Mortgage Loans in accordance with the terms thereof; (F) all
income, payments, proceeds and products of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts from time to time held or
invested in the Certificate Account, whether in the form of cash, instruments,
securities or other property; and (G) all cash and non-cash proceeds of any of
the foregoing; (iii) the possession or control by the Trustee or any other agent
of the Trustee of Mortgage Notes or such other items of property as constitute
instruments, money, documents, advices of credit, letters of credit, goods,
certificated securities or chattel paper shall be deemed to be possession or
control by the secured party, or possession or control by a purchaser, for
purposes of perfecting the security interest pursuant to the Uniform Commercial
Code (including, without limitation, Sections 9-305 or 9-115 thereof); and (iv)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for, the Trustee, as
applicable, for the purpose

                                       99

<PAGE>

of perfecting such security interest under applicable law. "Secured Obligations"
means (i) the rights of each Certificateholder to be paid any amount owed to it
under this Agreement, (ii) all other obligations of the Seller under this
Agreement and (iii) the right of the Certificateholders to the Mortgage Loans.

     (b) The Seller, and, at the Seller's direction, the Master Servicer and the
Trustee, shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the other Trust
Fund property described above, such security interest would be deemed to be a
perfected security interest of first priority as applicable. The Master Servicer
shall file, at its expense, all filings necessary to maintain the effectiveness
of any original filings necessary under the Uniform Commercial Code as in effect
in any jurisdiction to perfect the Trustee's security interest in or lien on the
Mortgage Loans, including without limitation (i) continuation statements, (ii)
such other statements as may be occasioned by any transfer of any interest of
the Master Servicer or the Seller in any Mortgage Loan; and filings necessary as
a result in any change in the UCC.

     SECTION 11.05 NOTICES.

     In addition to other notices provided under this Agreement, the Trustee
shall notify the Rating Agencies in writing of: (a) any amendment of this
Agreement pursuant to 11.01; (b) the final payment of any amounts owing to a
Class of Certificates; (c) any Event of Default of which a Responsible Officer
has actual knowledge under this Agreement; and (d) in the event any Mortgage
Loan is repurchased in accordance with this Agreement; and (e) the appointment
of any successor to the Master Servicer.

     All directions, demands and notices hereunder shall be in writing (except
where also required to be given telephonically) and shall be deemed to have been
duly given when received (i) in the case of the Seller, Structured Asset
Mortgage Investments Inc., 245 Park Avenue, New York, New York 10167, Attention:
Legal Department; (ii) in the case of the Trustee, Bankers Trust Company of
California, N.A., 1761 East St. Andrew Place, Santa Ana, California 92705,
Attention: WAMU/SAMI 2001-1 or such other address as may hereafter be furnished
to the Seller, the Originator and the Master Servicer in writing by the Trustee;
(iii) in the case of the Originator or Master Servicer, Washington Mutual Bank,
FA, 540 E. Main Street, Stockton, California 95290, Attention: Jess G. Almanza
and to 9451 Corbin Avenue, Northridge, California 91324, Attention: Gabriel V.
Barroso (with a copy to 9200 Oakdale Avenue, Chatsworth, California 91311,
Attention: Fay L. Chapman, Senior Executive Vice President); and (iv) in the
case of the Rating Agencies, Moody's Investors Service, Inc., 99 Church Street,
New York, New York 10007, Attention: Mortgage-Backed Securities Rating Group;
and Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York, Attention: Residential Mortgages. Notices given by
telecopy shall be deemed received when request is confirmed by telephone.
Notices of default are also required to be given by registered mail. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid.

                                       100

<PAGE>

     SECTION 11.06 SEVERABILITY OF PROVISIONS.

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

     SECTION 11.07 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

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

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

     (c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as provided herein, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Interests evidenced by the Certificates shall also have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.07, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

                                       101

<PAGE>

     SECTION 11.08 CERTIFICATES NONASSESSABLE AND FULLY PAID.

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

                                       102

<PAGE>

     IN WITNESS WHEREOF, the Seller, the Originator and Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the 31st day of January, 2001.

                                      STRUCTURED ASSET MORTGAGE
                                      INVESTMENTS INC.,
                                      as Seller

                                      By: ____________________________________
                                      Name:
                                      Title:

                                      WASHINGTON MUTUAL BANK, FA,
                                      as Originator and Master Servicer

                                      By: ____________________________________
                                      Name:
                                      Title:

                                      BANKERS TRUST COMPANY OF
                                      CALIFORNIA, N.A.,
                                      not in its individual capacity, but solely
                                      as Trustee

                                      By: ____________________________________
                                      Name:
                                      Title:

                                       103

<PAGE>

STATE OF CALIFORNIA   )
                      :  ss.:
COUNTY OF             )

     On this ____ day of January, 2001, before me, personally appeared _________
______________________________, known to me to be a ____________________________
of Bankers Trust Company of California, N.A., that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said bank, and acknowledged to me that such bank executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                         ______________________________________
                                         Notary Public

[NOTARIAL SEAL]

                                       104

<PAGE>

STATE OF NEW YORK     )
                      :  ss.:
COUNTY OF NEW YORK    )

     On the _____ day of January, 2001, before me, personally appeared _______
____________________________, known to me to be a ____________________________
of Structured Asset Mortgage Investments Inc., one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                         ______________________________________
                                         Notary Public

[NOTARIAL SEAL]

                                       105

<PAGE>

STATE OF WASHINGTON   )
                      :  ss.:
COUNTY OF             )

     On the ____ day of January, 2001, before me, a Notary Public in and for
said State, personally appeared _____________________________, known to me to be
a the _________________ of Washington Mutual Bank, FA, the federally chartered
savings association, that executed the within instrument and also known to me to
be the person who executed it on behalf of said bank, and acknowledged to me
that such bank executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                         ______________________________________
                                         Notary Public

[NOTARIAL SEAL]

                                       106

<PAGE>

                                    EXHIBIT A

                           FORM OF CLASS A CERTIFICATE

          SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

          THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY
OF THE TRUSTEE NAMED 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.

                                       A-1

<PAGE>

Certificate No. __                   Variable Pass-Through Rate

Class A Senior                       Percentage Interest: ___%

Date of Pooling and Servicing        Aggregate Initial Current Principal Amount
Agreement and Cut-off Date:          of this Certificate as of the Cut-off Date:
January 1, 2001                      $______________

First Distribution Date:             Initial Current Principal Amount of this
February 26, 2001                    Certificate as of the Cut-off Date:
                                     $____________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:     CUSIP __________
January 25, 2041

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-1

     evidencing a percentage  interest in the distributions  allocable to
     the Class A  Certificates  with  respect to a Trust Fund  consisting
     primarily of a pool of conventional  one- to four-family  adjustable
     interest  rate  mortgage  loans sold by  STRUCTURED  ASSET  MORTGAGE
     INVESTMENTS INC.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments Inc., the Master Servicer or the Trustee referred to below or any of
their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

          This certifies that ________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial Current
Principal Amount of this Certificate by the aggregate Initial Current Principal
Amount of all Class A Certificates, both as specified above) in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien,
adjustable rate mortgages loans secured by one- to four- family residences,
units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by EMC Mortgage
Corporation (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank, FA will act as master servicer of the Mortgage Loans (in such
capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was

                                       A-2

<PAGE>

created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement"), between SAMI, as seller (the "Seller"),
the Master Servicer, the Mortgage Loan Seller and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.

          Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

          Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. The Initial
Current Principal Amount of this Certificate is set forth above. The Current
Principal Amount hereof will be reduced to the extent of distributions allocable
to principal hereon and any Realized Losses allocable hereto.

          This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in eight
Classes. The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.

          The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

                                       A-3

<PAGE>

          This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

          The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

          No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate scheduled principal balance
of the

                                       A-4

<PAGE>

Mortgage Loans is less than the percentage of the aggregate Scheduled Principal
Balance specified in the Agreement of the Mortgage Loans at the Cut-off Date.
The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue
beyond the expiration of 21 years after the death of certain persons identified
in the Agreement.

          Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                       A-5

<PAGE>

          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2001                BANKERS TRUST COMPANY OF
                                       CALIFORNIA,
                                       N.A.
                                       Not in its individual capacity but solely
                                       as Trustee

                                     By:________________________________________
                                                Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class A Certificates referred to in the
within-mentioned Agreement.

                                       BANKERS TRUST COMPANY OF
                                       CALIFORNIA,
                                       N.A.
                                       Authorized signatory of Bankers Trust
                                       Company of California, N.A., not in its
                                       individual capacity but solely as Trustee

                                       By:______________________________________
                                              Authorized Signatory

                                       A-6

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Mortgage Pass- Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: _____________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Dated:                          ________________________________________________
                                       Signature by or on behalf of assignor

                                       _________________________________________
                                                  Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________.

          This information is provided by ______________________, the assignee
named above, or ____________________________, as its agent.

                                      A-3-1

<PAGE>

                                    EXHIBIT B

                   FORM OF CLASS M-1, M-2 AND M-3 CERTIFICATE

          SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

          THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED 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.

                                       B-1

<PAGE>

Certificate No. __                  Variable Pass-Through Rate

Class M-__                          Percentage Interest: ___%

Date of Pooling and Servicing       Aggregate Initial Current Principal of this
Agreement and Cut-off Date:         Certificate as of the Cut-off Date:
January 1, 2001                     $____________

First Distribution Date:            Initial Current Principal Amount of this
February 26, 2001                   Certificate as of the Cut-off Date:
                                    $____________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:    CUSIP ___________
January 25, 2041

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-1

     evidencing a percentage  interest in the distributions  allocable to
     the Class M-__  Certificates with respect to a Trust Fund consisting
     primarily of a pool of conventional  one- to four-family  adjustable
     interest  rate  mortgage  loans sold by  STRUCTURED  ASSET  MORTGAGE
     INVESTMENTS INC.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments Inc., the Master Servicer or the Trustee referred to below or any of
their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

          This certifies that ________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial Current
Principal Amount of this Certificate by the aggregate Initial Current Principal
Amount of all Class M-__ Certificates, both as specified above) in the
beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") generally consisting of conventional
first lien, adjustable rate mortgages loans secured by one- to four- family
residences, units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by EMC Mortgage
Corporation (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank, FA will act as master servicer of the Mortgage Loans (in such
capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was

                                       B-2

<PAGE>

created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement"), between SAMI, as seller (the "Seller"),
the Master Servicer, the Mortgage Loan Seller and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.

          Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

          Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. The Initial
Current Principal Amount of this Certificate is set forth above. The Current
Principal Amount hereof will be reduced to the extent of distributions allocable
to principal hereon and any Realized Losses allocable hereto.

          This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in eight
Classes. The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.

          The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

                                       B-3

<PAGE>

          This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

          The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

          No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate scheduled principal balance
of the

                                       B-4

<PAGE>

Mortgage Loans is less than the percentage of the aggregate Scheduled Principal
Balance specified in the Agreement of the Mortgage Loans at the Cut-off Date.
The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue
beyond the expiration of 21 years after the death of certain persons identified
in the Agreement.

          Unless this Certificate has been countersigned by an authorized
signatory of the Trustee 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.

Dated: January __, 2001                    BANKERS TRUST COMPANY OF CALIFORNIA,
                                           N.A.
                                           Not in its individual capacity but
                                           solely as Trustee

                                          By:___________________________________
                                                    Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-__ Certificates referred to in the
within-mentioned Agreement.

                                           BANKERS TRUST COMPANY OF CALIFORNIA,
                                           N.A.
                                           Authorized signatory of Bankers Trust
                                           Company of California, N.A., not in
                                           its individual capacity but solely
                                           as Trustee

                                           By:_________________________________
                                                    Authorized Signatory

                                       B-6

<PAGE>

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass- Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ____________________________

________________________________________________________________________________
________________________________________________________________________________

Dated:                         _________________________________________________
                                    Signature by or on behalf of assignor

                                          ______________________________________
                                                Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________ for the account
of _______________________________ account number __________, or, if mailed by
check, to _________________________________________. Applicable statements
should be mailed to __________________________________________________.

          This information is provided by ______________________, the assignee
named above, or ____________________________, as its agent.

                                       B-7

<PAGE>

                                    EXHIBIT C

                   FORM OF CLASS B-1, B-2 AND B-3 CERTIFICATE

          SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

          THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.

          THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.

          THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER

<PAGE>

RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, UNLESS SUCH PERSON PROVIDES A CERTIFICATE
SUBSTANTIALLY IN THE FORM OF EXHIBIT J TO THE EFFECT THAT THE PROPOSED TRANSFER
AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION
OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION
WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION
EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23 AND (II) WILL NOT
GIVE RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE
MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE EVIDENCED BY A REPRESENTATION OR
AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL
ACCREDITED INVESTOR.

                                       C-2

<PAGE>

Certificate No. __                   Variable Pass-Through Rate

Class B-__                           Percentage Interest: ___%

Date of Pooling and Servicing        Aggregate Initial Current Principal of this
Agreement and Cut-off Date:          Certificate as of the Cut-off Date:
January 1, 2001                      $___________

First Distribution Date:             Initial Current Principal Amount of this
February 26, 2001                    Certificate as of the Cut-off Date:
                                     $______________

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:     CUSIP _________
January 25, 2041

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-1

     evidencing a percentage  interest in the distributions  allocable to
     the Class B-__  Certificates with respect to a Trust Fund consisting
     primarily of a pool of conventional  one- to four-family  adjustable
     interest  rate  mortgage  loans sold by  STRUCTURED  ASSET  MORTGAGE
     INVESTMENTS INC.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments Inc., the Master Servicer or the Trustee referred to below or any of
their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

          This certifies that ________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial Current
Principal Amount of this Certificate by the aggregate Initial Current Principal
Amount of all Class B-__ Certificates, both as specified above) in the
beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") generally consisting of conventional
first lien, adjustable rate mortgages loans secured by one- to four- family
residences, units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by EMC Mortgage
Corporation (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank, FA will act as master servicer of the Mortgage Loans (in such
capacity, the "Master Servicer," which term includes any successors thereto
under the Agreement referred to below). The Trust Fund was

                                       C-3

<PAGE>

created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement"), between SAMI, as seller (the "Seller"),
the Master Servicer, the Mortgage Loan Seller and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.

          Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

          Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. The Initial
Current Principal Amount of this Certificate is set forth above. The Current
Principal Amount hereof will be reduced to the extent of distributions allocable
to principal hereon and any Realized Losses allocable hereto.

          This Certificate may not be acquired directly or indirectly by, or on
behalf of, an employee benefit plan or other retirement arrangement which is
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
unless such person provides a certificate substantially in the form of Exhibit J
to the effect that the proposed transfer and/or holding of a Certificate and the
servicing, management and/or operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
or PTE 96-23 and (ii) will not give rise to any additional fiduciary obligations
on the part of the Seller, the Master Servicer or the Trustee, which will be
evidenced by a representation or an Opinion of Counsel to such effect by or on
behalf of an Institutional Accredited Investor.

                                       C-4

<PAGE>

          This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in eight
Classes. The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.

          The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

          This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

          The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

          No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

                                       C-5

<PAGE>

          The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate scheduled principal balance
of the Mortgage Loans is less than the percentage of the aggregate Scheduled
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

          Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                       C-6

<PAGE>

          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA,
                                          N.A.
                                          Not in its individual capacity but
                                          solely as Trustee

                                        By:____________________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-__ Certificates referred to in the
within-mentioned Agreement.

                                          BANKERS TRUST COMPANY OF CALIFORNIA,
                                          N.A.
                                          Authorized signatory of Bankers Trust
                                          Company of California, N.A., not in
                                          its individual capacity but solely as
                                          Trustee

                                          By:___________________________________
                                                   Authorized Signatory

                                       C-7

<PAGE>

                                   ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass- Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

     I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address: _________________________________________

_______________________________________________________________________________
_______________________________________________________________________________

Dated:                         ________________________________________________
                                    Signature by or on behalf of assignor

                                          ______________________________________
                                                 Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ___________________________________.

          This information is provided by ______________________, the assignee
named above, or ____________________________, as its agent.

                                       C-8

<PAGE>

                                    EXHIBIT D

                           FORM OF CLASS R CERTIFICATE

          THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED ORGANIZATION (AS
DEFINED BELOW).

          SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").

          THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART
OF THE SELLER, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE EVIDENCED BY AN
OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF AN INSTITUTIONAL ACCREDITED
INVESTOR.

          ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL

<PAGE>

CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.

                                       D-2

<PAGE>

Certificate No. __                   Variable Pass-Through Rate

Class R Senior                       Percentage Interest: ___%

Date of Pooling and Servicing        Aggregate Initial Current Principal Amount
Agreement and Cut-off Date:          of this Certificate as of the Cut-off Date:
January 1, 2001                      $_______

First Distribution Date:             Initial Current Principal Amount of this
February 26, 2001                    Certificate as of the Cut-off Date: $_____

Master Servicer:
Washington Mutual Bank, FA

Assumed Final Distribution Date:      CUSIP ___________
January 25, 2041

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2001-1

     evidencing a percentage  interest in the distributions  allocable to
     the Class R  Certificates  with  respect to a Trust Fund  consisting
     primarily of a pool of conventional  one- to four-family  adjustable
     interest  rate  mortgage  loans sold by  STRUCTURED  ASSET  MORTGAGE
     INVESTMENTS INC.

          This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments Inc., the Master Servicer or the Trustee referred to below or any of
their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.

          This certifies that ________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial Current
Principal Amount of this Certificate by the aggregate Initial Current Principal
Amount of all Class R Certificates, both as specified above) in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien,
adjustable rate mortgages loans secured by one- to four- family residences,
units in planned unit developments and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments Inc. ("SAMI"). The Mortgage Loans were sold by EMC Mortgage
Corporation (in such capacity, the "Mortgage Loan Seller") to SAMI. Washington
Mutual Bank,

                                       D-3

<PAGE>

FA will act as master servicer of the Mortgage Loans (in such capacity, the
"Master Servicer," which term includes any successors thereto under the
Agreement referred to below). The Trust Fund was created pursuant to the Pooling
and Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), between SAMI, as seller (the "Seller"), the Master Servicer, the
Mortgage Loan Seller and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.

          Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date, an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.

          Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose and designated in such notice. The Initial Current Principal Amount of
this Certificate is set forth above. The Current Principal Amount hereof will be
reduced to the extent of distributions allocable to principal hereon and any
Realized Losses allocable hereto.

          Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this

                                       D-4

<PAGE>

Certificate, to sell this Certificate to a purchaser selected by the Company,
which purchaser may be the Seller, or any affiliate of the Seller, on such terms
and conditions as the Seller may choose.

          This Certificate may not be acquired directly or indirectly by, or on
behalf of, an employee benefit plan or other retirement arrangement which is
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
unless such person provides a certificate substantially in the form of Exhibit J
to the effect that the proposed transfer and/or holding of a Certificate and the
servicing, management and/or operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
or PTE 96-23 and (ii) will not give rise to any additional fiduciary obligations
on the part of the Seller, the Master Servicer or the Trustee, which will be
evidenced by a representation or an Opinion of Counsel to such effect by or on
behalf of an Institutional Accredited Investor.

          This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in eight
Classes. The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.

          The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

          This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Mortgage Loan Seller and the Master Servicer and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the
Mortgage Loan Seller, the Master Servicer and the Trustee with the consent of
the Holders of Certificates evidencing Voting Interests aggregating not less
than 66-2/3% (or in certain cases, Holders of Certificates of affected Classes
evidencing such percentage of the Voting Interests thereof). Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee for such purposes, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and

                                       D-5

<PAGE>

thereupon one or more new Certificates in authorized denominations representing
a like aggregate Percentage Interest will be issued to the designated
transferee.

          The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

          No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate scheduled principal balance
of the Mortgage Loans is less than the percentage of the aggregate Scheduled
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.

          Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.

                                       D-6

<PAGE>

          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2001                   BANKERS TRUST COMPANY OF CALIFORNIA,
                                          N.A.
                                          Not in its individual capacity but
                                          solely as Trustee

                                          By:___________________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                          BANKERS TRUST COMPANY OF CALIFORNIA,
                                          N.A.
                                          Authorized signatory of Bankers Trust
                                          Company of California, N.A., not in
                                          its individual capacity but solely as
                                          Trustee

                                          By:__________________________________
                                                   Authorized Signatory

                                       D-7

<PAGE>

                                   ASSIGNMENT

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass- Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

          I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ____________________________

_______________________________________________________________________________
_______________________________________________________________________________

Dated:                     ____________________________________________________
                                    Signature by or on behalf of assignor

                                        ________________________________________
                                                Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.

          This information is provided by ______________________, the assignee
named above, or ____________________________, as its agent.

                                       D-8

<PAGE>

                                    EXHIBIT E

                           SCHEDULE OF MORTGAGE LOANS

                                       E-1

<PAGE>

                                   EXHIBIT F-1

                     FORM OF INITIAL LOAN LIST CERTIFICATION

                                                   January ___, 2001

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

          Re:  Pooling and Servicing Agreement ("Pooling and Servicing
               Agreement") relating to Washington Mutual Mortgage Loan Trust
               Mortgage Pass-Through Certificates, Series 2001-1

Ladies and Gentlemen:

     In accordance with and subject to the provisions of Section 2.02 of the
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that, except for the exceptions noted on the schedule attached hereto, it has
received a Trustee Mortgage File with respect to each Mortgage Loan listed on
the Mortgage Loan Schedule. The Trustee has made no independent examination of
any documents contained in each Trustee Mortgage File beyond the review
specifically mentioned above. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents delivered in accordance with Section 2.01 of the Pooling and Servicing
Agreement or any of the Mortgage Loans identified in the Mortgage Loan Schedule,
or (ii) the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.

     The Trustee acknowledges receipt of notice that the Seller has granted to
the Trustee for the benefit of the Certificateholders a security interest in all
of the Seller's right, title and interest in and to the Mortgage Loans.

     Capitalized terms used herein without definition shall have the meaning
assigned to them in the Pooling and Servicing Agreement.

                                      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                      as Trustee

                                      By:_______________________________________
                                      Name:
                                      Title:

                                      F-1-1

<PAGE>

                                   EXHIBIT F-2

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                               January __, 2001

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

          Re:  Pooling and Servicing Agreement ("Pooling and Servicing
               Agreement") relating to Washington Mutual Mortgage Loan Trust
               Mortgage Pass-Through Certificates, Series 2001-1

Ladies and Gentlemen:

     In accordance with and subject to the provisions of Section 2.02 of the
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that, except for the exceptions noted on the schedule attached hereto, it has
(a) received an original Mortgage Note with respect to each Mortgage Loan listed
on the Mortgage Loan Schedule and (b) received an original Mortgage (or a
certified copy thereof) in accordance with Section 2.01(b) of the Pooling and
Servicing Agreement with respect to each Mortgage Loan listed on the Mortgage
Loan Schedule. The Trustee has made no independent examination of any documents
contained in each Trustee Mortgage File beyond the review specifically mentioned
above. The Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents delivered in
accordance with Section 2.01 of the Pooling and Servicing Agreement or any of
the Mortgage Loans identified in the Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.

     The Trustee acknowledges receipt of notice that the Seller has granted to
the Trustee for the benefit of the Certificateholders a security interest in all
of the Seller's right, title and interest in and to the Mortgage Loans.

     Capitalized terms used herein without definition shall have the meaning
assigned to them in the Pooling and Servicing Agreement.

                                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                    as Trustee

                                    By:________________________________________
                                    Name:
                                    Title:

                                      F-2-1

<PAGE>

                                   EXHIBIT F-3

                     FORM OF FINAL CERTIFICATION OF TRUSTEE

                                          _____________________________
                                                      [date]

Washington Mutual Bank, FA
1201 Third Avenue, 5th Floor
Seattle, Washington 98101

Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167

          Re:  Pooling and Servicing Agreement ("Pooling and Servicing
               Agreement") relating to Washington Mutual Mortgage Loan Trust
               Mortgage Pass-Through Certificates, Series 2001-1

Ladies and Gentlemen:

     In accordance with and subject to the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement the undersigned, as Trustee,
hereby certifies that, except for the exceptions noted on the schedule attached
hereto, as to each Mortgage Loan listed in the Mortgage Loan Schedule it has
reviewed the Trustee Mortgage File and has determined that (based solely on its
review of each such documents on its face) (i) all documents described in
clauses (i)-(v) of Section 2.01(b) of the Pooling and Servicing Agreement are in
its possession or its agent, (ii) such documents have been reviewed by it and
have not been mutilated, damaged, defaced, torn or otherwise physically altered
and such documents relate to such Mortgage Loan and (iii) each Mortgage Note has
been endorsed and each assignment of Mortgage has been delivered as provided in
Section 2.01(b) of the Pooling and Servicing Agreement. The Trustee has made no
independent examination of any documents required to be delivered in accordance
with Section 2.01(b) of the Pooling and Servicing Agreement beyond the review
specifically required therein. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents required to be delivered in accordance with Section 2.01(b) of the
Pooling and Servicing Agreement or any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectibility, insurability, effectiveness
or suitability of any such Mortgage Loan.

                                      F-3-1

<PAGE>

     Capitalized terms used herein without definition have the meanings ascribed
to them in the Pooling and Servicing Agreement.

                                      BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                      as Trustee

                                      By:_______________________________________
                                      Name:
                                      Title:

                                      F-3-2

<PAGE>

                                    EXHIBIT G

                           FORM OF REQUEST FOR RELEASE

                                           ___________________________________
                                                         [date]

To:

     In connection with the administration of the Mortgage Loans held by you as
Trustee under the Pooling and Servicing Agreement dated as of January 1, 2001,
among Structured Asset Mortgage Investments Inc., as Seller, Washington Mutual
Bank, FA, as mortgage loan seller and master servicer, and you, as Trustee (the
"Pooling and Servicing Agreement"), the undersigned hereby requests a release of
the Trustee Mortgage File held by you as Trustee with respect to the following
described Mortgage Loan for the reason indicated below.

     Mortgagor's Name:

     Address:

     Loan No.:

     Reason for requesting file:

____  1.  Mortgage Loan paid in full. (The Master Servicer hereby certifies that
          all amounts received in connection with the Mortgage Loan have been or
          will be credited to the Custodial Account pursuant to the Pooling and
          Servicing Agreement.)

____  2.  Mortgage Loan repurchased. (The Master Servicer hereby certifies that
          the Purchase Price has been credited to the Custodial Account pursuant
          to the Pooling and Servicing Agreement.)

____  3.  The Mortgage Loan is being foreclosed.

____  4.  Other.  (Describe)

     The undersigned acknowledges that the above Trustee Mortgage File will be
held by the undersigned in accordance with the provisions of the Pooling and
Servicing Agreement and will be returned, except if the Mortgage Loan has been
paid in full or repurchased (in which case the Trustee Mortgage File will be
retained by us permanently) when no longer required by us for such purpose.

                                       G-1

<PAGE>

         Capitalized terms used herein shall have the meanings ascribed to them
in the Pooling and Servicing Agreement.

                                          [MASTER SERVICER]

                                          By:___________________________________
                                          Name:
                                          Title:

                                       G-2

<PAGE>

                                    EXHIBIT H

                     FORM OF RULE 144A TRANSFER CERTIFICATE

                                          ________________________________
                                                        [date]

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California  92705

               Re:  Pooling and Servicing Agreement relating to Washington
                    Mutual Mortgage Loan Trust Mortgage Pass-Through
                    Certificates, Series 2001-1

     Reference is hereby made to the Pooling and Servicing Agreement (the
"Agreement") among Structured Asset Mortgage Investments Inc., as Seller,
Bankers Trust Company of California, N.A., as Trustee and Washington Mutual
Bank, FA, as Mortgage Loan Seller and Master Servicer, dated as of January 1,
2001. Capitalized terms used but not defined herein shall have the meanings
given to them in the Agreement.

     This letter relates to $___________ initial Current Principal Amount of
Class ____ Certificates which are held in the form of Definitive Certificates
registered in the name of _______________________ (the "Transferor"). The
Transferor has requested a transfer of such Definitive Certificates for
Definitive Certificates of such Class registered in the name of
_______________________ (the "Transferee").

     In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Agreement and the
Certificates and (ii) Rule 144A under the 1933 Act to a purchaser that the
Transferor reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A purchasing for its own account or for the account of a
"qualified institutional buyer", which purchaser is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting the requirements
of Rule 144A and in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Placement Agent and the Seller.

                                          _____________________________________
                                          [Name of Transferor]

                                          By:__________________________________
                                          Name:
                                          Title:

                                       H-1

<PAGE>

                                    EXHIBIT I

                        FORM OF ERISA TRANSFER AFFIDAVIT

STATE OF NEW YORK    )
                     )  ss.:
COUNTY OF NEW YORK   )

     The undersigned, being first duly sworn, deposes and says as follows:

     1. That he [she] is [title of officer] ________________________ of [name of
Investor] ______________________ (the "Investor"), a __________________________
[description of type of entity] duly organized and existing under the laws of
the [State of _______________] [United States], on behalf of which he [she]
makes this affidavit.

     2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or (2)
if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60; or (y) shall
deliver to the Trustee and the Seller a representation or an opinion of counsel
(a "Benefit Plan Opinion") satisfactory to the Trustee and the Seller, and upon
which the Trustee, the Master Servicer and the Seller shall be entitled to rely,
to the effect that the purchase or holding of such Certificate by the Investor
and the servicing, management and/or operation of the Trust and its assets: (i)
will not result in any prohibited transaction which is not covered under an
individual or class prohibited transaction exemption, including, but not limited
to, Prohibited Transaction Exemption ("PTE") 84- 14, PTE 91-38, PTE 90-1, PTE
95-60 or PTE 96-23 and (ii) will not give rise to any additional fiduciary
obligations on the part of the Seller, the Master Servicer or the Trustee, which
will be evidenced by a representation or an Opinion of Counsel to such effect by
or on behalf of an Institutional Accredited Investor.

     3. The Investor hereby acknowledges that under the terms of the Agreement,
no transfer of a Class [B-1][B-2][B-3] Certificate shall be permitted to be made
to any person unless the Seller and Trustee have received a certificate from
such transferee in the form hereof.

                                       I-1

<PAGE>

     IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this _____ day of _______________, 20__.

                                          ______________________________________
                                          [Investor]

                                          By:___________________________________
                                          Name:
                                          Title:

ATTEST:

__________________

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 Investor, and acknowledged
that he executed the same as his free act and deed and the free act and deed of
the Investor.

     Subscribed and sworn before me this _____ day of ___________ 20___.

                                          ______________________________________
                                          NOTARY PUBLIC

                                          My commission expires the
                                          ____ day of ____________, 20__.

                                       I-2

<PAGE>

                                   EXHIBIT J-1

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF                   )
                           )  ss.:
COUNTY OF                  )

     [NAME OF OFFICER], ___________________________ being first duly sworn,
deposes and says:

     1. That he [she] is [title of officer] ________________________ of [name of
Purchaser] ________________________ (the "Purchaser"), a ______________________
[description of type of entity] duly organized and existing under the laws of
the [State of _______________] [United States], on behalf of which he [she]
makes this affidavit.

     2. That the Purchaser's Taxpayer Identification Number is ______________.

     3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a "disqualified organization" as of
____________________ [date of transfer], and that the Purchaser is not acquiring
a Residual Certificate (as defined in the Agreement) for the account of, or as
agent (including a broker, nominee, or other middleman) for, any person or
entity from which it has not received an affidavit substantially in the form of
this affidavit. For these purposes, a "disqualified organization" means 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 an instrumentality if all of its activities are
subject to tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(C), any "electing large partnership" within the meaning of
Section 775 of the Code, or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.

     4. That the Purchaser is not, and on ____________________ [date of
transfer] will not be, and is not and on such date will not be investing the
assets of, an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject to Code Section
4975 or a person or entity that is using the assets of any employee benefit plan
or other plan to acquire a Residual Certificate.

     5. That the Purchaser hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Structured Asset
Mortgage Investments Inc., as Seller, Bankers Trust Company of California, N.A.,
as Trustee and Washington Mutual Bank, FA, as Mortgage Loan Seller and Master
Servicer, dated as of January 1, 2001, no transfer of a Residual Certificate
shall be permitted to be made to any person unless the Trustee has received a
certificate from such transferee to the effect that such transferee is not an
employee benefit plan subject to

                                      J-1-1

<PAGE>

ERISA or a plan subject to Section 4975 of the Code and is not using the assets
of any employee benefit plan or other plan to acquire a Residual Certificate.

     6. That the Purchaser does not hold REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
"Book-Entry Nominee").

     7. That the Purchaser does not have the intention to impede the assessment
or collection of any federal, state or local taxes legally required to be paid
with respect to such Residual Certificate.

     8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, 4, 6 or 10 hereof are not satisfied or
that the Purchaser has reason to believe does not satisfy the requirements set
forth in paragraph 7 hereof, and (ii) without obtaining from the prospective
Purchaser an affidavit substantially in this form and providing to the Trustee a
written statement substantially in the form of Exhibit I to the Agreement.

     9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.

     10. That the Purchaser (i) is a U.S. Person or (ii) is a Non-U.S. Person
that holds a Residual Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with an effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code. "Non-U.S. Person" means any
person other than (i) a citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
state thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations) provided that, for purposes solely of
the Class R Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are United States Persons; (iv) an estate
whose income is includible in gross income for United States income tax purposes
regardless of its source; or (v) a trust, if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more U.S. Persons have authority to control all substantial decisions of
the trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to continue
to be U.S. Persons.

     11. That the Purchaser agrees to such amendments of the Agreement as may be
required to further effectuate the restrictions on transfer of any Residual
Certificate to such a "disqualified organization," an agent thereof, a
Book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.

                                      J-1-2

<PAGE>

     12. That the Purchaser consents to the designation of the Trustee as its
agent to act as "tax matters person" of the Trust Fund pursuant to the
Agreement.

     IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its
______________________ this day_____ of ____________, 20__.

                                          ______________________________________
                                          [name of Purchaser]

                                          By:___________________________________
                                          Name:
                                          Title:

     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 Purchaser, and
acknowledged to me that he [she] executed the same as his [her] free act and
deed and the free act and deed of the Purchaser.

     Subscribed and sworn before me this _____ day of __________, 20__.

NOTARY PUBLIC

COUNTY OF_____________________

STATE OF______________________

My commission expires the _____ day of __________, 20__.

                                      J-1-3

<PAGE>

                                   EXHIBIT J-2

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

                                          ___________________________
                                                     [date]

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California  92705

               Re:  Pooling and Servicing Agreement relating to Washington
                    Mutual Mortgage Loan Trust Mortgage Pass-Through
                    Certificates, Series 2001-1

     _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraphs 3, 4, 6, 7 and 10 thereof is not true, and
has no reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to a Residual Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.

                                          Very truly yours,

                                          By:___________________________________
                                          Name:
                                          Title:

                                      J-2-1

<PAGE>

                                    EXHIBIT K

                              FORM OF NOTE ALLONGE

                                  NOTE ALLONGE

     Pay the note affixed to this allonge to the order of _____________________,
without recourse.

                                          WASHINGTON MUTUAL BANK, FA

                                          By:___________________________________
                                          Name:
                                          Title:

                                       K-1<PAGE>   1
                                                                     EXHIBIT 4.2

                         FLEXTRONICS INTERNATIONAL LTD.

                             1993 SHARE OPTION PLAN

              (AS AMENDED AND RESTATED THROUGH SEPTEMBER 21, 2000)

                                   ARTICLE ONE

                                     GENERAL

I. PURPOSE OF THE PLAN

        A. This 1993 Share Option Plan (the "Plan") is intended to promote the
interests of Flextronics International Ltd., a Singapore corporation (the
"Corporation"), by providing (i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations), (ii) certain non-employee members of the
Corporation's Board of Directors (the "Board") and (iii) certain consultants and
other independent contractors who provide valuable services to the Corporation
(or its parent or subsidiary corporations) with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the Corporation
(or its parent or subsidiary corporations).

        B. The Plan shall become effective on December 1, 1993 upon adoption by
the Board, and such date shall accordingly constitute the Effective Date of the
Plan.

II. DEFINITIONS

        A. For purposes of the Plan, the following definitions shall be in
effect:

        BOARD: the Corporation's Board of Directors.

        CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through either of the following transactions:

                a. the direct or indirect acquisition by any person or related
        group of persons (other than the Corporation or a person that directly
        or indirectly controls, is controlled by, or is under common control
        with, the Corporation) of beneficial ownership (within the meaning of
        Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
        percent (50%) of the total combined voting power of the Corporation's
        outstanding securities pursuant to a tender or exchange offer made
        directly to the Corporation's stockholders which the Board does not
        recommend such stockholders to accept; or

                b. a change in the composition of the Board over a period of
        thirty-six (36) consecutive months or less such that a majority of the
        Board members (rounded up to the next whole number) ceases, by reason of
        one or more proxy contests for the election of Board members, to be
        comprised of individuals who either (i) have been Board members
        continuously since the beginning of such period or (ii) have been
        elected or nominated for election as Board members during such period by
        at least a majority of the Board members described in clause (i) who
        were still in office at the time such election or nomination was
        approved by the Board.

        CODE: the U.S. Internal Revenue Code of 1986, as amended.

        CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:

<PAGE>   2

                a. a merger or consolidation in which the Corporation is not the
        surviving entity, except for a transaction the principal purpose of
        which is to change the state in which the Corporation is incorporated,

                b. the sale, transfer or other disposition of all or
        substantially all of the assets of the Corporation in complete
        liquidation or dissolution of the Corporation, or

                c. any reverse merger in which the Corporation is the surviving
        entity but in which securities possessing more than fifty percent (50%)
        of the total combined voting power of the Corporation's outstanding
        securities are transferred to a person or persons different from the
        persons holding those securities immediately prior to such merger.

        EMPLOYEE: an individual who performs services while in the employ of the
Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.

        EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.

        FAIR MARKET VALUE: the Fair Market Value per Ordinary Share determined
in accordance with the following provisions:

                a. If the Ordinary Shares are not at the time listed or admitted
        to trading on any U.S. national stock exchange but are traded on the
        Nasdaq National Market, the Fair Market Value shall be the closing
        selling price per Ordinary Share on the date in question, as such price
        is reported by the National Association of Securities Dealers through
        the Nasdaq National Market or any successor system. If there is no
        reported closing selling price for the Ordinary Shares on the date in
        question, then the closing selling price per Ordinary Share on the last
        preceding date for which such quotation exists shall be determinative of
        Fair Market Value.

                b. If the Ordinary Shares are at the time listed or admitted to
        trading on any U.S. national stock exchange, then the Fair Market Value
        shall be the closing selling price per Ordinary Share on the date in
        question on the U.S. exchange determined by the Plan Administrator to be
        the primary market for the Ordinary Shares, as such price is officially
        quoted in the composite tape of transactions on such exchange. If there
        is no reported sale of the Ordinary Shares on such exchange on the date
        in question, then the Fair Market Value shall be the closing selling
        price per Ordinary Share on the exchange on the last preceding date for
        which such quotation exists.

                c. If the Ordinary Shares are on the date in question neither
        listed nor admitted to trading on any U.S. national stock exchange nor
        traded on the Nasdaq National Market, then the Fair Market Value per
        Ordinary Share on such date shall be determined by the Plan
        Administrator after taking into account such factors as the Plan
        Administrator shall deem appropriate.

        HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:

                a. the direct or indirect acquisition by any person or related
        group of persons (other than the Corporation or a person that directly
        or indirectly controls, is controlled by, or is under common control
        with, the Corporation) of beneficial ownership (within the meaning of
        Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
        percent (50%) of the total combined voting power of the Corporation's
        outstanding securities pursuant to a tender or exchange offer made
        directly to the Corporation's stockholders which the Board does not
        recommend such stockholders to accept, and

                b. the acceptance of more than fifty percent (50%) of the
        securities so acquired in such tender or exchange offer from holders
        other than Section 16 Insiders.

                                       2
<PAGE>   3

        INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.

        INITIAL AUTOMATIC GRANT DATE: January 24, 1994.

        1934 ACT: the U.S. Securities and Exchange Act of 1934, as amended from
time to time.

        NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.

        OPTIONEE: any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in effect under the
Plan.

        ORDINARY SHARES: ordinary shares of the Corporation with a par value of
S$0.01 per share.

        PARENT: any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing more than fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

        PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.

        PLAN ADMINISTRATOR: the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant Program with respect to one or more
classes of eligible persons, to the extent such entity is carrying out its
administrative functions under that program with respect to the persons under
its jurisdiction.

        PRIMARY COMMITTEE: the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option Grant
Program with respect to Section 16 Insiders.

        SECONDARY COMMITTEE: the committee of one (1) or more Board members
appointed by the Board to administer the Discretionary Option Grant Program with
respect to eligible persons other than Section 16 Insiders.

        SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the Board or an independent consultant or
advisor, except to the extent otherwise specifically provided in the applicable
stock option agreement.

        SECTION 12(g) REGISTRATION DATE: the date on which the initial
registration of the Ordinary Shares under Section 12(g) of the 1934 Act becomes
effective.

        SECTION 16 INSIDER: an officer or director of the Corporation subject to
the short-swing profit restrictions of Section 16 of the 1934 Act.

        SUBSIDIARY: any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing more than fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

        TAKE-OVER PRICE: the greater of (a) the Fair Market Value per Ordinary
Share on the date the particular option to purchase Ordinary Shares is
surrendered to the Corporation in connection with a Hostile Take-Over or (b) the
highest reported price per Ordinary Share paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.

                                       3
<PAGE>   4

        UNDERWRITING EXECUTION DATE: the date on which the Underwriting
Agreement for the initial public offering of the Ordinary Shares in the U.S. is
executed and priced.

        B. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:

                Any corporation (other than the Corporation) in an unbroken
        chain of corporations ending with the Corporation shall be considered to
        be a PARENT of the Corporation, provided each such corporation in the
        unbroken chain (other than the Corporation) owns, at the time of the
        determination, stock possessing fifty percent (50%) or more of the total
        combined voting power of all classes of stock in one of the other
        corporations in such chain.

                Each corporation (other than the Corporation) in an unbroken
        chain of corporations beginning with the Corporation shall be considered
        to be a SUBSIDIARY of the Corporation, provided each such corporation in
        the unbroken chain (other than the last corporation) owns, at the time
        of the determination, stock possessing fifty percent (50%) or more of
        the total combined voting power of all classes of stock in one of the
        other corporations in such chain.

III. STRUCTURE OF THE PLAN

        A. Stock Programs. The Plan shall be divided into two (2) components:
the Discretionary Option Grant Program specified in Article Two and the
Automatic Option Grant Program specified in Article Three. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase Ordinary Shares in
accordance with the provisions of Article Two. Under the Automatic Option Grant
Program, non-employee members of the Board will receive special option grants at
periodic intervals to purchase Ordinary Shares in accordance with the provisions
of Article Three.

        B. General Provisions. Unless the context clearly indicates otherwise,
the provisions of Articles One and Four shall apply to the Discretionary Option
Grant and the Automatic Option Grant Programs and shall accordingly govern the
interests of all individuals under the Plan.

IV. ADMINISTRATION OF THE PLAN

        A. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant Program with respect to Section 16
Insiders. No non-employee Board member shall be eligible to serve on the Primary
Committee if such individual has, during the twelve (12)-month period
immediately preceding the date of his or her appointment to the Committee or (if
shorter) the period commencing with the Section 12(g) Registration Date and
ending with the date of his or her appointment to the Primary Committee,
received an option grant under the Plan or any other stock option, stock
appreciation, stock bonus or other stock plan of the Corporation (or any parent
or subsidiary corporation), other than pursuant to the Automatic Option Grant
Program.

        B. Administration of the Discretionary Option Grant Program with respect
to all other persons eligible to participate in that program may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or the
Board may retain the power to administer that program with respect to all such
persons. The members of the Secondary Committee may be Board members who are
Employees eligible to receive discretionary option grants under the Plan or any
other stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).

        C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

                                       4
<PAGE>   5

        D. Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Discretionary Option Grant Program
and to make such determinations under, and issue such interpretations of the
provisions of such program and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant Program under its jurisdiction or any option grant
thereunder.

        E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.

        F. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms and conditions of that program, and
no Plan Administrator shall exercise any discretionary functions with respect to
any option grants made under that program.

V. OPTION GRANTS

        A. The persons eligible to participate in the Discretionary Option Grant
Program under Article Two shall be limited to the following:

                l. officers and other key employees of the Corporation (or its
        parent or subsidiary corporations) who render services which contribute
        to the management, growth and financial success of the Corporation (or
        its parent or subsidiary corporations); and

                2. those consultants or other independent contractors who
        provide valuable services to the Corporation (or its parent or
        subsidiary corporations) but who are not residents of Singapore.

        B. Non-employee Board members shall not be eligible to participate in
the Discretionary Option Grant Program. Such individuals shall, however, be
eligible to receive automatic option grants pursuant to the provisions of
Article Three, provided such individuals are not residents of Singapore.

        C. The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Discretionary Option
Grant Program, the number of Ordinary Shares to be covered by each such grant,
the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.

        D. Options may be granted to eligible individuals or upon the request of
any such individual to a trust or other entity for the benefit of such
individual at the discretion of the Plan Administrator.

VI. STOCK SUBJECT TO THE PLAN

        A. The maximum number of Ordinary Shares which may be issued over the
term of the Plan shall not exceed 50,800,000* Ordinary Shares, subject to
adjustment from time to time in accordance with the provisions of this Section
VI. The Ordinary Shares reserved for issuance under the Plan shall be drawn from
the Corporation's authorized but unissued Ordinary Shares.

        B. In no event may the aggregate number of Ordinary Shares for which any
one individual participating in the Plan may be granted stock options exceed
4,000,000* Ordinary Shares annually.

                                       5
<PAGE>   6

        C. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the Ordinary Shares subject to the portion of
each option not so exercised shall be available for subsequent issuance under
the Plan. Ordinary Shares subject to any option or portion thereof surrendered
in accordance with Section V of Article Two or Section III of Article Three and
all Ordinary Shares issued under the Plan shall reduce on a share-for-share
basis the number of Ordinary Shares available for subsequent issuance the Plan.

        D. Should any change be made to the Ordinary Shares issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Ordinary
Shares as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options over the term of the Plan, (iii) the number and/or class of
securities and price per share in effect under each option outstanding under the
Discretionary Option Grant or Automatic Option Grant Program, and (iv) the class
of securities for which automatic option grants are to be subsequently made to
newly elected or continuing non-employee Board members under Automatic Option
Grant Program. Such adjustments to the outstanding options are to be effected in
a manner which shall preclude the enlargement or dilution of rights and benefits
under such options. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive. In no event shall such adjustments be made to
the number of securities for which automatic option grants are to be
subsequently made to newly elected or continuing non-employee Board members
under the Automatic Option Grant Program.

        E. The repricing, replacement or regranting of any previously granted
share option, through cancellation or by lowering the exercise price of such
share option, shall be prohibited unless the shareholders of the Company first
approve such repricing, replacement or regranting.

                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

I. TERMS AND CONDITIONS OF OPTIONS

        Options granted pursuant to the Discretionary Option Grant Program shall
be authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or Non-Statutory
Options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted Non-Statutory Options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.

        A. Exercise Price.

                1. The exercise price per Ordinary Share shall be fixed by the
Plan Administrator in accordance with the following provisions:

                a. The exercise price per Ordinary Share subject to an Incentive
        Option shall in no event be less than one hundred percent (100%) of the
        Fair Market Value per Ordinary Share on the grant date.

                b. The exercise price per Ordinary Share subject to a
        Non-Statutory Option shall in no event be less than eighty-five percent
        (85%) of the Fair Market Value per Ordinary Share on the grant date.

                                       6
<PAGE>   7

                c. In no event may the exercise price per Ordinary Share subject
        to any Incentive or Non-Statutory Option be less than the par value of
        such Ordinary Share.

                2. The exercise price shall become immediately due upon exercise
of the option and, subject to the provisions of Section I of Article Four and
the instrument evidencing the grant, shall be payable in one of the following
alternative forms specified below:

                a. full payment in cash or check made payable to the
        Corporation's order;

                b. full payment through a broker-dealer sale and remittance
        procedure pursuant to which the Optionee shall provide concurrent
        irrevocable written instructions (i) to a Corporation-designated
        brokerage firm to effect the immediate sale of the purchased Ordinary
        Shares and remit to the Corporation, out of the sale proceeds available
        on the settlement date, sufficient funds to cover the aggregate exercise
        price payable for the purchased Ordinary Shares plus all applicable
        Federal, state and local income and employment taxes required to be
        withheld by the Corporation in connection with such purchase and (ii) to
        the Corporation to deliver the certificates for the purchased Ordinary
        Shares directly to such brokerage firm in order to complete the sale
        transaction; or

                c. conversion of a convertible note issued by the Corporation or
        a Subsidiary, the terms of which provide that it is convertible into
        Ordinary Shares issuable pursuant to the 1993 Plan (with the principal
        amount and any accrued interest being converted and credited dollar for
        dollar to the payment of the exercise price).

        B. Term and Exercise of Options. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of five (5) years measured from the grant date. The
option, together with any stock appreciation rights pertaining to such option,
shall be exercisable only by the Optionee and shall not be assignable by the
Optionee, except for a transfer of the option effected by will or the laws of
descent or distribution following the Optionee's death. Notwithstanding the
foregoing, (i) Optionees may transfer or assign their options (other than
Incentive Options) to family members (as defined below) through a gift or a
domestic relations order (and not in a transfer for value), and (ii) if the
terms of the applicable instrument evidencing the grant of an option so provide,
Optionees who reside outside of the United States and Singapore may assign their
options to a financial institution outside of the United States and Singapore
that has been approved by the Plan Administrator, in accordance with the terms
of the applicable instrument. The Optionee shall be solely responsible for
effecting any such assignment, and for ensuring that such assignment is valid,
legal and binding under all applicable laws. The Plan Administrator shall have
the discretion to adopt such rules as it deems necessary to ensure that any
assignment is in compliance with all applicable laws.

        C. Termination of Service.

                1. The following provisions shall govern the exercise period
applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.

                        a. Should an Optionee cease Service for any reason
                (including death or Permanent Disability) while holding one or
                more outstanding options under this Article Two, then none of
                those options shall (except to the extent otherwise provided
                pursuant to subparagraph 3 below) remain exercisable for more
                than a twenty-four (24)-month period (or such shorter period
                determined by the Plan Administrator and set forth in the
                instrument evidencing the grant) measured from the date of such
                cessation of Service.

                        b. Any option held by the Optionee under this Article
                Two and exercisable in whole or in part on the date of his or
                her death may be subsequently exercised by the personal

                                       7
<PAGE>   8

                representative of the Optionee's estate or by the person or
                persons to whom the option is transferred pursuant to the
                Optionee's will or in accordance with the laws of descent and
                distribution. However, the right to exercise such option shall
                lapse upon the earlier of (i) the second anniversary of the date
                of the Optionee's death (or such shorter period determined by
                the Plan Administrator and set forth in the instrument
                evidencing the grant) or (ii) the specified expiration date of
                the option term. Accordingly, upon the occurrence of the earlier
                event, the option shall terminate and cease to remain
                outstanding.

                c. Under no circumstances shall any such option be exercisable
        after the specified expiration date of the option term.

                d. During the applicable post-Service exercise period, the
        option may not be exercised in the aggregate for more than the number of
        Ordinary Shares (if any) for which that option is exercisable at the
        time of the Optionee's cessation of Service. Upon the expiration of the
        limited post-Service exercise period or (if earlier) upon the specified
        expiration date of the option term, each such option shall terminate and
        cease to be outstanding with respect to any vested Ordinary Shares for
        which the option has not otherwise been exercised. However, each
        outstanding option shall immediately terminate and cease to be
        outstanding, at the time of the Optionee's cessation of Service, with
        respect to any Ordinary Shares for which the option is not otherwise at
        that time exercisable or in which Optionee is not otherwise vested.

                e. Should (i) the Optionee's Service be terminated for
        misconduct (including, but not limited to, any act of dishonesty,
        willful misconduct, fraud or embezzlement) or (ii) the Optionee make any
        unauthorized use or disclosure of confidential information or trade
        secrets of the Corporation or its parent or subsidiary corporations,
        then in any such event all outstanding options held by the Optionee
        under this Article Two shall terminate immediately and cease to remain
        outstanding.

                2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under this paragraph C., not only with respect to the number
of vested Ordinary Shares for which each such option is exercisable at the time
of the Optionee's cessation of Service but also with respect to one or more
subsequent installments of vested Ordinary Shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.

                3. The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of Service or
death from the limited period in effect under subparagraph 1. above to such
greater period of time as the Plan Administrator shall deem appropriate. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.

        D. Stockholder Rights. An optionee shall have no stockholder rights with
respect to the Ordinary Shares subject to the option until such individual shall
have exercised the option and paid the exercise price for the purchased Ordinary
Shares.

II. INCENTIVE OPTIONS

        The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to such terms and conditions. Except as so modified by this
Section II, the provisions of Articles One, Two and Four of the Plan shall apply
to all Incentive Options granted hereunder.

                                       8
<PAGE>   9

        A. Dollar Limitation. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Ordinary Shares for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Corporation or its parent or subsidiary corporations) may for the first
time become exercisable as incentive stock options under the Code during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options
under the Code shall be applied on the basis of the order in which such options
are granted. Should the number of Ordinary Shares for which any Incentive Option
first becomes exercisable in any calendar year exceed the applicable One Hundred
Thousand Dollar ($100,000) limitation, then that option may nevertheless be
exercised in such calendar year for the excess number of shares as a
non-statutory option under the Code.

        B. 10% Stockholder. If any individual to whom an Incentive Option is
granted is the owner of stock (as determined under Section 424(d) of the Code)
possessing ten percent (10%) or more of the total combined voting power of all
classes of stock of the Corporation or any one of its parent or subsidiary
corporations, then the exercise price per Ordinary Share shall not be less than
the greater of (i) one hundred and ten percent (110%) of the Fair Market Value
per Ordinary Share on the grant date or (ii) the par value of such Ordinary
Share.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

        A. In the event of any Corporate Transaction, each option which is at
the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of Ordinary Shares at the time subject to such option and may be
exercised for all or any portion of such Ordinary Shares. However, an
outstanding option under this Article Two shall not so accelerate if and to the
extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (ii) such option is to be replaced with
a cash incentive program of the successor corporation which preserves the option
spread existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.

        B. Immediately following the consummation of the Corporate Transaction,
all outstanding options under this Article Two shall terminate and cease to
remain outstanding, except to the extent assumed by the successor corporation or
its parent company.

        C. Each outstanding option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share, provided the aggregate exercise price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.

        D. The Plan Administrator shall have the discretion, exercisable either
in advance of any actually-anticipated Corporate Transaction or at the time of
an actual Corporate Transaction, to provide (upon such terms as it may deem
appropriate) for the automatic acceleration of one or more outstanding options
granted under the Plan which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, in the event the
Optionee's Service should subsequently terminate within a designated period
following such Corporate Transaction.

                                       9
<PAGE>   10

        E. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two upon the
occurrence of the Change in Control. The Plan Administrator shall also have full
power and authority to condition any such option acceleration upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.

        F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.

        G. The grant of options under this Article Two shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

        H. The portion of any Incentive Option accelerated under this Section
III in connection with a Corporate Transaction or Change in Control shall remain
exercisable as an incentive stock option under the Code only to the extent the
dollar limitation of Section II of this Article Two is not exceeded. To the
extent such dollar limitation is exceeded, the accelerated portion of such
option shall be exercisable as a non-statutory option under the Code.

IV. CANCELLATION AND REGRANT OF OPTIONS

        The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under this Article Two and to
grant in substitution new options under the Plan covering the same or different
numbers of Ordinary Shares but with an exercise price per Ordinary Share not
less than (i) eighty-five percent (85%) of the Fair Market Value per Ordinary
Share on the new grant date or (ii) one hundred percent (100%) of such Fair
Market Value in the case of an Incentive Option, but in no event shall the
exercise price per Ordinary Share be less than the par value of such Ordinary
Share.

V. STOCK APPRECIATION RIGHTS

        A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the Fair Market
Value (on the option surrender date) of the number of vested Ordinary Shares for
which the surrendered option (or surrendered portion thereof) is at the time
exercisable over (ii) the aggregate exercise price payable for such vested
Ordinary Shares.

        B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in Ordinary Shares valued at Fair Market Value on the
option surrender date, in cash, or partly in Ordinary Shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.

        C. If the surrender of an option is rejected by the Plan Administrator,
then the Optionee shall retain whatever rights the Optionee had under the
surrendered option (or surrendered portion thereof) on the option surrender date
and may exercise such rights at any time prior to the later of (i) five (5)
business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be exercised
more than five (5) years after the date of the option grant.

        D. One or more Section 16 Insiders may, in the Plan Administrator's sole
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under this Article Two. Upon the

                                       10
<PAGE>   11

occurrence of a Hostile Take-Over, the Section 16 Insider shall have a thirty
(30)-day period in which he or she may surrender any outstanding options with
such a limited stock appreciation right in effect for at least six (6) months to
the Corporation, to the extent such option is at the time exercisable for vested
Ordinary Shares. The Section 16 Insiders shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the vested Ordinary Shares for which each surrendered option
(or surrendered portion thereof) is at the time exercisable over (ii) the
aggregate exercise price payable for such Ordinary Shares. The cash distribution
payable upon such option surrender shall be made within five (5) days following
the date the option is surrendered to the Corporation. Neither the approval of
the Plan Administrator nor the consent of the Board shall be required in
connection with such option surrender and cash distribution. Any unsurrendered
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.

        E. The Ordinary Shares subject to any option surrendered for an
appreciation distribution pursuant to this Section V shall not be available for
subsequent issuance under the Plan.

                                  ARTICLE THREE

                         AUTOMATIC OPTION GRANT PROGRAM

I. ELIGIBILITY

        A. Eligible Directors. The individuals eligible to receive automatic
option grants pursuant to the provisions of this Article Three shall be limited
to (i) those individuals who are serving as non-employee Board members on the
Initial Automatic Grant Date, (ii) those individuals who are first elected or
appointed as non-employee Board members after the Initial Automatic Grant Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (iii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the
Underwriting Execution Date. In no event, however, may any non-employee Board
member who is a Singapore resident participate in this Automatic Option Grant
Program. Any non-employee Board member eligible to participate in the Automatic
Option Grant Program pursuant to the foregoing criteria shall be designated an
Eligible Director for purposes of the Plan.

        B. Limitation. Except for the option grants to be made pursuant to the
provisions of this Automatic Option Grant Program, a non-employee Board member
shall not be entitled to receive any additional option grants or stock issuances
under this Plan or any other stock plan of the Corporation (or its parent or
subsidiaries) during his or her period of Board service.

II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

        A. Grant Dates. Option grants shall be made under this Article Three on
the dates specified below:

                1. Initial Grant.

                Each individual serving as an Eligible Director on the Initial
Automatic Grant Date shall automatically be granted on such date a Non-Statutory
Option to purchase 30,000 Ordinary Shares upon the terms and conditions of this
Article Three.

                Each individual who first becomes an Eligible Director after the
Initial Automatic Grant Date, whether through election by the stockholders or
appointment by the Board, shall automatically be granted, at the time of such
initial election or appointment, a Non-Statutory Option to purchase 30,000*
Ordinary Shares upon the terms and conditions of this Article Three.

                2. Annual Grant. On the date of each Annual Stockholders Meeting
held after the Underwriting Execution Date, each individual who is at that time
serving as an Eligible Director, whether or not such individual is standing for
reelection as a Board member at that Annual Meeting, shall automatically be
granted a

                                       11
<PAGE>   12

Non-Statutory Option to purchase an additional 6,000* Ordinary Shares upon the
terms and conditions of this Article Three, provided such individual has served
as a Board member for at least six (6) months.

        B. There shall be no limit on the number of such 6,000* Ordinary Share
option grants any one Eligible Director may receive over his or her period of
Board service. The number of Ordinary Shares for which the automatic option
grants are to be made to each newly elected or continuing Eligible Director
shall be subject to periodic adjustment pursuant to the applicable provisions of
Section VI.C. of Article One.

        C. Exercise Price. The exercise price per Ordinary Share subject to each
automatic option grant made under this Article Three shall be determined as
follows:

        - For each automatic option grant made on the Initial Automatic Grant
Date, the exercise price per Ordinary Share shall be equal to the Fair Market
Value per Ordinary Share on such date as shall be determined by the Plan
Administrator after taking into account such factors as the Plan Administrator
deems relevant.

        - For all other automatic option grants, the exercise price per Ordinary
Share shall be equal to one hundred percent (100%) of the Fair Market Value per
Ordinary Share on the automatic grant date, but in no event less than the par
value of such Ordinary Share.

        D. Payment. The exercise price shall be payable in one of the
alternative forms specified below:

                1. full payment in cash or check made payable to the
Corporation's order; or

                2. to the extent the option is exercised for vested Ordinary
Shares, full payment through a sale and remittance procedure pursuant to which
the non-employee Board member shall provide concurrent irrevocable written
instructions (i) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased Ordinary Shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased Ordinary Shares and
(ii) to the Corporation to deliver the certificates for the purchased Ordinary
Shares directly to such brokerage firm in order to complete the sale
transaction.

        E. Option Term. Each automatic grant under this Article Three shall have
a maximum term of ten (10) years measured from the automatic grant date, except
that any grant to a person who is not an employee of the Company or a related
entity will have a maximum term of five (5) years.

        F. Exercisability. Each automatic grant shall become exercisable for the
Ordinary Shares subject to that grant in a series of successive equal monthly
installments upon the Optionee's completion of each month of Board service over
the twenty-four (24) month period measured from the automatic grant date. The
exercisability of each such grant shall be subject to acceleration as provided
in Section II.G and Section III of this Article Three. In no event, however,
shall any automatic option grant become exercisable for any additional Ordinary
Shares after the Optionee's cessation of Board service.

        G. Transferability. During the lifetime of the Optionee, each automatic
option grant, together with the limited stock appreciation right pertaining to
such option, shall be exercisable only by the Optionee and shall not be
assignable or transferable by the Optionee, except for a transfer of the option
effected by will or the laws of descent or distribution following the Optionee's
death. Notwithstanding the foregoing, (i) Optionees may transfer or assign their
options (other than Incentive Options) to family members (as defined below)
through a gift or domestic relations order (and not in a transfer for value),
and (ii) if the terms of the applicable Award Agreement so provide, Optionees
who reside outside of the United States and Singapore may assign their options
to a financial institution outside of the United States and Singapore that has
been approved by the Committee, in accordance with the terms of the applicable
award agreement. The Optionee shall be solely responsible for effecting any such
assignment, and for ensuring that such assignment is valid, legal and binding
under all applicable laws. The Committee shall have the discretion to establish
such rules as it deems necessary to ensure that all such assignments are made in
compliance with all applicable laws. For purposes of this paragraph, "family
member" includes any child, stepchild, grandchild,

                                       12
<PAGE>   13

parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interest, a foundation in
which these persons (or the employee) control the management of assets, and any
other entity in which these persons (or the employee) own more than fifty
percent of the voting interests.

        H. Termination of Board Service.

                1. Should the Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding one or more
automatic option grants under this Article Three, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option for any or all of the option
shares for which the option is exercisable at the time of such cessation of
Board service. Each such option shall immediately terminate and cease to remain
outstanding, at the time of the Optionee's cessation of Board service, with
respect to any option shares for which the option is not otherwise at that time
exercisable.

                2. Should the Optionee die within six (6) months after cessation
of Board service, then any automatic option grant held by the Optionee at the
time of death may subsequently be exercised, for any or all of the option shares
for which the option is exercisable at the time of the Optionee's cessation of
Board service (less any option shares subsequently purchased by the Optionee
prior to death), by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. The
right to exercise each such option shall lapse upon the expiration of the twelve
(12)-month period measured from the date of the Optionee's death.

                3. Should the Optionee die or become Permanently Disabled while
serving as a Board member, then each automatic option grant held by such
Optionee under this Article Three shall immediately become exercisable for all
the Ordinary Shares subject to that option, and the Optionee (or the
representative of the Optionee's estate or the person or persons to whom the
option is transferred upon the Optionee's death) shall have a twelve (12)-month
period following the date of the Optionee's cessation of Board service in which
to exercise such option for any or all of those Ordinary Shares as fully-vested
shares.

                4. In no event shall any automatic grant under this Article
Three remain exercisable after the expiration date of the five (5)-year option
term. Upon the expiration of the applicable post-service exercise period under
subparagraphs 1. through 3. above or (if earlier) upon the expiration of the
five (5)-year option term, the automatic grant shall terminate and cease to be
outstanding for any option shares for which the option was exercisable at the
time of the Optionee's cessation of Board service but for which such option was
not otherwise exercised.

        I. Stockholder Rights. The holder of an automatic option grant under
this Article Three shall have none of the rights of a stockholder with respect
to the Ordinary Shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased Ordinary
Shares.

        J. Remaining Terms. The remaining terms and conditions of each automatic
option grant shall be as set forth in the form Automatic Stock Option Agreement
attached as Exhibit A.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

        A. In the event of any Corporate Transaction, each option at the time
outstanding under this Article Three but not otherwise fully exercisable shall,
immediately prior to the specified effective date for the Corporate Transaction,
automatically accelerate and become fully exercisable for all of the Ordinary
Shares at the time subject to that option and may be exercised for all or any
portion of those shares as fully vested Ordinary Shares. Immediately following
the consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to remain outstanding.

                                       13
<PAGE>   14

        B. In connection with any Change in Control of the Corporation, each
option at the time outstanding under this Article Three but not otherwise fully
exercisable shall, immediately prior to the specified effective date for the
Change in Control, automatically accelerate and become fully exercisable for all
of the Ordinary Shares at the time subject to that option and may be exercised
for all or any portion of those shares as fully vested Ordinary Shares. Each
such option shall remain so exercisable for the option shares until the
expiration or sooner termination of the option term.

        C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each option held
by him or her under this Article Three for a period of at least six (6) months.
The Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
Ordinary Shares at the time subject to the surrendered option (whether or not
the option is otherwise at the time exercisable for those Ordinary Shares) over
(ii) the aggregate exercise price payable for such Ordinary Shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. Neither the approval of the Plan Administrator nor
the consent of the Board shall be required in connection with such option
surrender and cash distribution. The Ordinary Shares subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent issuance under the Plan.

        D. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS

        A. Limited Amendments. The provisions of this Automatic Option Grant
Program, together with the automatic option grants outstanding under this
Article Three, may not be amended at intervals more frequently than once every
six (6) months, other than to the extent necessary to comply with applicable
U.S. income tax laws and regulations.

                                  ARTICLE FOUR

                                  MISCELLANEOUS

I. LOANS OR INSTALLMENT PAYMENTS

        A. The Plan Administrator may, in its discretion but subject to any
prohibition imposed by any applicable laws, assist any Optionee, to the extent
such Optionee is an Employee (including an Optionee or Participant who is an
officer of the Corporation), in the exercise of one or more stock options
granted to such Optionee under the Discretionary Option Grant Program, including
the satisfaction of any Federal, state and local income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan from
the Corporation to such Optionee or (ii) permitting the Optionee to pay the
exercise price for the purchased shares in installments over a period of years.
The terms of any loan or installment method of payment (including the interest
rate and terms of repayment) shall be upon such terms as the Plan Administrator
specifies in the applicable option agreement or otherwise deems appropriate
under the circumstances. Loans or installment payments may be authorized with or
without security or collateral. However, the maximum credit available to the
Optionee may not exceed the exercise price of the acquired Ordinary Shares (less
the par value of such shares) plus any Federal, state and local income and
employment tax liability incurred by the Optionee in connection with the
acquisition of the Ordinary Shares.

        B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.

                                       14
<PAGE>   15

        C. All financial assistance provided under this Section I of Article
Four shall be effected in compliance with the applicable provisions of Section
76(9)(b) of the Companies Act, Chapter 50 of Singapore (or any successor
statutory provision).

II. AMENDMENT OF THE PLAN AND AWARDS

        A. The Board has complete and exclusive power and authority to amend or
modify the Plan (or any component thereof) in any or all respects whatsoever.
However, (i) no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the Optionee consents to such amendment, and (ii) any amendment made to
the Automatic Option Grant Program (or any options outstanding thereunder) shall
be in compliance with the limitation of Section IV of Article Three. In
addition, the Board may not, without the approval of the Corporation's
stockholders, amend the Plan to (i) materially increase the maximum number of
Ordinary Shares issuable under the Plan or the number of Ordinary Shares for
which options may be granted per newly-elected or continuing Eligible Director
under Article Three of the Plan or the maximum number of Ordinary Shares for
which any one individual participating in the Plan may be granted stock options
over the term of the Plan, except for permissible adjustments under Section
VI.C. of Article One, (ii) materially modify the eligibility requirements for
plan participation or (iii) materially increase the benefits accruing to plan
participants.

        B. Options to purchase Ordinary Shares may be granted under the
Discretionary Option Grant Program which are in excess of the number of Ordinary
Shares then available for issuance under the Plan. However, no such option shall
become exercisable in whole or in part for the excess Ordinary Shares subject to
that option until stockholder approval is obtained for a sufficient increase in
the number of Ordinary Shares available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess option grants are made, then such options shall terminate
and cease to be exercisable with respect to the excess number of Ordinary
Shares, and no further option grants shall be made under the Plan.

III. TAX WITHHOLDING

        The Corporation's obligation to deliver Ordinary Shares upon the
exercise of stock options for such shares under the Plan shall be subject to the
satisfaction of all applicable income and employment tax withholding
requirements.

IV. EFFECTIVE DATE AND TERM OF PLAN

        A. This Plan became effective when adopted by the Board and approved by
the stockholders in 1993. On June 8, 1995, the Board approved an amendment to
the Plan to (i) increase the aggregate number of Ordinary Shares issuable over
the term thereof from 7,200,000* shares to 12,000,000* shares and (ii) increase
the number of Ordinary Shares for which options may be granted to any one
individual from 2,400,000* shares to 4,000,000* shares. The shareholders
approved those amendments at the 1995 Annual Meeting.

        B. In June 1996, the Board amended the Plan to (i) increase the
aggregate number of Ordinary Shares issuable over the term of the Plan from
6,000,000* Ordinary Shares to 8,000,000* Ordinary Shares. The stockholders
approved such amendment at the 1996 Annual Meeting.

        C. On August 15, 1996, the Board amended and restated the Plan to
authorize, among other things, the separate but concurrent jurisdiction of the
Discretionary Option Grant Program by the Primary Committee and one or more
Secondary Committees of the Board, with the Primary Committee to have the sole
authority to administer such program with respect to Section 16 Insiders.

        D. In September 1997, the Board approved an amendment to the Plan to
increase the aggregate number of Ordinary Shares issuable over the term thereof
from 16,000,000* to 20,800,000* shares. The shareholders approved those
amendments at the 1997 Annual Meeting.

                                       15
<PAGE>   16

        E. In August 1998, the Board approved an amendment to the Plan to
increase the aggregate number of Ordinary Shares issuable over the term thereof
from 20,800,000* to 28,800,000* shares. The shareholders approved this amendment
at the 1998 Annual Meeting.

        F. In July 1999, the Board approved an amendment to the Plan to increase
the aggregate number of Ordinary Shares issuable over the term of the Plan from
28,800,000* Ordinary Shares to 32,800,000* Ordinary Shares. The shareholders
approved this amendment at the 1999 Annual Meeting.

        G. In November 1999, the Board approved an amendment to the Plan to
increase the aggregate number of Ordinary Shares issuable over the term of the
Plan from 32,800,000* Ordinary Shares to 40,800,000* Ordinary Shares. The
shareholders approved this amendment at the 2000 Extraordinary General Meeting.

        H. In September 2000, the Board approved an amendment to the Plan to
increase the aggregate number of Ordinary Shares issuable over the term of the
Plan from 40,800,000* Ordinary Shares to 50,400,000* Ordinary Shares. The
shareholders approved this amendment at the 2000 Annual Meeting.

        I. The Plan shall terminate upon the earlier of (i) November 30, 2003 or
(ii) the date on which all Ordinary Shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.

V. USE OF PROCEEDS

        Any cash proceeds received by the Corporation from the sale of Ordinary
Shares pursuant to option grants under the Plan shall be used for general
corporate purposes.

VI. REGULATORY APPROVALS

        A. The implementation of the Plan, the granting of any stock option or
stock appreciation right under the Plan, the issuance of any Ordinary Shares
upon the exercise or surrender of the stock options or stock appreciation rights
granted hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options and stock appreciation rights granted under it
and the Ordinary Shares issued pursuant to it.

        B. No Ordinary Shares or other assets or securities shall be issued or
delivered under this Plan unless and until there shall have been compliance with
(i) all applicable requirements of U.S. and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the Ordinary
Shares issuable under the Plan, (ii) all applicable listing requirements of any
securities exchange on which the Ordinary Shares are then listed for trading and
(iii) all applicable requirements of Singapore law.

VII. NO EMPLOYMENT/SERVICE RIGHTS

        Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
Service of the Corporation (or any parent or subsidiary corporation) for any
period of specific duration, and the Corporation (or any parent or subsidiary
corporation retaining the services of such individual) may terminate such
individual's Service at any time and for any reason, with or without cause.

VIII. MISCELLANEOUS PROVISIONS

        A. Except to the extent otherwise expressly provided in the Plan, the
right to acquire Ordinary Shares or other assets or securities under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.

                                       16
<PAGE>   17

        B. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.

*Reflects the two-for-one stock splits in the form of a bonus issue (the
equivalent of a stock dividend) effective December 22, 1998, December 22, 1999
and October 16, 2000.

                                       17

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