Document:

<PAGE>

                                                                  EXECUTION COPY

                            AAMES CAPITAL CORPORATION

                                   as Seller,

                      AAMES CAPITAL ACCEPTANCE CORPORATION

                                  as Depositor,

                          COUNTRYWIDE HOME LOANS, INC.

                                   as Servicer

                                       and

                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                   as Trustee

                         POOLING AND SERVICING AGREEMENT

                            Dated as of June 1, 2001
                           Aames Mortgage Trust 2001-2
                       Mortgage Pass-Through Certificates,
                                  Series 2001-2

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                                TABLE OF CONTENTS

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<CAPTION>

                                                   ARTICLE I

                                                  DEFINITIONS

<S>              <C>                                                                                      <C>
Section 1.01     Definitions.................................................................................1
Section 1.02     Interest Calculations......................................................................30

                                                   ARTICLE II

                           CONVEYANCE OF THE TRUST ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01     Conveyance of the Trust....................................................................30
Section 2.02     Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract..........................33
Section 2.03     Acceptance by the Trustee; Repurchase or Substitution of
                 Mortgage Loans.............................................................................36
Section 2.04     Representations and Warranties Regarding the Servicer and the Seller.......................39
Section 2.05     Representations and Warranties of the Seller Regarding the
                 Mortgage Loans.............................................................................42
Section 2.05A    Representations and Warranties of the Depositor as to the
                 Mortgage Loans.............................................................................53
Section 2.06     Execution and Authentication of Certificates...............................................53
Section 2.07     Reserved...................................................................................53
Section 2.08     Indemnification of the Trust...............................................................53

                                                  ARTICLE III

                      ADMINISTRATION AND SERVICING OF MORTGAGE LOANS; CERTIFICATE ACCOUNT

Section 3.01     The Servicer and the Sub-Servicers.........................................................54
Section 3.02     Collection of Certain Mortgage Loan Payments; Collection Account and Certificate Account...55
Section 3.03     Additional Servicing Responsibilities for the Adjustable Rate
                 Mortgage Loans.............................................................................58
Section 3.04     Hazard Insurance Policies..................................................................58
Section 3.05     Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements.................59
Section 3.06     Realization upon Liquidated Mortgage Loans.................................................60
Section 3.07     Trustee to Cooperate; Release of Mortgage Files............................................61
Section 3.08     Servicing Compensation; Payment of Certain Expenses by the Servicer........................62
Section 3.09     Annual Statement as to Compliance..........................................................62
Section 3.10     Annual Independent Public Accountants'Servicing Report.....................................62
Section 3.11     Access to Certain Documentation and Information Regarding the
                 Mortgage Loans.............................................................................63
Section 3.12     Maintenance of Fidelity Bond and Errors and Omissions Policy...............................63

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Section 3.13     Notices to the Rating Agencies and the Trustee ............................................63
Section 3.14     Reports of Foreclosures and Abandonment of Mortgaged Properties............................64
Section 3.15     Sub-Servicers and Sub-Servicing Agreements.................................................64
Section 3.16     Prefunding Account.........................................................................65
Section 3.17     Capitalized Interest Account...............................................................66
Section 3.18     [Reserved].................................................................................66
Section 3.19     [Reserved].................................................................................66
Section 3.20     [Reserved].................................................................................66
Section 3.21     Net Rate Cap Fund..........................................................................67
Section 3.22     Covenants and Representations Regarding Prepayment Charges.................................67
Section 3.23     Claims Upon the PMI Policy.................................................................68

                                                   ARTICLE IV

                                               REMITTANCE REPORT

Section 4.01     Servicer Remittance Report.................................................................68
Section 4.02     Trustee Distribution Date Statement........................................................68

                                                   ARTICLE V

                                 PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

Section 5.01     Distributions..............................................................................70
Section 5.02     Monthly Advances; Servicing Advances.......................................................74
Section 5.03     Statements to Certificateholders...........................................................75
Section 5.04     Allocation of Losses.......................................................................77

                                                   ARTICLE VI

                                                THE CERTIFICATES

Section 6.01     The Certificates...........................................................................77
Section 6.02     Registration of Transfer and Exchange of Certificates......................................78
Section 6.03     Mutilated, Destroyed, Lost or Stolen Certificates..........................................82
Section 6.04     Persons Deemed Owners......................................................................83
Section 6.05     Actions of Certificateholders..............................................................83

                                                  ARTICLE VII

                                   THE SERVICER, THE SELLER AND THE DEPOSITOR

Section 7.01     Liability of the Seller, the Depositor and the Servicer....................................84
Section 7.02     Merger or Consolidation of, or Assumption of the Obligations
                 of the Seller, the Depositor or Servicer...................................................84
Section 7.03     Limitation on Liability of the Servicer and Others.........................................84
Section 7.04     Servicer Not to Resign.....................................................................84

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Section 7.05     Merger or Consolidation of the Seller or Depositor.........................................86

                                                  ARTICLE VIII

                                                    DEFAULT

Section 8.01     Events of Default..........................................................................86
Section 8.02     Trustee to Act; Appointment of Successor...................................................87
Section 8.03     Notifications to Certificateholders........................................................88
Section 8.04     Assumption or Termination of Sub-Servicing Agreements by the Trustee or any
                 Successor Servicer ........................................................................89

                                                   ARTICLE IX

                                                  THE TRUSTEE

Section 9.01     Duties of the Trustee......................................................................89
Section 9.02     Certain Matters Affecting the Trustee......................................................90
Section 9.03     Trustee Not Liable for Certificates or Mortgage Loans......................................91
Section 9.04     Trustee May Own Certificates...............................................................92
Section 9.05     Payment of the Trustee's Fees and Expenses.................................................92
Section 9.06     Eligibility Requirements for the Trustee...................................................92
Section 9.07     Resignation or Removal of the Trustee......................................................93
Section 9.08     Successor Trustee..........................................................................93
Section 9.09     Merger or Consolidation of the Trustee.....................................................94
Section 9.10     Appointment of Co-Trustee or Separate Trustee..............................................94
Section 9.11     Compliance with REMIC Provisions...........................................................95
Section 9.12     Trustee May Enforce Claims Without Possession of Certificates..............................96
Section 9.13     Exercise of Trustee Powers by Certificateholders...........................................96
Section 9.14     Tax Returns................................................................................97
Section 9.15     Taxpayer Identification Number.............................................................97
Section 9.16     Miscellaneous REMIC Matters................................................................97

                                                   ARTICLE X

                                                  TERMINATION

Section 10.01    Termination Upon Purchase or Liquidation of All Mortgage Loans............................101
Section 10.02    Additional Termination Requirements.......................................................103

                                                   ARTICLE XI

                                            MISCELLANEOUS PROVISIONS

Section 11.01    Amendment.................................................................................104
Section 11.02    Recordation of Agreement..................................................................106
Section 11.03    Limitation on Rights of Certificateholders................................................106

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Section 11.04    Governing Law.............................................................................107
Section 11.05    Notices...................................................................................107
Section 11.06    Severability of Provisions................................................................107
Section 11.07    Assignment................................................................................107
Section 11.08    Certificates Nonassessable and Fully Paid.................................................108
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                             SCHEDULES AND EXHIBITS
                             ----------------------

Schedule I           List of Sub-Servicers
Schedule II          Schedule of Restricted Mortgage Loans
Exhibit A-1          Form of Class A Certificate
Exhibit A-2          Form of Class M Certificate
Exhibit A-3          Form of Class B Certificate
Exhibit A-4          Form of Class A-IO Certificate
Exhibit B-1          Form of Class C Certificate
Exhibit B-2          Form of Class R Certificate
Exhibit B-3          Form of Class P Certificate
Exhibit C            [Reserved]
Exhibit D            [Reserved]
Exhibit E            Mortgage Loan Schedule
Exhibit F            Form of Annual Statement as to Compliance
Exhibit G            Form of Transfer Affidavit
Exhibit H            Form of Payoff Notice
Exhibit I            Form of Liquidation Report
Exhibit J            Form of Officer's Certificate as to Charge-offs
Exhibit K            Form of Transferor Affidavit
Exhibit L            [Reserved]
Exhibit M            Form of Transferor Letter
Exhibit N-1          Form of Investment Letter [Non-Rule 144A]
Exhibit N-2          Form of Rule 144A Letter
Exhibit O            Mortgage Guaranty Insurance Corporation PMI Policy
Exhibit P            List of PMI Mortgage Loans
Exhibit Q            [Reserved]
Exhibit R            Prepayment Charge Schedule

                                      -v-
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     THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of June
1, 2001, by and among Aames Capital Corporation, as seller (in such capacity,
the "Seller"), Aames Capital Acceptance Corp., as depositor (the "Depositor"),
Countrywide Home Loans, Inc., as servicer (the "Servicer") and Bankers Trust
Company of California, N.A., as trustee (the "Trustee").

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

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

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS

     Section 1.01 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.

     Addition Notice: With respect to the transfer of Subsequent Mortgage Loans
to the Trust pursuant to Section 2.02 of this Agreement, notice of the Seller's
designation of Subsequent Mortgage Loans to be sold to the Trust separated by
Mortgage Loan Group and the aggregate Subsequent Cut-off Date Principal Balance
of such Subsequent Mortgage Loans in each Mortgage Loan Group, which notice
shall be given to the Trustee not later than one Business Day prior to the
related Subsequent Transfer Date.

     Adjustable Rate Mortgage Loan: Any Hybrid Loan which, upon the expiration
of its initial term bearing a fixed rate of interest, has a Mortgage Loan Rate
that is adjustable at regular periodic intervals, based on the Index plus the
related Gross Margin subject to any Minimum Rate, Maximum Rate and any periodic
limitations on adjustment from time to time, all as set forth in the Mortgage
Loan Schedule.

     Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.

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

     Aggregate Principal Amount: As to any Distribution Date, the sum of the
Basic Principal Amount for each Mortgage Loan Group.

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

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     Annual Statement of Compliance: The annual statement to be prepared and
delivered by the Servicer in accordance with Section 3.09.

     Applied Realized Loss Amounts: As to any Distribution Date, an amount equal
to the excess, if any, of (i) the aggregate of the Certificate Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the Pool Balance as of the last day of the
related Collection period.

     Appraised Value: The appraised value of any Mortgaged Property based upon
the appraisal made at the time of origination of the related Mortgage Loan or,
in the case of a Mortgage Loan that is a purchase money mortgage loan, the sales
price of the related Mortgaged Property if such sales price is less than such
appraised value.

     Available Funds: With respect to any Mortgage Loan Group and any
Distribution Date, the sum, without duplication of the following amounts with
respect to the Mortgage Loans in such Mortgage Loan Group and the immediately
preceding Collection Period:

               (i) scheduled and unscheduled payments of principal and interest
         on the Mortgage Loans received by the Servicer, including amounts
         deposited in respect of the Closing Date Deposit (net of amounts
         representing the Monthly Servicing Fee with respect to each Mortgage
         Loan and the applicable PMI Insurer Fee to the extent previously paid
         to the Servicer and reimbursement for Monthly Advances and Servicing
         Advances);

               (ii) Net Liquidation Proceeds and Trust Insurance Proceeds with
         respect to the Mortgage Loans (net of amounts applied to the
         restoration or repair of a Mortgaged Property);

               (iii) amounts payable in connection with each such Mortgage Loan
         that was repurchased from the Trust, and all amounts payable in respect
         of any Mortgage Loan in the related Mortgage Loan Group in connection
         with a substitution of a Qualified Replacement Mortgage Loan therefor;

               (iv) payments from the Servicer in connection with (a) Monthly
         Advances and (b) Compensating Interest, and payments in connection with
         the termination of the Trust with respect to the Mortgage Loans as
         provided in this Agreement;

               (v) on the Distribution Dates during and immediately following
         the Funding Period, amounts from the Capitalized Interest Account for
         the payment of interest on the Certificates of the related Mortgage
         Loan Group; and

               (vi) on the Distribution Date at or immediately following the end
         of the Funding Period, amounts remaining on deposit in the Prefunding
         Account with respect to the related Mortgage Loan Group.

     Available Funds Cap: A per annum rate equal to (i) the weighted average Net
Loan Rate of the Mortgage Loans minus (ii) the product of (x) the Pass-Through
Rate on the Class A-IO

                                      -2-
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Certificates and (y) a fraction, the numerator of which is the Notional Amount
of such Class A-IO Certificates immediately prior to such Distribution Date, and
the denominator of which is the Pool Balance as of the end of the second
preceding Collection Period.

     Basic Principal Amount: With respect to any Mortgage Loan Group and any
Distribution Date, an amount equal to the sum of the following amounts (without
duplication) with respect to the Mortgage Loans in such Mortgage Loan Group and
the immediately preceding Collection Period:

               (i) each payment of principal on a Mortgage Loan received by the
         Servicer during such Collection Period, including all full and partial
         principal prepayments (net of reimbursements to the Servicer for
         Servicing Advances);

               (ii) the Net Liquidation Proceeds and Trust Insurance Proceeds
         allocable to principal received by the Servicer with respect to any
         Mortgage Loan during such Collection Period (net of amounts applied to
         the restoration or repair of a Mortgaged Property);

               (iii) all amounts allocable to principal payable in connection
         with each such Mortgage Loan that was repurchased from the Trust during
         such Collection Period, and all amounts allocable to principal payable
         in respect any Mortgage Loan in the related Mortgage Loan Group in
         connection with a substitution of a Qualified Replacement Mortgage Loan
         therefor; and

               (iv) any related amounts remaining in the Prefunding Account with
         respect to the related Mortgage Loan Group after the Funding Period.

     Basic Principal Distribution Amount: As to any Distribution Date, is an
amount equal to the Aggregate Principal Amount minus the Excess
Overcollateralization Amount.

     Bloomberg: The on-line computer based information network maintained by
Bloomberg L.P., or any successor thereto.

     Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Offered Certificates
constitute Book-Entry Certificates.

     Book-Entry Nominee: As defined in Section 6.02(b).

     Business Day: Any day other than (a) a Saturday or a Sunday or (b) a day on
which banking institutions in the State of California or the State of New York
are required or authorized by law, executive order or governmental decree to be
closed.

     Capitalized Interest Account: Not applicable.

     Capitalized Interest Account Deposit: $0.

                                      -3-
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     Capitalized Interest Requirement: Not applicable.

     Certificate: Any Class A-1, Class A-2, Class A-IO, Class M-1, Class M-2,
Class B, Class C, Class P or Class R Certificate issued pursuant to this
Agreement.

     Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
2001-2 Mortgage Pass-Through Certificates, Series 2001-2, Certificate Account".

     Certificateholder: The Person in whose name a Certificate is registered in
the Certificate Register, except that, solely for the purpose of taking any
action under Article Eight or giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller or the Servicer or any Person
actually known to a Responsible Officer of the Trustee to be an Affiliate of the
Seller, the Depositor or the Servicer shall be deemed not to be outstanding and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether Holders of the requisite Percentage Interests necessary to
take any such action or effect any such consent have acted or consented unless
the Seller, the Depositor, the Servicer or any such Person is an owner of record
of all of the Certificates.

     Certificate Owner: With respect to any Book-Entry Certificate, the Person
who is the beneficial owner thereof.

     Certificate Principal Balance: With respect to the Class A-1 Certificates,
the Class A-1 Certificate Principal Balance; with respect to the Class A-2
Certificates, the Class A-2 Certificate Principal Balance; with respect to the
Class M-1 Certificates, the Class M-1 Certificate Principal Balance; with
respect to the Class M-2 Certificates, the Class M-2 Certificate Principal
Balance; with respect to the B Certificates, the Class B Certificate Principal
Balance; with respect to the Class C Certificates, the Class C Certificate
Principal Balance; and with respect to the Class P Certificates, the Class P
Certificate Principal Balance. The Class A-IO Certificates do not have a
Certificate Principal Balance.

     Certificate Register: The register maintained pursuant to Section 6.02.

     Class: Any class of the Offered Certificates, the Class C Certificate, the
Class P Certificate, the Class R-I Certificate, the Class R-II Certificate or
the Class R-III Certificate, as the case may be, taken as a whole.

     Class A Certificates: The Class A-1 and Class A-2 Certificates.

     Class A Principal Allocation Percentage: For any Distribution Date, the
percentage equivalent of a fraction, determined as follows: (i) in the case of
the Class A-1 Certificates, the numerator of which is (x) the portion of the
Aggregate Principal Amount for such distribution date that is attributable to
principal received

                                      -4-
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on the Group I Mortgage Loans, and the denominator of which is (y) the Aggregate
Principal Amount for such Distribution Date, and (ii) in the case of the Class
A-2 Certificates, the numerator of which is (x) the portion of the Aggregate
Principal Amount for such Distribution Date that is attributable to principal
received on the Group II Mortgage Loans, and the denominator of which is (y) the
Aggregate Principal Amount for such Distribution Date.

     Class A-1 Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-1 hereto.

     Class A-1 Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance for the Class A-1 Certificates less the
Class A-1 Principal Distribution Amounts actually distributed to the holders of
the Class A-1 Certificates on previous Distribution Dates.

     Class A-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.095%, and for
each Interest Period thereafter, 6.595% and (y) the Available Funds Cap.

     Class A-2 Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-1 hereto.

     Class A-2 Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance for the Class A-2 Certificates less the
Class A-2 Principal Distribution Amounts actually distributed to the holders of
the Class A-2 Certificates on previous Distribution Dates.

     Class A-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 5.970%, and for
each Interest Period thereafter, 6.470% and (y) the Available Funds Cap.

     Class A-IO Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-4 hereto.

     Class A-IO Pass-Through Rate: 6.000% per annum.

     Class B Certificate: Any one of the Certificates executed by the Trustee on
behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-4 hereto.

     Class B Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance for the Class B Certificates less the
Class B Principal Distribution Amounts actually distributed to the holders of
the Class B Certificates on previous Distribution Dates and reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.

     Class B Pass-Through Rate: The lesser of (x) with respect to each Interest
Period ending on or prior to the Clean-Up Call Date, 7.367%, and for each
Interest Period thereafter, 7.867% and (y) the Available Funds Cap.

                                      -5-
<PAGE>

     Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Delinquency Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A Certificates (after giving effect to the
distribution of the Senior Principal Distribution Amount on such Distribution
Date), (B) the Certificate Principal Balance of the Class M-1 Certificates
(after giving effect to the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Certificate Principal Balance of the
Class M-2 Certificates (after giving effect to the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date) and (D) the Certificate
Principal Balance of the Class B Certificates immediately prior to such
Distribution Date, over (2) the lesser of (A) 100% of the Pool Balance minus the
Subordination Required Overcollateralization Amount as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the OC Floor, provided, however, that after the
Certificate Principal Balances of the Class A, Class M-1 and Class M-2
Certificates are reduced to zero, the Class B Principal Distribution Amount for
such Distribution Date will equal 100% of the Principal Distribution Amount.

     Class C Certificate: Any one of the Certificates executed by the Trustee on
behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-1 hereto.

     Class C Carryforward Amount: With respect to any Distribution Date, the
amount by which the aggregate of the amount by which the Class C Distribution
Amount for each prior Distribution Date exceeded the amount actually distributed
in respect of the Class C Distribution Amount on each such date, reduced by the
aggregate of the amounts distributed in respect of the Class C Carryforward
Amount on each such prior Distribution Dates, and reduced by the aggregate of
the amounts of Applied Realized Loss Amounts that have resulted in the reduction
of the Overcollateralization Amount on each such prior Distribution Date.

     Class C Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class C Certificates less any
amounts distributed to the holders of the Class C Certificates on previous
Distribution Dates with respect to principal on the Class C Certificates.

     Class C Distribution Amount: With respect to any Distribution Date, means
the interest allocated to the Class C Certificates as separate components in
accordance with note (5) of Section 9.16(c) with respect to such Distribution
Date and additionally, with respect to the first Distribution Date, an amount
equal to the Class C Certificate Principal Balance.

     Class Interest Carryover Shortfall: With respect to any Class of Offered
Certificates on any Distribution Date, means the amount, if any, by which (i)
the Class Monthly Interest Amount on such Class for the preceding Distribution
Date plus any outstanding Class Interest Carryover Shortfall with respect to
such Class from the preceding Distribution Date (together with interest on such
outstanding Class Interest Carryover Shortfall at the related Pass-Through Rate
for the related Interest Period to the extent lawful) exceeds (ii) the amount of
interest actually distributed to the holders of such Certificates on such
Distribution Date.

                                      -6-
<PAGE>

     Class Interest Distribution: As to any Class of Certificates and
Distribution Date, an amount equal to the sum of (a) the related Class Monthly
Interest Amount and (b) any Class Interest Carryover Shortfall for such Class of
Certificates for such Distribution Date.

     Class M-1 Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-2 hereto.

     Class M-1 Certificate Principal Balance: As to any Distribution Date, the
Initial Class Principal Balance for the Class M-1 Certificates less the Class
M-1 Principal Distribution Amounts actually distributed to the holders of the
Class M-1 Certificates on previous Distribution Dates and reduced by any Applied
Realized Loss Amounts allocated to such Class on prior Distribution Dates.

     Class M-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.973%, and for
each Interest Period thereafter, 7.473% and (y) the Available Funds Cap.

     Class M-1 Principal Distribution Amount: As to any Distribution Date on or
after the Stepdown Date, 100% of the Principal Distribution Amount if the
Certificate Principal Balance of each Class of Class A Certificates has been
reduced to zero and a Delinquency Event exists, or, if a Delinquency Event is
not in effect, the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A Certificates (after giving effect to
distributions of the Senior Principal Distribution Amount for such Distribution
Date) and (B) the Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (2) the lesser of (A) 83.00% of
the Pool Balance minus the Subordination Required Overcollateralization Amount
as of the last day of the related Collection Period and (B) the Pool Balance as
of the last day of the related Collection Period minus the OC Floor.

     Class M-2 Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
A-3 hereto.

     Class M-2 Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance for the Class M-2 Certificates less the
Class M-2 Principal Distribution Amounts actually distributed to the holders of
the Class M-2 Certificates on previous Distribution Dates and reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.

     Class M-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 7.367%, and for
each Interest Period thereafter, 7.867% and (y) the Available Funds Cap.

     Class M-2 Principal Distribution Amount: As to any Distribution Date on or
after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Certificate Principal Balance of each of the Class A and Class M-1
Certificates has been reduced to zero and a Delinquency Event exists, or, if a
Delinquency Event is not in effect, the excess of (1) the sum of (A) the
aggregate Certificate Principal Balance of the Class A Certificates (after
giving effect to distributions of the Senior Principal Distribution Amount for
such Distribution Date), (B) the Certificate Principal Balance of the Class M-1
Certificates (after giving effect to

                                      -7-
<PAGE>

distribution of the Class M-1 Principal Distribution Amount for such
Distribution Date) and (C) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (2) the lesser of
(A) 92.50% of the Pool Balance minus the Subordination Required
Overcollateralization Amount as of the last day of the related Collection Period
and (B) the Pool Balance as of the last day of the related Collection Period
minus the OC Floor.

     Class Monthly Interest Amount: With respect to any Class and Distribution
Date, means the amount of interest due for any Class of Certificates in respect
of any Interest Period at the applicable Pass-Through Rate on the related
Certificate Principal Balance or Notional Amount, less such Class' related share
of Interest Shortfalls. All calculations of interest will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months.

     Class P Certificate: Any one of the Certificates executed by the Trustee on
behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-3 hereto.

     Class P Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class P Certificates less any
amounts distributed to the holders of the Class P Certificates on previous
Distribution Dates with respect to principal on the Class P Certificates.

     Class P Deposit: $100.00, to be deposited into the Certificate Account.

     Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Certificate Principal Balance of that
Class of Subordinate Certificates as a result of the application of Applied
Realized Loss Amounts and (y) the amount of such reductions on prior
Distribution Dates over (ii) the amount distributed in respect of the Class
Principal Carryover Shortfall to such Class of Subordinate Certificates on prior
Distribution Dates.

     Class R Certificate: Any one of the Certificates executed by the Trustee on
behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-2 hereto representing each of the Class R-I, Class R-II and Class R-III
Certificates.

     Class R-I Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC I, as such term is defined
in Code Section 860G(a)(2). The Class R-I Certificate shall be certificated
together with the Class R-II and Class R-III Certificates, in the form of the
Class R Certificate.

     Class R-II Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC II, as such term is
defined in Code Section 860G(a)(2). The Class R-II Certificate shall be
certificated together with the Class R-I and Class R-III Certificates, in the
form of the Class R Certificate.

                                      -8-
<PAGE>

     Class R-III Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC III, as such term is
defined in Code Section 860G (a)(2). The Class R-III Certificate shall be
certificated together with the Class R-I and Class R-II Certificates, in the
form of the Class R Certificate.

     Clean-up Call Date: The first Distribution Date on which the Pool Balance
is less than 5% of the sum of the Original Pool Balance and the Prefunding
Account Deposit.

     Closing Date: June 28, 2001.

     Closing Date Deposit: $28,349.95.

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

     Collection Account: The segregated account, which shall at all times be an
Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "Bankers Trust Company of California, N.A., in trust for the benefit of
Holders of Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
Series 2001-2, Collection Account". References herein to the Collection Account
shall include any Sub-Servicing Account as the context requires.

     Collection Period: As to the first Distribution Date, the period beginning
on and including June 2, 2001 and ending on and including July 1, 2001 (except
that with respect to payments due and unpaid on or before June 1, 2001, only
collections of principal are included). As to any Distribution Date thereafter
for collections of both interest and principal, the period beginning on and
including the second day of the calendar month immediately preceding the month
in which such Distribution Date occurs and ending on and including the first day
of the calendar month of such Distribution Date.

     Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the ratio
(expressed as a percentage) of (i) the sum of the Original Principal Amount of
such related Mortgage Loan plus the outstanding principal balance (at the time
of origination of such Mortgage Loan) of each mortgage loan secured by the
related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.

     Company: Aames Capital Corporation, a California corporation.

     Compensating Interest: As to any Distribution Date and any Mortgage Loan
Group, an amount equal to the lesser of (a) the related Monthly Servicing Fee
for the related Collection Period and (b) the difference between (i) 30 days'
interest (at the related Mortgage Loan Rates, net of the Servicing Fee Rate) on
the Principal Balance of each Mortgage Loan in such Mortgage Loan Group as to
which a Principal Prepayment was received or that became a Liquidated Mortgage
Loan or that was otherwise charged-off (before giving effect to any related
reduction in the Principal Balance of such Mortgage Loan) by the Servicer during
the related Collection Period and (ii) the amount of interest actually collected
by the Servicer for such Mortgage Loans in such Mortgage Loan Group during such
Collection Period.

                                      -9-
<PAGE>

     Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate trust business with respect to this Agreement
shall be principally 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: Aames

     Mortgage Loan Pass-Through Certificates, Series 2001-2.

         Cumulative Loss Event: For any Distribution Date in the applicable
period below, if Cumulative Net Losses shall be in excess of the applicable
percentage of the aggregate Pool Balance as of the Cut-off Date:

                   Number of
               Distribution Dates                   Percentages
               ------------------                   -----------

               37-48                                   3.50%
               49-60                                   4.00%
               61 and thereafter                       4.50%

     Cumulative Net Losses: As of any date of determination, the aggregate of
the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.

     Cut-off Date: With respect to the Initial Mortgage Loans in each Mortgage
Loan Group, the close of business on June 1, 2001. With respect to the
Subsequent Mortgage Loans, the close of business on the Subsequent Cut-off Date.

     Cut-off Date Principal Balance: As to any Mortgage Loan, its Principal
Balance as of the related Cut-off Date.

     Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.

     Definitive Certificates: As defined in Section 6.02(e).

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

     Delinquency Amount: As to any Distribution Date, the aggregate Principal
Balance of the Mortgage Loans that are (a) 60 or more days delinquent, (b) 60 or
more days delinquent and in bankruptcy or (c) in foreclosure and are REO, in
each case, as of the last day of the immediately preceding calendar month.

     Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds 50% of the
Senior Enhancement Percentage.

     Deposit Date: As to any Distribution Date, the third Business Day prior to
such Distribution Date.

                                      -10-
<PAGE>

     Depositor: Aames Capital Acceptance Corporation, a Delaware corporation.

     Depository: The initial depository shall be The Depository Trust Company,
the nominee of which is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8102(3) of the Uniform Commercial
Code of the State of California, as amended, or any successor provisions
thereto.

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

     Determination Date: As to any Distribution Date, the last day of the
related Collection Period.

     Disqualified Organization: Any Person that is (i) the United States, any
state or any political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality of a governmental unit that is a corporation if all of its
activities are subject to tax and, except in the case of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such governmental unit), (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in Code Section
521) exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Code Section 511 on unrelated business taxable income), (iv) rural electric
and telephone cooperatives described in Code Section 1381(a)(2)(C), and (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Class R Certificate by such Person may
cause any REMIC Pool or any Person having an ownership interest in any Class R
Certificate, other than such Person, to incur a liability for any tax imposed
under the Code that would not otherwise be imposed but for the transfer of an
ownership interest in a Class R Certificate to such Person. The terms "United
States", "state" and "international organization" shall have the meanings set
forth in Code Section 7701 or successor provisions.

     Distribution Date: The 25th day of each month or, if such day is not a
Business Day, the Business Day immediately following such 25th day, beginning
July 25, 2001.

     Eligible Account: Either (A) a segregated account or accounts maintained
with an institution the deposits of which are insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated "AA" or better by
Standard & Poor's or "A2" or better by Moody's and in the highest short term
rating category by Standard & Poor's and Moody's and that is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws and (iv) a
principal subsidiary of a bank holding company or (B) a segregated trust account
maintained with the trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity, the

                                      -11-
<PAGE>

unsecured and uncollateralized debt obligations of which shall be rated "Baa3"
or better by Moody's. Any Eligible Accounts maintained with the Trustee shall
conform to the preceding clause (B).

     ERISA Plan: Any Person that is an employee benefit plan within the meaning
of Section 3(3) of ERISA or any Person that is an individual retirement account
or employee benefit plan, trust or account subject to Section 4975 of the Code.

     ERISA Prohibited Holder: As defined in Section 6.02(b).

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

     Event of Default: As defined in Section 8.01.

     Excess Interest: With respect to any Distribution Date, the sum of (a) any
Excess Overcollateralization Amount for such Distribution Date and (b) the
excess of (x) the Available Funds for such Distribution Date (excluding any
amounts payable therefrom for the Trustee Fee, the Monthly Servicing Fee and the
PMI Insurer Premium) over (y) the sum for such Distribution Date of (A) the
Class Monthly Interest Amounts for the Offered Certificates, (B) any Class
Interest Carryover Shortfall for the Senior Certificates, and (C) the Aggregate
Principal Amount.

     Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.

     Expense Fee Rate: The sum of (i) the Servicing Fee Rate, (ii) the per annum
rate for calculating the Trustee Fee (i.e., 0.015%) and (iii) the PMI Insurer
Premium expressed as a per annum rate equal to a fraction, expressed as a
percentage, the numerator of which is the PMI Insurer Premium and the
denominator of which is the Principal Balance of the Mortgage Loans as of the
applicable Determination Date.

     FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.

     FEMA: The Federal Emergency Management Agency and its successors in
interest.

     FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.

     Final Scheduled Distribution Date: The Final Scheduled Distribution Date
for each of the Classes of Certificates are as set forth below:

              Class                  Final Scheduled Distribution Date
              -----                  ---------------------------------
            Class A-1                          August 2031
            Class A-2                          August 2031
            Class A-IO                         June 2004
            Class M-1                          August 2031
            Class M-2                          August 2031

                                      -12-
<PAGE>

            Class B                            August 2031
            Class C                            August 2031
            Class P                            August 2031
            Class R                            August 2031

     FNMA: The Federal National Mortgage Association and its successors in
interest.

     Foreign Person: A Person that is not (i) a citizen or resident of the
United States, (ii) a corporation or partnership (including an entity treated as
a corporation or partnership for U.S. federal income tax purposes) created in
the United States or organized under the laws of the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, as
otherwise provided by Treasury regulations), (iii) an estate that is subject to
United States federal income tax regardless of the source of its income, or (iv)
a trust whose administration may be subject to the primary supervision of a
court within the United States and for which one or more United States persons
have the authority to control all substantial decisions of the trust.

     Funding Period: Not applicable.

     Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note, which amount is added
to the Index in accordance with the terms of the related Mortgage Note to
determine the applicable Mortgage Loan Rate.

     Group Factor: As to any Distribution Date and any Mortgage Loan Group, the
percentage (carried to eight places, rounded down) obtained by dividing the
aggregate Principal Balances of the Mortgage Loans in the related Mortgage Loan
Group (after giving effect to any distribution of principal on the related
Certificates on such Distribution Date) by (i) in the case of Group I, the sum
of the Original Group I Balance and the related allocated Prefunding Account
Deposit or (ii) in the case of Group II, the sum of the Original Group II
Balance and the related allocated Prefunding Account Deposit, as applicable.

     Group I: The group of Initial Mortgage Loans comprised of fixed rate
mortgage loans having agency-conforming balances and identified in the Mortgage
Loan Schedule as having been assigned to Group I and any Subsequent Mortgage
Loans identified in a Subsequent Transfer Agreement as having been assigned to
Group I, including any Qualified Replacement Mortgage Loans delivered in
replacement thereof.

     Group I Class A-IO Class Interest Distribution: As to any distribution
date, an amount equal to the Class Interest Distribution for the Class A-IO
Certificates for such Distribution Date multiplied by a fraction, the numerator
of which is (x) the Certificate Principal Balance of the Class A-1 Certificates
immediately prior to such Distribution Date and the denominator of which is (y)
the aggregate Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date.

     Group II: The group of Initial Mortgage Loans comprised of fixed rate
mortgage loans and Hybrid Loans, both having and not having agency conforming
balances and identified in the Mortgage Loan Schedule as having been assigned to
Group II and any Subsequent Mortgage

                                      -13-
<PAGE>

Loans identified in a Subsequent Transfer Agreement as having been assigned to
Group II, including any Qualified Replacement Mortgage Loans delivered in
replacement thereof.

     Group II Class A-IO Class Interest Distribution: As to any Distribution
Date, an amount equal to the Class Interest Distribution for the Class A-IO
Certificates for such Distribution Date multiplied by a fraction, the numerator
of which is (x) the Certificate Principal Balance of the Class A-2 Certificates
immediately prior to such Distribution Date and the denominator of which is (y)
the aggregate Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date.

     Holder: A Certificateholder.

     Hybrid Loan: Any Mortgage Loan that bears interest at a fixed rate for its
initial three year period following origination, and at an adjustable rate for
the ensuring 27 years in which it remains outstanding.

     Index: With respect to any Adjustable Rate Mortgage Loan, the applicable
index for computing the Mortgage Loan Rate as specified in the Mortgage Note.

     Initial Certificate Principal Balance: As to the Class P Certificates,
$100. As to the Class C Certificates, $7,003.99, which is equal to the initial
Overcollateralization Amount as of the Closing Date. As to the Class R
Certificates, $0. As to any other Class of Offered Certificates, other than the
Class A-IO Certificates, the respective amount set forth below opposite such
Class:

                                              Initial Certificate
                  Class                        Principal Balance
                  -----                        -----------------
          Class A-1 Certificates                 $105,818,000
          Class A-2 Certificates                  $20,932,000
          Class M-1 Certificates                  $10,500,000
          Class M-2 Certificates                   $7,125,000
          Class B Certificates                     $5,625,000

     Initial Mortgage Loan: Any Mortgage Loan in any Mortgage Loan Group
included in the assets of the Trust as of the Closing Date that is indicated as
such on the Mortgage Loan Schedule.

     Insurance Proceeds: With respect to any Distribution Date, proceeds paid by
any insurer (other than the PMI Insurer) and received by the Servicer during the
related Collection Period pursuant to any insurance policy covering a Mortgage
Loan or the related Mortgaged Property, including any deductible payable by the
Servicer with respect to a blanket insurance policy pursuant to Section 3.04 and
the proceeds from any fidelity bond or errors and omission policy pursuant to
Section 3.12 (to the extent such payments compensate for losses that would
otherwise be payable to Certificateholders pursuant to this Agreement), net of
any component thereof covering any expenses incurred by or on behalf of the
Servicer and specifically reimbursable under this Agreement.

                                      -14-
<PAGE>

     Interest Period: The calendar month preceding the month in which such
Distribution Date occurs.

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

     Interest Shortfall: As to any Distribution Date, the amount of any (i)
Prepayment Interest Shortfall and (ii) Relief Act Shortfall. On any Distribution
Date, the amount of any Interest Shortfalls will be applied to reduce the Class
Monthly Interest Amount of a Class in the following order: first, to the Class C
Certificates in reduction of the interest amounts payable to such Class on the
related Distribution Date and, to the extent the amount of such Interest
Shortfall exceeds the interest due and payable to the Class C Certificates on
such Distribution Date, thereafter to the Offered Certificates, pro rata, based
on the respective Class Monthly Interest Amount for each such Class on such
Distribution Date.

     Investment Company Act: The Investment Company Act of 1940, as amended.

     Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a lien
of other than first priority.

     Late Payment Rate: With respect to any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York on its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%.

     Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage Loan as
to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.

     Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 with
respect to the related Mortgage Loan (including, without limitation, amounts
voluntarily advanced to correct defaults on each mortgage loan that is senior to
such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.

     Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount, if
any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon is in excess of the related Net Liquidation Proceeds with respect
thereto.

     Liquidation Proceeds: Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, including payments
received under the PMI Policy, whether through trustee's sale, foreclosure sale,
condemnation, taking by eminent domain or

                                      -15-
<PAGE>

otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 3.06 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).

     Liquidation Report: A liquidation report in the form of Exhibit I attached
hereto.

     Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan as a
percentage of the Appraised Value of the related Mortgaged Property determined
by the Seller at the time of origination of such Mortgage Loan.

     Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.

     Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.

     Monthly Advance: Defined in Section 5.02(a).

     Monthly Mortgage Payment: With respect to any Mortgage Note, the amount of
each monthly payment (other than any final balloon payment) payable under such
Mortgage Note in accordance with its terms by the Mortgagor, including one
month's accrued interest on the related Principal Balance at the then applicable
Mortgage Loan Rate, but net of any portion of such monthly payment that
represents late payment charges, prepayment or extension fees or collections
allocable to payments to be made by Mortgagors for payment of insurance premiums
or similar items.

     Monthly Servicing Fee: With respect to any Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Servicing Fee Rate and the
aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan Group as
of the beginning of the related Collection Period (or, in the case of the first
Collection Period, the aggregate Principal Balance of the related Mortgage Loans
as of the Cut-off Date). The Monthly Servicing Fee shall be payable on the
following Deposit Date to the Servicer as servicing compensation hereunder
pursuant to Section 3.08.

     Moody's: Moody's Investors Service, Inc. and its successors in interest.

     Mortgage: The mortgage, deed of trust or other instrument creating a first,
second or third lien on an estate in fee simple in real property securing a
Mortgage Loan.

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

     Mortgage Loan: Each of the Mortgage Loans transferred and assigned to the
Trustee pursuant to Section 2.01 or 2.02, that from time to time comprise part
of the Trust, the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule attached hereto as Exhibit E.

                                      -16-
<PAGE>

     Mortgage Loan Group: Group I or Group II. References herein to any Class or
Classes of Certificates being related to a Mortgage Loan Group, shall mean (A)
in the case of Group I, the Class A-1 Certificates, the Class A-IO Certificates,
the Class M-1 Certificates, the Class M-2 Certificates, the Class B
Certificates, the Class C Certificates, the Class P Certificates and the Class R
Certificates, and (B) in the case of Group II, the Class A-2 Certificates, the
Class A-IO Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class B Certificates, the Class C Certificates, the Class P Certificates and
the Class R Certificates.

     Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage Loan, the
per annum rate of interest computed in accordance with the provisions of the
related Mortgage Note as the sum of the Index and the Gross Margin, subject to
any Minimum Rate, the Maximum Rate or periodic limitation on adjustments to such
rate applicable from time to time to the calculation of interest thereon. As to
any Fixed Rate Mortgage Loan, the fixed per annum rate of interest applicable to
the calculation of interest thereon specified in the related Mortgage Note.

     Mortgage Loan Schedule: As of any date, the schedule of Mortgage Loans as
amended by each subsequently delivered schedule of Subsequent Mortgage Loans
separated by Mortgage Loan Group. The initial schedule of Mortgage Loans as of
the related Cut-off Date is attached hereto as Exhibit E and sets forth as to
each such Mortgage Loan, among other things, (a) its identifying number and the
name of the related Mortgagor; (b) the street address of the related Mortgaged
Property including the state, county and zip code; (c) its date of origination;
(d) the original number of months to stated maturity; (e) its original stated
maturity; (f) its Original Principal Amount; (g) its Cut-off Date Principal
Balance; (h) the related Mortgage Loan Rate as of the related Cut-off Date and,
with respect to any Adjustable Rate Mortgage Loan, the related Index, Gross
Margin, Minimum Rate, Maximum Rate and any periodic limitations on adjustment;
(i) the scheduled Monthly Mortgage Payment as of the related Cut-off Date; (j)
the date in each month on which the related Monthly Mortgage Payments are due;
(k) its Combined Loan-to-Value Ratio or the ratio, expressed as a percentage, of
the Original Principal Amount of such Mortgage Loan to the Appraised Value of
the related Mortgaged Property, as applicable; (l) the lien status of the
related Mortgage and, with respect to any Junior Mortgage Loan, the principal
amount (as of the date of origination) of all related Senior Liens; (m) whether
the related Mortgaged Property is owner-occupied or non-owner-occupied; (n)
whether the related Mortgaged Property is a single-family residence, a two- to
four-family residence, a unit in a condominium or planned unit development, or
manufactured housing; (o) whether the Mortgage Loan has been originated by an
Affiliate of the Company; (p) the related Cut-off Date (unless specified in a
related Subsequent Transfer Agreement); and (q) a code indicating if the
Mortgage Loan is covered under the PMI Policy.

     Mortgage Note: The note or other instrument evidencing the indebtedness of
a Mortgagor under the related Mortgage Loan.

     Mortgaged Property: The underlying property securing a Mortgage Loan.

     Mortgagor: The obligor under a Mortgage Note.

     Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds net
of Liquidation Expenses. If Liquidation Expenses exceed Liquidation Proceeds as
to any Mortgage

                                      -17-
<PAGE>

Loan, Net Liquidation Proceeds shall be zero. For all purposes of this
Agreement, Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the Principal Balance
thereof.

     Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Mortgage Loan Rate less the Expense Fee Rate.

     Net Rate Cap Carryover: As to any Distribution Date and the Offered
Certificates (other than the Class A-IO Certificates), the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at the
applicable Pass-Through Rate (without regard to the Available Funds Cap), over
the Class Monthly Interest Amount for such Distribution Date, (ii) any Net Rate
Cap Carryover remaining unpaid from the prior Distribution Date and (iii) 30
days' interest on the amount in clause (ii) calculated at the applicable
Pass-Through Rate (without regard to the Available Funds Cap).

     Net Rate Cap Fund: The Net Rate Cap Fund established and maintained as
described in Section 3.21 and entitled "Bankers Trust Company of California,
N.A., as Trustee for Aames Mortgage Trust 2001-2, Mortgage Pass-Through
Certificates, Series 2001-2, Net Rate Cap Fund."

     Non-permitted Foreign Holder: As defined in Section 6.02(c).

     Notional Amount: The Notional Amount of the Class A-IO Certificates for any
Distribution Date prior to the 37th Distribution Date will equal the lesser of
(i) the Pool Balance as of the end of the second preceding related Collection
Period and (ii) the applicable amount set forth below:

       Distribution Date                  Notional Amount
       -----------------                  ---------------

        1 through 3                         $26,125,000
        4 through 6                          23,375,000
        7 through 9                          22,000,000
        10 through 12                        19,250,000
        13 through 15                        16,500,000
        16 through 18                        14,437,500
        19 through 21                        13,681,250
        22 through 24                        12,031,250
        25 through 27                        10,263,000
        28 through 30                         9,121,750
        31 through 33                         7,981,875
        34 through 36                         7,218,750

     On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.

     OC Floor: An amount equal to 0.50% of the aggregate Certificate Principal
Balance of the Offered Certificates as of the Closing Date. (i.e., $750,000).

                                      -18-
<PAGE>

     Offered Certificateholder: A holder of an Offered Certificate.

     Offered Certificates: The Certificates other than the Retained
Certificates.

     Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President of the Seller,
the Depositor or the Servicer, as the case may be, and delivered to the Trustee
or each Rating Agency, as the case may be.

     Opinion of Counsel: A written opinion of counsel reasonably acceptable to
the Trustee, who may be in-house counsel for the Seller, the Depositor or the
Servicer (except with respect to any opinion with respect to or concerning the
REMIC status of any REMIC Pool). Any expense related to obtaining an Opinion of
Counsel for an action requested by a party shall be borne by the party required
to obtain such opinion or seeking to effect the action that requires the
delivery of such Opinion of Counsel.

     Original Group I Balance: Means the aggregate of the outstanding principal
amounts of each Initial Mortgage Loan that is a Group I Mortgage Loan as of its
related Cut-off Date, which amount is $125,529,579.61.

     Original Group II Balance: Means the aggregate of the outstanding principal
amounts of each Initial Mortgage Loan that a Group II Mortgage Loan as of its
related Cut-off Date, which amount is $24,477,424.38.

     Original Pool Balance: Means the aggregate outstanding principal amounts of
each Initial Mortgage Loan as of its related Cut-off Date, which amount is
$150,007,003.99.

     Original Principal Amount: With respect to any Mortgage Loan, the original
principal amount due under the related Mortgage Note as of its date of
origination.

     Overcollateralization Amount: As of any Distribution Date, the excess of
(x) the Pool Balance as of the last day of the related Collection Period (plus,
during the Funding Period, related allocated amounts on deposit in the
Prefunding Account on such date) over (y) the aggregate Certificate Principal
Balance of the Offered Certificates (after taking into account all distributions
in respect of principal collections on such Distribution Date).

     Pass-Through Rate: The Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-IO Pass-Through Rate, the Class M-1 Pass-Through
Rate, the Class M-2 Pass Through Rate or the Class B Pass Through Rate, as
applicable.

     Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the Monthly
Mortgage Payment due during such Collection Period with respect to such Mortgage
Note, which sums the related Mortgagor has instructed the Servicer to apply to
Monthly Mortgage Payments due in one or more subsequent Collection Periods. A
Monthly Mortgage Payment that was a Payment Ahead shall, for purposes of
computing Available Funds, be deemed to have been received by the Servicer on
the date in the related Collection Period on which such Monthly Mortgage Payment
would have been due if such Monthly Mortgage Payment was not a Payment Ahead.

                                      -19-
<PAGE>

     Payoff Notice: The certification delivered by the Servicer in connection
with any payment in full of the outstanding principal balance of a Mortgage Loan
pursuant to Section 3.07, to be substantially in the form of Exhibit H.

     Percentage Interest: With respect to any Certificate, the undivided
percentage interest (carried to eight places, rounded down) obtained by dividing
the original principal balance of such Certificate by the Initial Certificate
Principal Balance of the related Class, as applicable, and multiplying the
result by 100; provided that with respect to a Class C Certificate, a Class P
Certificate or a Class R Certificate, Percentage Interest means the undivided
percentage interest set forth on the face of such Certificate, which in the
aggregate shall not exceed 100%.

     Permitted Investments: One or more of the following obligations,
instruments and securities:

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

         (B) Federal Housing Administration debentures, FHLMC senior debt
     obligations and FNMA senior debt obligations, but excluding any of such
     securities whose terms do not provide for payment of a fixed dollar amount
     upon maturity or call for redemption or that are not rated in the highest
     rating category by each Rating Agency;

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

         (D) deposits of any bank or savings and loan association that has
     combined capital, surplus and undivided profits of at least $100,000,000,
     which deposits are held up to the applicable limits insured by the Bank
     Insurance Fund or the Savings Association Insurance Fund of the FDIC;

         (E) commercial paper (having original maturities of not more than 180
     days) that has the highest short term rating of each of Standard & Poor's
     and Moody's;

         (F) investments in money market funds rated "AAAm" or "AAAm-G" by
     Standard & Poor's and "Aaa" by Moody's (any such money market funds that
     provide for demand withdrawals without penalty being conclusively deemed to
     satisfy any maturity requirement for Permitted Investments set forth
     herein); and

         (G) investments approved in writing by all Rating Agencies;

provided that (1) no investment described hereunder shall evidence either the
right to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and

                                      -20-
<PAGE>

interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provided a yield
to maturity at par greater than 120% of the yield to maturity of the underlying
obligations; (2) no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price less
than its purchase price prior to stated maturity; (3) no investment described
hereunder shall contain options or otherwise have voting rights with respect
thereto (unless such voting rights are relinquished upon the purchase of such
investment); and (4) no investment shall mature later than the latest Final
Scheduled Distribution Date or be sold or disposed of prior to maturity.
Permitted Investments shall mature not later than the Business Day prior to the
date on which such monies will be needed to make payments, or in the case of
Permitted Investments held in the Prefunding Account, shall be available on the
Business Day next succeeding the date the Trustee receives the Addition Notice
that such monies will be needed. Notwithstanding the foregoing, with respect to
investment of amounts in any account, any of the foregoing obligations,
instruments or securities will not be Permitted Investments to the extent that
an investment therein will cause the then outstanding principal amount thereof
in which such funds are then invested to exceed $25,000,000 (such investments
being valued at par).

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

     PMI Insurer: Mortgage Guaranty Insurance Corporation, a monoline private
insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.

     PMI Insurer Premium: For any Distribution Date and any Mortgage Loan Group,
the aggregate of the premiums payable, if any, during the immediately preceding
Collection Period under each PMI Policy for any PMI Mortgage Loans in the
related Mortgage Loan Group, as set forth in an a statement delivered to the
Trustee by the PMI Insurer with respect to such Distribution Date.

     PMI Mortgage Loans: The list of Mortgage Loans insured by the PMI Insurer
attached hereto as Exhibit P as amended by each subsequently delivered schedule
of Subsequent Mortgage Loans insured by the PMI Insurer.

     PMI Policy: The related primary mortgage insurance policy set forth on
Exhibit O hereto with respect to the PMI Mortgage Loans and all endorsements
thereto, issued by the PMI Insurer or collective reference to such policies, as
the context requires.

     Pool Balance: As to any Distribution Date, the sum of the aggregate of the
Principal Balances of the Mortgage Loans as of the end of the related Collection
Period plus, in the case of any Distribution Date relating to a Collection
Period that includes any part of the Funding Period, any portion of the related
allocated Prefunding Account Deposit remaining on deposit in the Prefunding
Account or Certificate Account as of the last day of such Collection Period.

     Prefunding Account: Not applicable.

     Prefunding Account Deposit: Not applicable.

                                      -21-
<PAGE>

     Prefunding Distribution Date: Not applicable.

     Prepayment Assumption: Means the prepayment assumptions described in the
Prospectus Supplement as having been used to generate the prepayment scenarios
therein described.

     Prepayment Charge: As to a Mortgage Loan, any charge paid by a Mortgagor in
connection with certain partial prepayments and all prepayments in full made
within the related Prepayment Charge Period, the Prepayment Charges with respect
to each applicable Mortgage Loan so held by the Trust being identified in a
prepayment charge schedule (other than any Servicer Prepayment Charge Payment
Amount).

     Prepayment Charge Period: As to any Mortgage Loan, the period of time, if
any, during which a Prepayment Charge may be imposed.

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

               (i) the Mortgage Loan identifying number;

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

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

               (iv) the date on which the first Monthly Mortgage Payment was due
         on the related Mortgage Loan;

               (v) the term of the related Mortgage Loan;

               (vi) the Principal Balance of the related Mortgage Loan as of the
         Cut-off Date;

               (vii) a code indicating whether a Mortgage Loan has a prepayment
         penalty;

               (viii) a code indicating the type of prepayment penalty;

               (ix) a code indicating the amount, if any, of a prepayment by a
         Mortgagor that would not be subject to the prepayment penalty that
         would otherwise apply; and

               (x) the period from the date of origination of the Mortgage Loan
         during which the prepayment penalty applies.

     Prepayment Interest Shortfall: As to any Distribution Date and any Mortgage
Loan Group, the amount, if any, by which the amount described in clause (b) of
the first sentence of

                                      -22-
<PAGE>

the definition of Compensating Interest for such Distribution Date exceeds the
Monthly Servicing Fee (calculated with a Servicing Fee Rate of 0.50% per annum)
for such Mortgage Loan Group and the related Collection Period.

     Principal Balance: As to any Mortgage Loan and any day, the actual
outstanding principal amount thereof as of the close of business on the last day
of the preceding calendar month (or, if prior to the last day of the calendar
month in which the Cut-off Date occurs, as of the related Cut-off Date, without
duplication), less the following amounts, if any, received through the last day
of the preceding calendar month (i) any Principal Payments received in respect
of such Mortgage Loan, (ii) Net Liquidation Proceeds and Trust Insurance
Proceeds allocable to principal recovered or collected in respect of such
Mortgage Loan, (iii) the portion of the Purchase Price allocable to principal to
be remitted by the Seller or the Servicer to the Trustee on the next succeeding
Deposit Date in connection with a purchase or repurchase of such Mortgage Loan
pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01, to the extent such amount
is actually received by the Trustee on such Deposit Date and (iv) the amount to
be remitted by the Seller to the Trustee on the next succeeding Deposit Date in
connection with a substitution of a Qualified Replacement Mortgage Loan for such
Mortgage Loan pursuant to Section 2.03 or 2.05, to the extent such amount is
actually received by the Trustee on such Deposit Date.

     Principal Distribution Amount: As to any Distribution Date, the lesser of
(a) the aggregate Certificate Principal Balances immediately preceding such
Distribution Date and (b) the sum of (1) the Aggregate Principal Amount minus
the Excess Overcollateralization Amount and (2) the Subordination Increase
Amount.

     Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.

     Principal Prepayment: As to any Mortgage Loan and Collection Period, any
payment by a Mortgagor or other recovery in respect of principal on a Mortgage
Loan (including Net Liquidation Proceeds) that, in the case of a payment by a
Mortgagor, is received in advance of its scheduled due date and is not a Payment
Ahead.

     Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).

                                      -23-
<PAGE>

     Prospectus: That certain Prospectus dated as of June 13, 2001 relating to
the asset-backed bonds and certificates to be sold by the Company.

     Prospectus Supplement: That certain Prospectus Supplement dated as of June
13, 2001 relating to $150,000,000 principal amount of Mortgage Pass-Through
Certificates, Series 2001-2.

     Purchase Price: With respect to (a) any Defective Mortgage Loan or (b) any
Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01 or
Section 3.06, an amount equal to (i) the sum of (A) the outstanding principal
balance of such Mortgage Loan or Defective Mortgage Loan, as the case may be, as
of the beginning of the Collection Period next preceding the Deposit Date on
which such repurchase or purchase is required to occur, (B) interest computed at
the applicable Mortgage Loan Rate on such outstanding principal balance from the
date to which interest was last paid by the Mortgagor to the last day of the
Collection Period immediately preceding the Deposit Date on which such
repurchase or purchase occurs and (C) any previously unreimbursed Servicing
Advances made on or in respect of such Defective Mortgage Loan or Mortgage Loan,
as the case may be, less (ii) any payments of principal and interest in respect
of such Defective Mortgage Loan or Mortgage Loan, as the case may be, made by or
on behalf of the related Mortgagor during such Collection Period; provided that
the Purchase Price with respect to any Restricted Mortgage Loan to be purchased
by the Servicer pursuant to Section 3.06 will be the fair market value of the
related Mortgaged Property as described in such Section 3.06.

     Qualified Replacement Mortgage Loan: A Mortgage Loan that is substituted
for a Deleted Mortgage Loan pursuant to Section 2.03 or Section 2.05 that must,
at the end of the Collection Period preceding the date of such substitution, (i)
have an outstanding principal balance (when taken together with any other
Qualified Replacement Mortgage Loan being substituted for such Deleted Mortgage
Loan), not in excess of and not substantially less than the unpaid principal
balance of the Deleted Mortgage Loan at the end of the Collection Period
preceding the date of substitution, (ii) if the Deleted Mortgage Loan is an
Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate computed on the same
basis as the Mortgage Loan Rate on the related Mortgage Loan, utilizing the same
Index and having a Gross Margin or Minimum Rate not less than (and not more than
one percentage point in excess of) the Gross Margin and Minimum Rate applicable
to the Deleted Mortgage Loan and if the Deleted Mortgage Loan is a Fixed Rate
Mortgage Loan, have a Mortgage Loan Rate not less than (and not more than one
percentage point in excess of) the Mortgage Loan Rate of the Deleted Mortgage
Loan, (iii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (iv) have a Combined
Loan-to-Value Ratio equal to or lower than the Combined Loan-to-Value Ratio of
the Deleted Mortgage Loan, (v) satisfy the criteria set forth from time to time
in the definition "qualified replacement mortgage" at Section 860G(a)(4) of the
Code, (vi) have the same or a superior lien priority as the Deleted Mortgage
Loan, (vii) comply as of the date of substitution with each representation and
warranty set forth in Section 2.05, (viii) have the same or better property type
as the Deleted Mortgage Loan and (ix) have the same or better occupancy status.
In the event that one or more mortgage loans are proposed to be substituted for
one or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis, except that the requirements of

                                      -24-
<PAGE>

clauses (iv) through (viii) hereof must be satisfied as to each Qualified
Replacement Mortgage Loan.

     Rating Agencies: Standard & Poor's and Moody's (each, a "Rating Agency").
If either such agency or a successor is no longer in existence, "Rating Agency"
shall be such nationally recognized statistical credit rating agency, or other
comparable Person, designated by the Servicer, notice of which designation shall
be given to the Trustee.

     Realized Loss: With respect to any Liquidated Mortgage Loan, the amount, if
any, by which the Principal Balance of such Mortgage Loan and accrued and unpaid
interest thereon (determined as of the Determination Date immediately prior to
such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such Mortgage Loan, which amount
shall in no event exceed the Principal Balance of such Mortgage Loan (determined
as of the Determination Date immediately prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan), in each case as determined by the Servicer and set
forth on a Liquidation Report and accompanying Officer's Certificate
substantially in the form of Exhibits I and J hereto.

     Record Date: As to any Distribution Date, the close of business on the last
Business Day of the calendar month immediately preceding such Distribution Date.

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

     Relief Act Shortfall: As to any Distribution Date and any Mortgage Loan
Group, the amount of any reduction of interest collectible on any Mortgage Loan
in such Mortgage Loan Group for the related Collection Period due to the
application of the Relief Act.

     REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D, and in particular, any of REMIC I, REMIC II or REMIC III as
indicated by context.

     REMIC I Interests: As defined in Section 9.16(b) and described in Section
9.16.

     REMIC I Regular Interests: As defined in Section 9.16(b) and described in
Section 9.16.

     REMIC II Interests: As defined in Section 9.16(c) and described in Section
9.16.

     REMIC II Regular Interests: As defined in Section 9.16(c) and described in
Section 9.16.

     REMIC Pool: With respect to REMIC I, the assets of the Trust other than the
Prefunding Account, Capitalized Interest Account, Net Rate Cap Fund, the REMIC I
Regular Interests and the REMIC II Regular Interests; with respect to REMIC II,
the REMIC I Regular Interests, other than the Class P Certificates; and, with
respect to REMIC III, the REMIC II Regular Interests.

     REMIC Provisions: Provisions of the federal income tax law relating to
REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury proposed, temporary or final regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.

                                      -25-
<PAGE>

     REO Property: As defined in Section 5.02(a).

     Representative: Greenwich Capital Markets, Inc.

     Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) 3.00% and (ii) the Pool Balance
as of the Cut-off Date; and (b) on and after the Stepdown Date, the greater of
(i) the lesser of (x) the product of 3.00% of the Pool Balance as of the Cut-off
Date and (y) the product of 6.00% and the Pool Balance as of the end of the
related Collection Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of (a) a Delinquency Event or
Cumulative Loss Event, the Required Overcollateralization Amount will equal the
Required Overcollateralization Amount in effect as of the Distribution Date
immediately preceding the date on which such Delinquency Event or Cumulative
Loss Event first occurred.

     Responsible Officer: When used with respect to the Trustee, any Vice
President or Assistant Vice President, any Assistant Secretary, 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 to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Seller, Depositor or Servicer, the President or any Vice
President, Assistant Vice President or any Secretary or Assistant Secretary.

     Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date was
90 or more days contractually delinquent. As of the date hereof, there are no
Restricted Mortgage Loans in any Mortgage Loan Group.

     Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, the Mortgaged Property securing such Restricted Mortgage Loan.

     Retained Certificates: The Class C Certificates, the Class P Certificates
and the Class R Certificates.

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

     Seller: The Company.

     Senior Certificates: The Class A-1, Class A-2 and Class A-IO Certificates.

     Senior Enhancement Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the sum of (i) the aggregate
Certificate Principal Balances of the Subordinate Certificates and (ii) the
Overcollateralization Amount (in each case, prior to taking into account the
distribution of the Principal Distribution Amount on such Distribution Date) and
the denominator of which is the Pool Balance as of the last day of the related
Collection Period.

     Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.

                                      -26-
<PAGE>

     Senior Principal Distribution Amount: As to (a) any Distribution Date prior
to the Stepdown Date or during the continuance of a Delinquency Event, the
lesser of (i) 100% of the Principal Distribution Amount and (ii) the aggregate
Certificate Principal Balances of the Class A Certificates, and (b) any other
Distribution Date, an amount equal to the lesser of (x) the Principal
Distribution Amount and (y) the excess, if any, of (i) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (ii) the lesser of (x) the product of 69.00% and the Pool
Balance as of the last day of the related Collection Period less the
Subordination Required Overcollaterization Amount for that Distribution Date and
(y) the Pool Balance as of the last day of the related Collection Period minus
the OC Floor.

     Servicer: Countrywide Home Loans, Inc., a New York corporation, or any
successor servicer appointed as provided pursuant to this Agreement.

     Servicer Prepayment Charge Payment Amount: The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.22.

     Servicer Remittance Report: The monthly report prepared by the Servicer and
delivered to the Trustee pursuant to Section 4.01.

     Servicing Advances: All reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property, (iv) compliance with the
obligations under Section 3.04 and (v) expenditures relating to the correction
of a default on any Senior Lien pursuant to Section 3.06 in connection with the
liquidation of a Mortgage Loan.

     Servicing Fee Rate: With respect to any Mortgage Loan Group and each
Collection Period, 0.50% per annum.

     Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Trustee by the Servicer, as such list may
from time to time be amended.

     Sixty Day Delinquency Rate: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of the related Collection Period, (b) 60 or more days delinquent and in
bankruptcy as of the last day of the related Collection Period or (c) REO
Property and Mortgage Loans in foreclosure and the denominator of which is the
Pool Balance as of the last day of the immediately preceding calendar month.

     Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.

                                      -27-
<PAGE>

     Startup Day: As defined in Section 9.16(e).

     Statement to Certificateholders: As defined in Section 5.03.

     Stepdown Date: The later to occur of (x) the earlier to occur of (i) the
Distribution Date in July 2004 and (ii) the Distribution Date on which the
aggregate Certificate Principal Balance of the Class A Certificates is reduced
to zero, and (y) the first Distribution Date on which the Senior Enhancement
Percentage (assuming 100% of the Principal Distribution Amount is distributed on
the Offered Certificates) is at least equal to 37.00%.

     Subordinate Certificates: The Class M-1, Class M-2 and Class B
Certificates.

     Subordination Deficiency: As to any Distribution Date, the excess, if any,
of (i) the Required Overcollateralization Amount for such Distribution Date over
(ii) the Overcollateralization Amount for such Distribution Date after giving
effect to the distribution of the Basic Principal Amount on such Distribution
Date.

     Subordination Increase Amount: As to any Distribution Date, the lesser of
(i) the Subordination Deficiency and (ii) the Excess Interest.

     Subordination Required Overcollateralization Amount: (A) as to any
Distribution Date on which a Delinquency Event or a Cumulative Loss Event does
not exist, the Required Overcollateralization Amount without giving effect to
clause (b) (ii) of such definition and (B) as to any Distribution Date on which
a Delinquency Event or a Cumulative Loss Event exists, the Required
Overcollateralization Amount.

     Subsequent Cut-off Date: None.

     Subsequent Cut-off Date Principal Balance: None.

     Subsequent Mortgage Loan Schedule: None.

     Subsequent Mortgage Loan: None.

     Subsequent Purchase Price: None.

     Subsequent Transfer Agreement: None.

     Subsequent Transfer Date: None.

     Sub-Servicer: Any Person, including an Affiliate of the Servicer, with whom
the Servicer has entered into a Sub-Servicing Agreement and who satisfies the
requirements set forth in Section 3.15 hereof in respect of the qualification of
a Sub-Servicer. The Sub-Servicers with respect to any of the Mortgage Loans as
of the related Cut-off Date are listed on Schedule I attached to this Agreement.

     Sub-Servicing Account: Any segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(b) and
entitled "Bankers Trust

                                      -28-
<PAGE>

Company of California, N.A., in trust for the benefit of Holders of Aames
Mortgage Trust 2001-2 Mortgage Pass-Through Certificates, Series 2001-2,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.

     Sub-Servicing Agreement: A written contract between the Servicer and any
Sub-Servicer relating to the servicing and/or administration of certain Mortgage
Loans.

     Three Month Delinquency Rate: As to any Distribution Date the arithmetic
average of the Sixty Day Delinquency Rates for the three Distribution Dates
preceding such Distribution Date.

     Transfer Affidavit: The affidavit to be delivered by any transferee of an
interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit G.

     Transferor Affidavit: The affidavit to be delivered by any transferor of an
interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit K.

     Transition Cost: Any documented expenses reasonably incurred by Trustee in
connection with a transfer of servicing from the Servicer to a successor
servicer as successor servicer pursuant to Section 8.02, but not to exceed
$5,000 with respect to any single succession.

     Trust: The trust created by this Agreement and the corpus thereof, which
consists of, to the extent described herein, the Mortgage Loans, such assets as
shall from time to time be identified or shall be required by this Agreement to
be deposited in the Collection Account, the Certificate Account, the Prefunding
Account or the Capitalized Interest Account or invested in Permitted Investments
in accordance with this Agreement, all rights under any insurance policy
covering a Mortgage Loan or the related Mortgaged Property, including the PMI
Policy, and property and any proceeds thereof that secured a Mortgage Loan and
that has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.

     Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by the
Servicer to reduce the Principal Balance of the related Mortgage Loan or pay
interest due on the related Mortgage Loan and (b) not applied to the restoration
or repair of the related Mortgaged Property or released to the related Mortgagor
in accordance with the Servicer's normal servicing procedures or the terms of
the related Mortgage Loan.

     Trust Parties: As defined in Section 5.04.

     Trustee: Bankers Trust Company of California, N.A., a national banking
association, and its successors in interest or any successor trustee appointed
as provided pursuant to this Agreement.

     Trustee Fee: With respect to any Distribution Date and each Mortgage Loan
Group, 1/12 of the product of 0.015% and the aggregate Principal Balance of the
Mortgage Loans in such Mortgage Loan Group as of the beginning of the related
Collection Period (or, in the case of the

                                      -29-
<PAGE>

first Distribution Date, the aggregate Principal Balance of the related Mortgage
Loans as of the Cut-off Date).

     Turbo Amount: As defined in Section 9.16(c).

     Vice President: Any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".

     Voting Interest: The portion of the voting interests of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Interests shall be allocated to the Class
A-IO Certificates (such Voting Rights to be allocated among the Holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Interests shall be allocated to the Class C
Certificates (such Voting Rights to be allocated among the Holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Interests shall be allocated to the Class P
Certificates, (d) 1% of all Voting Interests shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-I and Class R-II and Class
R-III Certificates are issued, 1/3% to each such Class (such Voting Interests to
be allocated among the Holders of Certificates of each such Class in accordance
with their respective Percentage Interests), and (e) the remaining Voting
Interests shall be allocated among Holders of the Classes of Offered
Certificates in proportion to the Certificate Principal Balances of their
respective Offered Certificates on such date. Each Certificateholder of a Class
will have a Voting Interest equal to the product of the Voting Interest to which
such Class is collectively entitled and the Percentage Interest in such Class
represented by such Holder's Certificates. With respect to any provision hereof
providing for action, consent or approval of each Class of Certificates or
specified Classes of Certificates, each Certificateholder of a Class will have a
Voting Interest in such Class equal to such Holder's Percentage Interest in such
Class.

     Section 1.02 Interest Calculations. All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months.

     All calculations of interest on the Offered Certificates will be computed
on the basis of a 360-day year of twelve 30-day months.

                                   ARTICLE II
                                   ----------

                             CONVEYANCE OF THE TRUST
                        ORIGINAL ISSUANCE OF CERTIFICATES

     Section 2.01 Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Depositor, without
recourse (except as otherwise explicitly provided for herein), all of its right,
title and interest in and to the corpus of the Trust, including specifically,
without limitation, the Mortgage Loans, the Mortgages, the Mortgage Files and
the Mortgage Notes, including all interest and principal (whether in the form of
payments by Mortgagors or other proceeds) received or deemed to be received by
the Seller on or with respect to the Mortgage

                                      -30-
<PAGE>

Loans on or after the related Cut-off Date net of amounts in respect of interest
accrued on the Mortgage Loans in periods prior to the related Cut-off Date,
(whether in the nature of amounts held by the Seller for application on behalf
of the related Mortgagor as a Monthly Mortgage Payment that is due on any date
on or after the related Cut-off Date or otherwise), and the Class P Deposit
together with all of its right, title and interest in and to the proceeds
received on or after the related Cut-off Date of any related insurance policies.
Such delivery of the Mortgage Loans, the Mortgages, Mortgage Files and the
Mortgage Notes shall be made against payment by the Depositor of the purchase
price, previously agreed to by the Seller and Depositor, for the Mortgage Loans.
In addition, on or prior to the Closing Date the Seller shall (i) cause the PMI
Policy to be delivered to the Depositor and (ii) deposit the Closing Date
Deposit with the Depositor for deposit in the Collection Account.

     Immediately upon the conveyance of the corpus of the Trust referred to in
the preceding paragraph, the Depositor does hereby sell, transfer, assign, set
over and otherwise convey to the Trustee in trust for the benefit of the
Certificateholders, without recourse (except as otherwise explicitly provided
for herein), all the right, title and interest of the Depositor in and to the
Trust, the PMI Policy and the Closing Date Deposit together with the Depositor's
right to require the Seller to cure any breach of a representation or warranty
made herein by the Seller or to repurchase or substitute for any affected
Mortgage Loan in accordance herewith.

     In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the corpus of the Trust by the Seller to the
Depositor and by the Depositor to the Trustee, such sale and assignment is
deemed to constitute a pledge of security for a loan, it is the intent of this
Agreement that the Seller shall be deemed to have granted to Depositor and the
Depositor shall be deemed to have granted to the Trustee for the benefit of the
Certificateholders a first priority perfected security interest in all of the
related transferring party's right, title and interest in and to the Mortgage
Loans, the Mortgages, the Mortgage Files and the Mortgage Notes, all payments of
principal or interest on the Mortgage Loans received on or after the related
Cut-off Date net of amounts in respect of interest accrued on the Mortgage Loans
in periods prior to the related Cut-off Date, all other payments made in respect
of such Mortgage Loans on or after the related Cut-off Date and all proceeds of
any thereof, including all amounts on deposit in the Certificate Account, the
Collection Account, the Prefunding Account and the Capitalized Interest Account
and amounts invested in Permitted Investments (but excluding all investment
income with respect to the Prefunding Account and Capitalized Interest Account),
and that this Agreement shall constitute a security agreement under applicable
law. The Seller and the Depositor shall file financing statements and
continuation statements as necessary to maintain the perfection of such security
interest.

     The Company confirms to the Depositor and the Depositor confirms to the
Trustee that it has caused its computer records relating to the Initial Mortgage
Loans to indicate by a code that the Initial Mortgage Loans have been sold,
respectively, to the Depositor and to the Trustee on behalf of the Trust and
constitute part of the Trust in accordance with the terms of this Agreement. The
Company further confirms to the Depositor and the Depositor further confirms to
the Trustee that it will cause its computer records relating to each Subsequent
Mortgage Loan to indicate by a code that such Subsequent Mortgage Loan has been
sold, respectively, to the Depositor and to the Trustee on behalf of the Trust
and that it constitutes part of the Trust in accordance with the terms of this
Agreement. The Company and the Depositor each confirms

                                      -31-
<PAGE>

that it will treat the conveyance transactions contemplated hereby and in each
Subsequent Transfer Agreement as sales in accordance with generally accepted
accounting principles and will reflect such transactions as sales on its primary
accounting records.

     In connection with the sale and assignment set forth in the second
paragraph of this Section 2.01, the Depositor does hereby deliver to or cause to
be delivered to, and deposit with or cause to be deposited with, the Trustee the
originals of the following documents or instruments with respect to each
Mortgage Loan so assigned:

         (a) The original Mortgage Note, with all intervening endorsements
     sufficient to show a complete chain of endorsement to the Person endorsing
     the Mortgage Note to the Trustee, endorsed (which endorsement may be by
     manual or facsimile signature) by the Person so endorsing without recourse
     to the order of the Trustee in the following form: "Pay to the order of
     Bankers Trust Company of California, N.A., in trust for the benefit of
     holders of Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
     Series 2001-2, without recourse";

         (b) The original Mortgage with evidence of recording indicated thereon;

         (c) The original assignment of the Mortgage executed by the Person
     assigning the Mortgage to the Trustee;

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

         (e) Originals of all intervening mortgage assignments with evidence of
     recording indicated thereon sufficient to show a complete chain of
     assignment from the originator of the Mortgage Loan to the Person assigning
     such assignments to the Trustee; and

         (f) Original lender's title insurance policy issued on the date of the
     origination of such Mortgage Loan or a true copy thereof or, if such
     original lender's title insurance policy has been lost, a copy thereof
     certified by the appropriate title insurer to be true and complete or, if
     such lender's title insurance policy has not been issued as of the Closing
     Date, a marked up commitment (binder) to issue such policy.

     As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as initial
Sub-Servicer shall (i) affix the Trustee's name to each assignment of Mortgage,
as the assignee thereof in the following form: "Bankers Trust Company of
California, N.A., in trust for the benefit of holders of Aames Mortgage Trust
2001-2 Mortgage Pass-Through Certificates, Series 2001-2, without recourse",
(ii) cause such assignment to be in proper form for recording in the appropriate
public office for real property records, and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Servicer has not received the
information required to prepare such assignment in recordable form, the Servicer
shall be obligated to prepare and to deliver such assignment for such recording
as soon as practicable after receipt of such

                                      -32-
<PAGE>

information and in any event within 30 days after receipt thereof (and in no
event more than one year after the Closing Date) and that the Servicer need not
cause to be recorded any assignment that relates to a Mortgage Loan in any
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel
delivered to the Trustee at Seller's expense to the effect that the recordation
of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan.

     If the Depositor cannot deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by the
public recording office where such original Mortgage or mortgage assignment has
been delivered for recordation, the Depositor shall deliver to the Trustee an
Officer's Certificate, with a photocopy of such Mortgage or mortgage assignment,
as the case may be, attached thereto, stating that such original Mortgage or
mortgage assignment has been delivered to the appropriate public recording
official for recordation. The Depositor shall promptly deliver to the Trustee
such original Mortgage or intervening mortgage assignment with evidence of
recording indicated thereon upon receipt thereof from the public recording
official. If the Depositor within six months from the Closing Date shall not
have received such original Mortgage or intervening mortgage assignment from the
public recording official, it shall obtain, and deliver to the Trustee within
eight months from the Closing Date, a copy of such original Mortgage or mortgage
assignment certified by such public recording official to be a true and complete
copy of such original Mortgage or mortgage assignment as recorded by such public
recording office.

     The costs relating to the delivery of the documents specified in this
Section shall be borne by the Depositor.

     The Seller shall deliver to the Depositor, within the time periods called
for by this Article II, such documents as are required to be delivered by the
Depositor to the Trustee pursuant to this Article II.

     Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract. Subject to the conditions set forth in the paragraphs below, in
consideration of the Trustee's delivery on the Closing Date or related
Subsequent Transfer Dates to or upon the order of the Depositor of the
Subsequent Purchase Price of the related Subsequent Mortgage Loans from amounts
on deposit in the Prefunding Account (or other amounts payable to or upon the
order of the Depositor if such purchases of all Subsequent Mortgage Loans occur
on the Closing Date) with respect to the related Mortgage Loan Group, the Seller
shall, from time to time, on the Closing Date or any Subsequent Transfer Date,
sell, transfer, assign, set over and otherwise convey without recourse to the
Depositor, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan identified on the Subsequent Mortgage Loan Schedule attached to
the related Subsequent Transfer Agreement delivered on the Closing Date or such
Subsequent Transfer Date, including all of its right, title and interest in and
to principal and interest (whether in the form of payments by Mortgagors or
other proceeds) received or deemed to be received by the Seller on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-off Date, net
of amounts in respect of interest accrued on such Subsequent Mortgage Loans in
periods prior to the related Subsequent Cut-off Date (whether in the nature of
amounts held by the Seller for application on behalf of the related Mortgagor as
a Monthly Mortgage Payment

                                      -33-
<PAGE>

that is due on any date on or after the related Subsequent Cut-off Date or
otherwise) plus all items with respect to such Subsequent Mortgage Loan to be
delivered pursuant to Section 2.01 and other items in the related Mortgage File;
provided, however, that the Seller reserves and retains all of its right, title
and interest in and to principal (including prepayments) and interest collected
on each such Subsequent Mortgage Loan prior to the related Subsequent Cut-off
Date (except for amounts held by the Seller for application on or after the
related Subsequent Cut-off Date).

     Immediately upon the conveyance of the Subsequent Mortgage Loans as
referred to in the preceding paragraph, the Depositor shall sell, transfer,
assign, set over and otherwise convey without recourse to the Trustee for
benefit of the Certificateholders, all right, title and interest of the
Depositor in the Subsequent Mortgage Loans as referred to in the preceding
paragraph.

     The respective transfers by the Seller and the Depositor of the Subsequent
Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule shall be
absolute and shall be intended by the parties hereto to be treated as a sale by
the Seller and the Depositor, respectively. On or before the last day of the
Funding Period, the Seller shall convey to the Depositor and the Depositor to
the Trustee pursuant to this Section 2.02 the lesser of: (i) all Mortgage Loans
then in its possession that satisfy the requirements of this Section 2.02 or
(ii) the maximum principal balance of Mortgage Loans as determined by Seller
that satisfy the requirements of this Section 2.02 whose aggregate Subsequent
Purchase Price does not exceed the Prefunding Account Deposit. Subsequent
Mortgage Loans to be conveyed on a given Subsequent Transfer Date must have an
aggregate Subsequent Cut-off Date Principal Balance of not less than $500,000;
provided, however, that the Subsequent Mortgage Loans to be conveyed on the
final Subsequent Transfer Date may have an aggregate Subsequent Cut-off Date
Principal Balance of less than $500,000.

     In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Depositor and by the Depositor to
the Trustee, such sale and assignment will be deemed to constitute a pledge of
security for a loan, it is the intent of this Agreement that the Seller shall be
deemed to have granted to the Depositor and the Depositor to the Trustee for the
benefit of the Certificateholders a first priority perfected security interest
in all of the related transferor's right, title and interest in and to the
Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal and interest on the Subsequent Mortgage Loans
received on or after their respective Subsequent Cut-off Dates, net of amounts
in respect of interest accrued on such Subsequent Mortgage Loans in periods
prior to the related Subsequent Cut-off Date, all other payments (provided that
the parties to this Agreement acknowledge that the Servicer is entitled to
receive all assumption fees, late payment charges, charges for checks returned
for insufficient funds, if any, and extension and other administrative charges
other than Prepayment Charges) made in respect of such Subsequent Mortgage Loans
on or after the related Subsequent Cut-off Date, and that this Agreement and the
related Subsequent Transfer Agreement shall each constitute a security agreement
with respect to the related Subsequent Mortgage Loans under applicable law. The
Seller and the Depositor shall file financing statements and continuation
statements as necessary to maintain the perfection of such security interest.

                                      -34-
<PAGE>

     The amount released to or upon the order of the Depositor from the
Prefunding Account on any Subsequent Transfer Date (or from other amounts
payable to the Depositor on the Closing Date) in connection with any conveyance
of Subsequent Mortgage Loans to be included in any Mortgage Loan Group shall be
equal to the aggregate of the related Subsequent Purchase Prices for such
related Subsequent Mortgage Loans to be included in such related Mortgage Loan
Group, which related amounts, in the aggregate, shall not exceed the allocated
Prefunding Account Deposit for such related Mortgage Loan Group. The amount so
released to or upon the order of the Depositor in connection with any conveyance
of Subsequent Mortgage Loans shall, for federal income tax purposes, be
considered cash contributed to REMIC I by the Depositor and used by the Trustee
to acquire the related Subsequent Mortgage Loans pursuant to a fixed price
contract established pursuant to this Section 2.02.

     On each related Subsequent Transfer Date, the Seller shall transfer to the
Depositor and the Depositor shall transfer to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
the first paragraph in this section only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:

         (a) the Seller or the Depositor shall provide the Trustee, the
     Servicer, the Representative and the Rating Agencies with an Addition
     Notice and shall provide any information reasonably requested by the
     Trustee, the Servicer, the Representative or the Rating Agencies with
     respect to the Subsequent Mortgage Loans;

         (b) the Seller or the Depositor shall deliver to the Trustee, the
     Servicer, the Representative and the Rating Agencies a duly executed
     Subsequent Transfer Agreement and any other related documentation in the
     forms of the exhibits listed thereon;

         (c) the Seller shall deposit in the Collection Account all collections
     in respect of the Subsequent Mortgage Loans received by the Seller and the
     Depositor on or after the related Subsequent Cut-off Date (whether in the
     nature of amounts held by the Seller for later application on behalf of the
     related Mortgagor in respect of a Monthly Payment due on or after the
     related Subsequent Cut-off Date or otherwise) except for amounts in respect
     of interest accrued on such Subsequent Mortgage Loans prior to the related
     Cut-off Date;

         (d) the Seller and the Depositor each shall certify that, as of the
     Subsequent Transfer Date, neither the Seller nor the Depositor was
     insolvent, nor was made insolvent by such transfer and neither is aware of
     any pending insolvency;

         (e) the Depositor shall certify that such addition of Subsequent
     Mortgage Loans will not result in a material adverse tax consequence to the
     Trust or the Certificateholders; and

         (f) the Funding Period shall not have expired.

     In addition, the Seller or the Depositor will provide the Servicer, the
Representative, the Rating Agencies and the Trustee with data regarding all
Subsequent Mortgage Loans to be transferred to the Trust on any Subsequent
Transfer Date prior to the related Subsequent Transfer

                                      -35-
<PAGE>

Date. On or prior to each Subsequent Transfer Date, the following conditions
shall have been satisfied with respect to all Subsequent Mortgage Loans to be
transferred to the Trust on any Subsequent Transfer Date:

         (A) the Depositor shall have confirmed to the Rating Agencies, the
     Representative and the Trustee, in the related Subsequent Transfer
     Agreement, the satisfaction of each condition precedent specified in this
     Section 2.02;

         (B) the Seller or the Depositor shall have delivered to the Rating
     Agencies, the Representative and the Trustee Opinions of Counsel with
     respect to the transfer of all of the Subsequent Mortgage Loans to the
     Trust on any Subsequent Transfer Date substantially in the form of the
     Opinions of Counsel delivered to the Trustee on the Closing Date regarding
     bankruptcy, corporate and tax matters;

         (C) the Trustee shall deliver to the Rating Agencies, the
     Representative and the Depositor an Opinion of Counsel with respect to the
     enforceability of each of the Subsequent Transfer Agreements substantially
     in the form of the Opinion of Counsel delivered to the Seller on the
     Closing Date; and

         (D) the Servicer shall deliver to the Depositor, the Trustee, the
     Representative and the Rating Agencies the Servicer's acknowledgment to
     service all Subsequent Mortgage Loans purchased by the Trust on any
     Subsequent Transfer Date.

     On or prior to each Subsequent Transfer Date, the Seller or the Depositor
shall provide to the Trustee, the Servicer and the Representative a schedule of
mortgage loans that are expected to be Subsequent Mortgage Loans, and Subsequent
Mortgage Loans transferred to the Trust shall be taken only from such schedule;
provided, however, if any such identified mortgage loans do not satisfy the
requirements of Subsequent Mortgage Loans as set forth in this Section 2.02 or
if any such mortgage loans are rejected as Subsequent Mortgage Loans by the
Servicer, mortgage loans acceptable to the Servicer may be substituted for such
defective or rejected mortgage loans. The Depositor shall certify that the
Subsequent Mortgage Loans will be transferred to the Trust in accordance with
the foregoing and that such Subsequent Mortgage Loans satisfy the requirements
of Subsequent Mortgage Loans as set forth in this Section 2.02 as of the Closing
Date.

     Subject to Section 3.16, if all of the Subsequent Mortgage Loans are
transferred to the Trust on the Closing Date, then the remaining portion of the
Prefunding Account Deposit will be deposited into the Certificate Account and
held there, without investment thereof, until the first Distribution Date. On
such first Distribution Date, such amounts will be deemed to comprise a portion
of the Principal Distribution Amount and will be distributable to the
Certificateholders.

     Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it of the PMI Policy, and subject
to (i) the provisions of the penultimate paragraph of Section 2.01, (ii) the
review provided for in this Section of the documents referred to in clauses (a)
through (f) of Section 2.01 and (iii) delivery of the Officer's Certificates
pursuant to Section

                                      -36-
<PAGE>

2.01, declares that it will hold the Trust in trust upon the terms herein set
forth for the use and benefit of all present and future Certificateholders. The
Trustee agrees, for the benefit of Certificateholders, to review each Mortgage
File within 45 days after the Closing Date (or, 45 days after the Subsequent
Transfer Date, with respect to the Subsequent Mortgage Loans) to determine
whether the documents described in Section 2.01(a)-(c), (e) and (f) have been
executed and received, and whether such documents relate to the Mortgage Loans
identified in the Mortgage Loan Schedule, or the Subsequent Mortgage Loan
Schedule, as applicable, and in so doing the Trustee may rely on the purported
due execution and genuineness of any such document and on the purported
genuineness of any signature thereon. If within such 45-day period the Trustee
finds any document constituting a part of a Mortgage File not to have been
executed or received or to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule or the Subsequent Mortgage Loan Schedule, as applicable,
the Trustee shall promptly, but in no event later than 30 days following such
finding, notify the Seller of such findings. The Seller shall have a period of
60 days from the date of such notice to correct or cure any such defect.
Notwithstanding the second paragraph of Section 9.01, the Trustee shall be under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.

     If the Trustee has notified the Seller of a defect in a Mortgage File that
materially and adversely affects the value of the related Mortgage Loan or the
interests of the Certificateholders in the related Mortgage Loan, and such
defect remains uncured after such 60-day period following the Seller's
notification, the Seller shall, (i) in the case of a defect consisting solely of
the failure of Seller to deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon for reasons set forth in
Section 2.01, on the first Deposit Date occurring after the expiration of eight
months from the Closing Date, and (ii) in the case of all other defects, on the
Deposit Date occurring not later than 60 days after receipt of notice of such
defect from the Trustee either (I) repurchase the related Mortgage Loan
(including any property acquired in respect thereof and any insurance policy or
current or future insurance proceeds with respect thereto) from the Trust at a
price equal to the Purchase Price, which shall be accomplished by deposit of
monies by the Seller in the Certificate Account on such Deposit Date, or (II)
substitute one or more Qualified Replacement Mortgage Loans for the related
Mortgage Loan.

     Upon receipt by the Trustee of an Officer's Certificate of the Servicer to
the effect that the Purchase Price for a Defective Mortgage Loan (other than a
Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).

     Payments received with respect to Qualified Replacement Mortgage Loans in
the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date

                                      -37-
<PAGE>

on which such substitution occurs, distributions to Certificateholders will
reflect the payments received on such Deleted Mortgage Loan in the related
Collection Period representing amounts due or accrued thereon prior to such
Deposit Date, and the Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. In the case of a
Qualified Replacement Mortgage Loan, the Mortgage File relating thereto shall be
delivered to the Trustee and the amount, if any, by which the Principal Balance
of the related Deleted Mortgage Loan as of the related Deposit Date exceeds the
Principal Balance of the Qualified Replacement Mortgage Loan as of the first day
of the related Collection Period shall be remitted by the Seller to the Trustee
for deposit in the Certificate Account on the Deposit Date on which the
substitution occurs. For purposes of this Agreement, any such amount so
deposited in the Certificate Account shall be deemed a prepayment of the related
Deleted Mortgage Loan received by the Servicer as of the prior Determination
Date. Upon receipt by the Trustee of an Officer's Certificate of the Seller
certifying that the Qualified Replacement Mortgage Loan conforms to the
requirements of this Agreement and (a) written notification of such deposit
signed by a Servicing Officer and (b) the new Mortgage File (containing all of
the documents referred to in clauses (a), (b), (c), (d), (e) and (f) of Section
2.01), the Trustee shall release or cause to be released to the Seller the
Mortgage File related to the Deleted Mortgage Loan or property and shall execute
and deliver or cause to be executed and delivered such instrument of transfer or
assignment presented to it by the Seller, without recourse, as shall be
necessary to vest in the Seller all of the legal and beneficial ownership of
such Deleted Mortgage Loan or property and the Trustee shall have no further
responsibility with respect to said Mortgage File. In addition, the Trustee
shall assign to the Seller any of the Trustee's rights under the PMI Policy in
respect of any such Deleted Mortgage Loan released to the Seller. It is
understood and agreed that the obligation of the Seller to substitute a
Qualified Replacement Mortgage Loan for or repurchase any Defective Mortgage
Loan (or any property acquired in respect thereof or insurance policy or current
or future insurance proceeds with respect thereto) shall constitute the sole
remedy against it respecting such defect available to the Certificateholders,
the Depositor or the Trustee. Notwithstanding the foregoing, a substitution by
the Seller for a defect in a constituent document will not be made unless the
Trustee receives an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.

     On or prior to the 90th day after the Closing Date (or the 90th day after
the applicable Subsequent Transfer Date with respect to the Subsequent Mortgage
Loans), the Trustee shall certify to the Seller, the Depositor and the Servicer
that it has received all of the documents referred to in clauses (a) (b), (c),
(e) and (f) of Section 2.01 and that all corrections or curative actions
required to be taken by the Seller within the 60-day period referred to in the
first paragraph of this Section have been completed or effected, or the related
Mortgage Loans have been repurchased or substituted, in accordance with the
provisions of this Section or, if any deficiencies in the Mortgage Files or
other omissions of the Seller with respect to the Mortgage Files are known to
the Trustee at the time of such certification, the Trustee shall make such
certification only with respect to those Mortgage Loans as to which no such
defects or omissions are known, and shall qualify such certification with
respect to the remaining Mortgage Loans, identifying the related defects or
omissions. Thereafter, the Trustee shall provide the Seller, the

                                      -38-
<PAGE>

Depositor and the Servicer with monthly exception reports indicating the status
of any exceptions until all such exceptions have been eliminated. Such monthly
exception reports shall be distributed by the Trustee on the related
Distribution Date with the Statement to Certificateholders.

     Section 2.04 Representations and Warranties Regarding the Servicer and the
Seller. (a) The Company, as Seller, hereby represents and warrants to the
Trustee, the Depositor, the Servicer and the Certificateholders that, as of the
Closing Date:

               (i) The Company is a corporation duly organized, validly existing
         and in good standing under the laws of the State of California. The
         Company has the power and authority to execute and deliver this
         Agreement and to perform its obligations in accordance herewith; the
         execution, delivery and performance of this Agreement (including all
         instruments of transfer to be delivered pursuant to this Agreement) by
         the Company and the consummation of the transactions contemplated
         hereby have been duly and validly authorized by all necessary corporate
         action; this Agreement evidences the valid and binding obligation of
         the Company enforceable against the Company in accordance with its
         terms, subject to the effect of bankruptcy, insolvency, reorganization,
         moratorium and other similar laws relating to or affecting creditors'
         rights generally or the application of equitable principles in any
         proceeding, whether at law or in equity; and the consummation of the
         transactions contemplated hereby will not result in the breach of any
         terms or provisions of the articles of incorporation or by-laws of the
         Company or result in the breach of any term or provision of, or
         conflict with or constitute a default under or result in the
         acceleration of any obligation under, any material agreement, indenture
         or loan or credit agreement or other material instrument to which the
         Company or its property is subject, or result in the violation of any
         law, rule, regulation, order, judgment or decree to which the Company
         or its property is subject.

               (ii) All actions, approvals, consents, waivers, exemptions,
         variances, franchises, orders, permits authorizations, rights and
         licenses required to be taken, given or obtained, as the case may be,
         by or from any federal, state or other governmental authority or
         agency, that are necessary in connection with the execution and
         delivery by the Company of this Agreement, have been duly taken, given
         or obtained, as the case may be, are in full force and effect, are not
         subject to any pending proceedings or appeals (administrative, judicial
         or otherwise) and either the time within which any appeal therefrom may
         be taken or review thereof may be obtained has expired or no review
         thereof may be obtained or appeal therefrom taken, and are adequate to
         authorize the consummation of the transactions contemplated by this
         Agreement on the part of the Company and the performance by the Company
         of its obligations under this Agreement;

               (iii) There is no action, suit, proceeding or investigation
         pending or, to the best of the Company's knowledge, threatened against
         the Company that, either in any one instance or in the aggregate, may
         result in any material adverse change in the business, operations,
         financial condition, properties or assets of the

                                      -39-
<PAGE>

         Company or in any material impairment of the right or ability of the
         Company to carry on its business substantially as now conducted, or in
         any material liability on the part of the Company or that would draw
         into question the validity of this Agreement or the Mortgage Loans or
         of any action taken or to be taken in connection with the obligations
         of the Company contemplated herein, or that would be likely to impair
         the ability of the Company to perform under the terms of this
         Agreement;

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

               (v) The transfer, assignment and conveyance of the Mortgage Loans
         by the Company, as Seller, pursuant to this Agreement are not subject
         to the bulk transfer laws or any similar statutory provisions in effect
         in any applicable jurisdiction and are not being transferred with the
         intent to hinder, delay or defraud any creditors; and

               (vi) The collection practices used by the Company are in all
         material respects legal, proper, prudent and customary in the home
         equity mortgage loan servicing business.

         (b) The Servicer hereby represents and warrants to the Trustee, the
     Depositor, the Seller and the Certificateholders that, as of the Closing
     Date:

               (i) The Servicer is a corporation licensed as a mortgage banker
         duly organized, validly existing and in good standing under the laws of
         the state of its incorporation and has, and had at all relevant times,
         full corporate power to service the Mortgage Loans, to own its
         property, to carry on its business as presently conducted and to enter
         into and perform its obligations under this Agreement. The Servicer has
         all necessary licenses and is qualified to transact business in and is
         in good standing under the laws of each state where a Mortgaged
         Property is located or is otherwise exempt under applicable law from
         such qualification or is otherwise not required under applicable law to
         effect such qualification and no demand for such qualification has been
         made upon the Servicer by any state having jurisdiction;

               (ii) The execution and delivery of this Agreement by the Servicer
         and the performance by it of and compliance with the terms of this
         Agreement will not violate the Servicer's articles of incorporation or
         by-laws or constitute a default (or an event which, with notice or
         lapse of time or both, would constitute a default) under, or result in
         the breach or acceleration of, any material contract, agreement or
         other instrument to which the Servicer is a party or which may be
         applicable to the Servicer or any of its assets;

                                      -40-
<PAGE>

               (iii) The Servicer has the full power and authority to enter into
         and consummate all transactions contemplated by this Agreement to be
         consummated by it, has duly authorized the execution, delivery and
         performance of this Agreement, and has duly executed and delivered this
         Agreement. This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of the Servicer, enforceable against it in
         accordance with the terms hereof, except as such enforcement may be
         limited by bankruptcy, insolvency, reorganization, receivership,
         moratorium or other similar laws relating to or affecting the rights of
         creditors generally, and by general equity principles (regardless of
         whether such enforcement is considered in a proceeding in equity or at
         law);

               (iv) The Servicer is not in violation of, and the execution and
         delivery of this Agreement by the Servicer and the performance by it
         and compliance with the terms of this Agreement will not constitute a
         violation with respect to, any order or decree of any court or any
         order or regulation of any federal, state, municipal or governmental
         agency having jurisdiction, which violation would materially and
         adversely affect the condition (financial or otherwise) or operations
         of the Servicer or any of its properties or materially and adversely
         affect the performance of any of its duties hereunder;

               (v) There are no actions or proceedings against, or
         investigations of, the Servicer pending or, to the knowledge of the
         Servicer, threatened, before any court, administrative agency or other
         tribunal (A) that, if determined adversely, would prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of any of
         the transactions contemplated by this Agreement or (C) that, if
         determined adversely, would prohibit or materially and adversely affect
         the performance by the Servicer of any of its obligations under, or the
         validity or enforceability of, this Agreement;

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

               (vii) No Officer's Certificate, statement, report or other
         document prepared by the Servicer and furnished or to be furnished by
         it pursuant to this Agreement or in connection with the transactions
         contemplated hereby contains any untrue statement of material fact;

               (viii) The Servicer believes that the Servicing Fee Rate provides
         a reasonable level of base compensation to the Servicer for servicing
         the Mortgage Loans on the terms set forth herein; and

                                      -41-
<PAGE>

               (ix) The transactions contemplated by this Agreement are in the
         ordinary course of business of the Servicer.

               (x) Each Sub-Servicer engaged by the Servicer has obtained all
         licenses and approvals required under state or federal law to service
         the Mortgage Loans specified in the Sub-Servicing Agreement to which
         the Sub-Servicer is a party.

         (c) The representations and warranties set forth in this Section shall
     survive the sale and assignment of the Mortgage Loans to the Trust and the
     issuance, sale and delivery of the Certificates. Upon discovery of a breach
     of any of the foregoing representations and warranties that materially and
     adversely affects the value of such Mortgage Loans or the interests of the
     Certificateholders in such Mortgage Loans, the party discovering such
     breach shall give prompt written notice to the other parties. Within 60
     days of its discovery or its receipt of notice of breach, the Company or
     the Servicer, as the case may be, shall cure such breach in all material
     respects.

     Section 2.05 Representations and Warranties of the Seller Regarding the
Mortgage Loans. The Seller represents and warrants to the Trustee, the
Depositor, the Servicer and the Certificateholders as of the Closing Date and,
with respect to any Subsequent Mortgage Loan, as of the Subsequent Transfer Date
(in either case except as otherwise expressly stated) that, as to each Mortgage
Loan conveyed to the Trust by it:

               (i) The information with respect to each Mortgage Loan set forth
         in the Mortgage Loan Schedule or Subsequent Mortgage Loan Schedule is
         true and correct as of the related Cut-off Date or related Subsequent
         Transfer Date;

               (ii) All of the original or certified documentation set forth in
         Section 2.01 (including all material documents related thereto), with
         respect to each Mortgage Loan has been or will be delivered to the
         Trustee on the Closing Date or as otherwise provided in Section 2.01 or
         Section 2.02, as applicable;

               (iii) Each related Mortgaged Property is improved by a one- to
         four-family residential dwelling owned by the related Mortgagor in fee
         simple that is permanently affixed to the land and constitutes real
         property under the laws of the state in which the Mortgaged Property is
         located but shall not include co-operatives or mobile homes;

               (iv) Each Mortgage Loan is a "qualified mortgage" as defined in
         Section 860G(a)(3) of the Code and no such Mortgage Loan has a
         loan-to-value ratio (calculated in accordance with the REMIC
         Provisions) in excess of 125%; none of the Mortgage Loans are either
         "consumer credit contracts" or "purchase money loans" as such terms are
         defined in 16 C.F.R. (Section)433; with respect to each Mortgage Loan
         that is a "mortgage" as such term is defined in 15 U.S.C. 1602(aa), no
         obligor has or will have a claim or defense under such Mortgage Loan;

                                      -42-
<PAGE>

               (v) As of the Cut-off Date, no Initial Mortgage Loan included in
         Group I or Group II has a Loan-to-Value Ratio in excess of 100%; except
         that Mortgage Loans in Group I representing not more than 0.46% of the
         Original Rate Group I Balance have Loan-to-Value Ratios between 95% and
         100% and Mortgage Loans in Adjustable Rate Group II representing not
         more than 3.30% of the Original Group II Balance have Loan-to-Value
         Ratios between 90% and 95%;

               (vi) Each Mortgage Loan was originated by the Seller, an
         Affiliate of the Seller or by an originator not affiliated with the
         Seller authorized to originate such Mortgage Loan and is being serviced
         by the Seller;

               (vii) Each Initial Mortgage Loan included in Group I as of the
         Cut-off Date bears a fixed rate of interest of at least 7.20% per annum
         and each Initial Mortgage Loan included in Group II as of the Cut-off
         Date either bears a fixed rate of interest of at least 7.83% per annum
         or is a Hybrid Loan that has a Minimum Rate of not less than 8.25% per
         annum and a Mortgage Loan Rate as of the Cut-off Date of not less than
         8.25% per annum; the terms of each Hybrid Loan that becomes an
         Adjustable Rate Mortgage Loan require that adjustments in the related
         Mortgage Loan Rate be made employing the related Index measured as of a
         date not more than three months prior to the related adjustment date;

               (viii) Each Mortgage Note provides for a schedule of
         substantially level and equal Monthly Mortgage Payments (subject, in
         the case of an Adjustable Rate Mortgage Loan, to periodic adjustments
         relating to changes in the Mortgage Loan Rate) that are sufficient to
         amortize fully the principal balance of such Mortgage Note on or before
         its maturity date, except that, Mortgage Notes with respect to Initial
         Mortgage Loans representing not more than 1% of the initial Pool
         Balance, provide for level and equal Monthly Mortgage Payments that are
         sufficient to amortize fully the principal balances of such Notes over
         a period not exceeding 30 years, with "balloon" payments at stated
         maturity that are substantially in excess of the Monthly Mortgage
         Payments;

               (ix) Each Mortgage is a valid and subsisting lien of record on
         the Mortgaged Property having the priority indicated on the Mortgage
         Loan Schedule, subject, in the case of any Junior Mortgage Loan, only
         to any Senior Lien or Senior Liens on such Mortgaged Property and
         subject in all cases to the exceptions to title set forth in the title
         insurance policy with respect to the related Mortgage Loan, which
         exceptions are generally acceptable to home equity mortgage lending
         institutions, and such other exceptions to which similar properties are
         commonly subject and that do not individually, or in the aggregate,
         materially and adversely affect the benefits of the security intended
         to be provided by such Mortgage;

               (x) Immediately prior to the sale, transfer and assignment herein
         contemplated, the Seller held good and indefeasible title to, and was
         the sole owner of, each Mortgage Loan conveyed by the Seller subject to
         no liens, charges, mortgages, encumbrances or rights of others, except
         with respect to liens

                                      -43-
<PAGE>

         that will be released simultaneously with such transfer and assignment;
         and immediately upon the transfer and assignment herein contemplated,
         the Trustee will hold good and indefeasible title to, and be the sole
         owner of, each Mortgage Loan subject to no liens, charges, mortgages,
         encumbrances or rights of others;

               (xi) The Mortgage Loan Rate for each Adjustable Rate Mortgage
         Loan will be adjustable on each related Adjustment Date and will equal
         the sum, rounded upward to the nearest three decimal places, of the
         Index plus the related Gross Margin, subject to any related Minimum
         Rates, Maximum Rates or any limitations or periodic adjustments, in
         each case as specified in the related Mortgage Loan Schedule. No
         Mortgage Loans in any Mortgage Loan Group are subject to negative
         amortization.

               (xii) With respect to any Adjustable Rate Mortgage Loan, no
         mortgage document in the Mortgage File contains any provision
         permitting or requiring conversion of the Mortgage Loan to a fixed
         interest rate nor is the Mortgage Loan Rate conditioned upon Mortgagor
         maintaining accounts with Seller;

               (xiii) As of the Closing Date or Subsequent Cut-off Date, as
         appropriate (a) no Mortgage Loan had two or more Monthly Mortgage
         Payments past due and (b) not more than 1.00% of the Initial Mortgage
         Loans (by Original Pool Balance) had one Monthly Mortgage Payments past
         due;

               (xiv) As of the related Cut-off Date or Subsequent Cut-off Date,
         as appropriate, there is no delinquent tax or assessment lien on any
         Mortgaged Property, and, to the best knowledge of the Seller, each
         Mortgaged Property is free of damage and is in good repair and is not
         affected by hazardous or toxic wastes or substances;

               (xv) There is no offset, right of rescission, counterclaim or
         defense, including the defense of usury, with respect to any Mortgage
         Note or Mortgage, nor will the operation of any of the terms of the
         Mortgage Note or the Mortgage, or the exercise of any right thereunder,
         render either the Mortgage Note or the Mortgage unenforceable in whole
         or in part, or subject to any right to 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;

               (xvi) As of the related Cut-off Date or Subsequent Cut-off Date,
         as appropriate, there is no mechanic's lien or claim for work, labor or
         material affecting any Mortgaged Property that is or may be a lien
         prior to, or equal to or on a parity with, the lien of the related
         Mortgage except those that are insured against by any title insurance
         policy referred to in paragraph (xvii) below;

               (xvii) To the best of the Seller's knowledge, each Mortgage Loan
         at the time it was made complied in all material respects with
         applicable local, state

                                      -44-
<PAGE>

         and federal laws and regulations, including, without limitation, the
         federal Truth-in-Lending Act and other consumer protection laws, real
         estate settlement procedure, usury, equal credit opportunity,
         disclosure and recording laws;

               (xviii) With respect to each Mortgage Loan, a lender's title
         insurance policy (issued in standard form by a title insurance company
         authorized to transact business in the state where the related
         Mortgaged Property is located), in an amount at least equal to the
         Original Principal Amount of such Mortgage Loan insuring the
         mortgagee's interest under the related Mortgage Loan as the holder of a
         valid lien of record on the real property described in the related
         Mortgage (subject only to exceptions of the character referred to in
         paragraph (viii) above), was effective on the date of the origination
         of such Mortgage Loan, and, as of the Closing Date, such policy is in
         full force and effect and thereafter such policy shall continue in full
         force and effect and shall inure to the benefit of the
         Certificateholders upon consummation of the transactions contemplated
         by this Agreement;

               (xix) As of the related Cut-off Date or Subsequent Cut-off Date,
         as appropriate, either (a) the improvements upon each Mortgaged
         Property are covered by a valid and existing hazard insurance policy
         (which may be a blanket policy) with a generally acceptable carrier
         that provides for fire and extended coverage representing coverage not
         less than the least of (a) the outstanding principal balance of the
         related Mortgage Loan (together, in the case of a Junior Mortgage Loan,
         with the outstanding principal balance of the Senior Lien), (b) the
         minimum amount required to compensate for damage or loss on a
         replacement cost basis or (c) the full insurable value of the Mortgaged
         Property or (b) in the case of a Junior Mortgage Loan, a policy has
         been issued by a generally acceptable carrier that will cover the full
         Principal Balance of such Junior Mortgage Loan in the event of a loss
         covered by a hazard typically insured against by the type of policy
         referred to in clause (xviii)(a);

               (xx) If any Mortgaged Property is in an area identified in the
         Federal Register by FEMA as having special flood hazards, a flood
         insurance policy in a form meeting the requirements of the current
         guidelines of the Federal Insurance Administration, if obtainable with
         respect to such Mortgaged Property, is in effect with respect to such
         Mortgaged Property with a generally acceptable carrier in an amount
         representing coverage not less than the least of (A) the outstanding
         principal balance of the related Mortgage Loan (together, in the case
         of a Junior Mortgage Loan, with the outstanding principal balance of
         the Senior Lien), (B) the minimum amount required to compensate for
         damage or loss on a replacement cost basis or (C) the maximum amount of
         insurance that is available under the Flood Disaster Protection Act of
         1973;

               (xxi) Each Mortgage and Mortgage Note is the legal, valid and
         binding obligation of the maker thereof and is enforceable in
         accordance with its terms, except only as such enforcement may be
         limited by bankruptcy, insolvency, reorganization, moratorium or other
         similar laws affecting the

                                      -45-
<PAGE>

         enforcement of creditors' rights generally and by general principles of
         equity (whether considered in a proceeding or action in equity or at
         law), and all parties to each Mortgage Loan had full legal capacity to
         execute all documents relating to such Mortgage Loan and convey the
         estate therein purported to be conveyed; with respect to each Mortgage
         Loan, only one original Mortgage Note exists;

               (xxii) The Seller has caused and will cause to be performed any
         and all acts required to be performed to preserve the rights and
         remedies of the Trustee in any insurance policies applicable to each
         Mortgage Loan, including any necessary notifications of insurers,
         assignments of policies or interests therein, and establishment of
         co-insured, joint loss payee and mortgagee rights in favor of the
         Trustee;

               (xxiii) As of the Cut-off Date, Initial Mortgage Loans
         representing no more than 1% of the Group I Balance and Initial
         Mortgage Loans representing no more than 1% of the Original Group II
         Balance, respectively, are secured by Mortgaged Properties located
         within any single zip code area;

               (xxiv) Each original Mortgage has been recorded or is in the
         process of being recorded, and all subsequent assignments of the
         original Mortgage (other than the assignment from the Seller to the
         Trustee and any assignment to the Seller or an affiliate thereof) have
         been recorded in the appropriate jurisdictions as to which no Opinion
         of Counsel was delivered pursuant to Section 2.01 or 2.02, as
         applicable, or such Mortgages and assignments are in the process of
         being recorded);

               (xxv) The terms of each Mortgage Note and each Mortgage have not
         been impaired, altered or modified in any respect, except by a written
         instrument that has been recorded, if necessary, to protect the
         interest of the Certificateholders and that has been delivered to the
         Trustee. The substance of any such alteration or modification is
         reflected on the Mortgage Loan Schedule and has been approved by the
         primary mortgage guaranty insurer, if any;

               (xxvi) The proceeds of each Mortgage Loan have been fully
         disbursed, and there is no obligation on the part of the mortgagee to
         make future advances thereunder. Any and all requirements as to
         completion of any on-site or off-site improvements and as to
         disbursements of any escrow funds therefor either have been complied
         with or are not yet required to be complied with but will be complied
         with as and when required. All costs, fees and expenses incurred in
         making or closing or recording such Mortgage Loans were paid;

               (xxvii) No Mortgage Note is or has been secured by any
         collateral, pledged account or other security other than the lien of
         the corresponding Mortgage;

               (xxviii) No Mortgage Loan was originated under a buydown plan;

                                      -46-
<PAGE>

               (xxix) No Mortgage Loan has a shared appreciation feature or
         other contingent interest feature;

               (xxx) Each Mortgaged Property consists of one or more contiguous
         parcels of real property with a residential dwelling erected thereon;

               (xxxi) Each Mortgage Loan contains a provision for the
         acceleration of the payment of the unpaid principal balance of such
         Mortgage Loan in the event the related Mortgaged Property is sold
         without the prior consent of the mortgagee thereunder;

               (xxxii) Any advances made to the Mortgagor after the date of
         origination of a Mortgage Loan but prior to the related Cut-off Date or
         Subsequent Cut-off Date, as appropriate, have been consolidated with
         the outstanding principal amount secured by the related Mortgage, and
         the secured principal amount, as consolidated, bears a single interest
         rate and single repayment term reflected on the Mortgage Loan Schedule.
         The consolidated principal amount as of the related Cut-off Date or
         Subsequent Cut-off Date, as appropriate, does not exceed the original
         principal amount of the related Mortgage Loan and is reflected as the
         current principal amount of such Mortgage Loan on the Mortgage Loan
         Schedule;

               (xxxiii) To the best knowledge of the Seller, there is no
         proceeding pending or threatened for the total or partial condemnation
         of any Mortgaged Property, nor is such a proceeding currently
         occurring;

               (xxxiv) To the best knowledge of the Seller, all of the
         improvements that were included for the purposes of determining the
         Appraised Value of any Mortgaged Property lie wholly within the
         boundaries and building restriction lines of such Mortgaged Property,
         and no improvements on adjoining properties encroach upon such
         Mortgaged Property except those that are identified in the related
         title insurance policy and affirmatively insured;

               (xxxv) To the best knowledge of the Seller, no improvement
         located on or being part of any Mortgaged Property is in violation of
         any applicable zoning law or regulation, all inspections, licenses and
         certificates required to be made or issued with respect to all occupied
         portions of each Mortgaged Property and, with respect to the use and
         occupancy of the same, including but not limited to certificates of
         occupancy and fire underwriting certificates, have been made or
         obtained from the appropriate authorities and such Mortgaged Property
         is lawfully occupied under applicable law;

               (xxxvi) With respect to each Mortgage that is a deed of trust, a
         trustee, duly qualified under applicable law to serve as such, has been
         properly designated and currently so serves and is named in such
         Mortgage, and no fees or expenses are or will become payable by the
         Certificateholders or the Trust to any trustee

                                      -47-
<PAGE>

         under any deed of trust, except in connection with a trustee's sale
         after default by the related Mortgagor;

               (xxxvii) With respect to each Junior Mortgage Loan, either (A) no
         consent for such Mortgage Loan was required by the holder of the
         related Senior Lien prior to the making of such Mortgage Loan or (B)
         such consent has been obtained and is contained in the related Mortgage
         File;

               (xxxviii) Each Mortgage contains customary and enforceable
         provisions that render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security, including by trustee's sale and by
         judicial foreclosure and there is no homestead or other exemption
         available to the related Mortgagor that would materially interfere with
         the right to sell the related Mortgaged Property at a trustee's sale or
         the right to foreclose upon the related Mortgaged Property;

               (xxxix) There is no default, breach, violation or event of
         acceleration existing under any Mortgage or the related Note and no
         event that, 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 Seller has not waived any
         default, breach violation or event of acceleration;

               (xl) No instrument of release or waiver has been executed in
         connection with any Mortgage Loan, and no Mortgagor has been released,
         in whole or in part, except in connection with an assumption agreement
         that has been approved by the primary mortgage guaranty insurer, if
         any, and that has been delivered to the Trustee;

               (xli) The maturity date of each Junior Mortgage Loan is at least
         12 months prior to the maturity date of the related Senior Lien if such
         Senior Lien provides for a balloon payment;

               (xlii) As of the Cut-off Date, at least 90.59% of the Initial
         Mortgage Loans in Group I (by Original Group I Balance) and at least
         88.31% of the Initial Mortgage Loans in Group II (by Original Group II
         Balance) are secured by Mortgaged Properties that are maintained by the
         related Mortgagors as primary residences;

               (xliii) There are no defaults (other than delinquencies) in
         complying with the terms of the Mortgage, and all taxes, governmental
         assessments, insurance premiums, water, sewer and municipal charges,
         leasehold payments or ground rents that previously became due and owing
         have been paid, or an escrow of funds has been established in an amount
         sufficient to pay for every such item that remains unpaid; the Seller
         has not advanced funds, or induced, solicited or knowingly received any
         advance of funds by a party other than the Mortgagor, directly or
         indirectly, for the payment of any amount required by the Mortgage,
         other than interest accruing from the date of the Mortgage Note or date
         of

                                      -48-
<PAGE>

         disbursement of the Mortgage proceeds, whichever is greater, to the
         date that precedes by one month the due date of the first installment
         of principal and interest;

               (xliv) To the best of the Seller's knowledge, all parties that
         have had any interest in the Mortgage Loan, whether as mortgagee,
         assignee, pledgee or otherwise during the period in which they held and
         disposed of such interest, were and either are now or, in the case of
         subclause (1) of this clause, will be within 30 days of the Closing
         Date or Subsequent Cut-off Date, as appropriate, (1) in compliance with
         any and all applicable licensing requirements of the laws of the state
         wherein the Mortgaged Property is located, and (2) (A) organized under
         the laws of such state, or (B) qualified to do business in such state,
         or (C) federal savings and loan associations or national banks having
         principal offices in such state, or (D) not doing business in such
         state so as to require qualification or licensing;

               (xlv) No Mortgage Loan was selected by the Seller for inclusion
         in the Trust on any basis intended to adversely affect the Trust;

               (xlvi) A full appraisal of each Mortgaged Property was performed
         in connection with the origination of the related Mortgage Loan, and
         such appraisal is the appraisal referred to in determining the
         Appraised Value of such Mortgaged Property;

               (xlvii) With respect to each Junior Mortgage Loan, the related
         Senior Lien requires equal monthly payments or, if such Senior Lien
         bears an adjustable interest rate, the monthly payments for such Senior
         Lien may be adjusted no more frequently than monthly;

               (xlviii) With respect to any Junior Mortgage Loan with a related
         Senior Lien that provides for negative amortization or an open-end
         feature that permits additional borrowings, the balance of such Senior
         Lien reflected on the Mortgage Loan Schedule and used to calculate the
         Combined Loan-to-Value Ratio for such Junior Mortgage Loan is based on
         the maximum amount of negative amortization, deferred interest or
         maximum amount of borrowings permitted under such Senior Lien;

               (xlix) The Company has not required the Mortgagor to sign a
         letter in connection with the origination of any Mortgage Loan in which
         such Mortgagor indicates its inability to repay such Mortgage Loan in
         accordance with the terms of the related Mortgage Note;

               (l) [Reserved];

               (li) As of the related Cut-off Date or Subsequent Cut-off Date,
         as appropriate, no Mortgage Loan in any Mortgage Loan Group was secured
         by more than one Mortgaged Property;

                                      -49-
<PAGE>

               (lii) With respect to each Hybrid Loan, all of the terms of the
         Mortgage pertaining to interest rate adjustments, payment adjustments
         and adjustments of the outstanding principal balance are enforceable;
         such adjustments will not affect the priority of the Mortgage lien and
         all of the adjustments have been properly calculated, recorded,
         reported and applied in accordance with the Mortgage and applicable
         law;

               (liii) All insurance policies, other than any primary mortgage
         insurance policies purchased by the Seller or Servicer or any of its
         affiliates, are the valid and binding obligation of the insurer and
         contain a standard mortgagee clause naming the originator, its
         successors and assigns, as mortgagee. Such insurance policies require
         prior notice to the insured of termination or cancellation and no such
         notice has been received, each Mortgage obligates the Mortgagor
         thereunder to maintain all such insurance at the Mortgagor's cost and
         expense, and upon the Mortgagor's failure to do so, authorizes the
         holder of the Mortgage to obtain and maintain such insurance at the
         Mortgagor's cost and expense and to seek reimbursement therefor from
         the Mortgagor;

               (liv) None of the Mortgage Loans is subject to a plan of
         bankruptcy and no Mortgagor has sought protection or relief under any
         state or federal bankruptcy or insolvency law during the term of the
         related Mortgage;

               (lv) At least 63.56% of the Initial Mortgage Loans in Group I (by
         Original Group I Balance) and at least 82.18% of the Initial Mortgage
         Loans in Group II (by Original Group II Balance) have Monthly Mortgage
         Payments due during the first Collection Period during which such
         Mortgage Loan is included in the Trust;

               (lvi) All Mortgage Loans were underwritten or re-underwritten in
         accordance with the underwriting guidelines of the Company;

               (lvii) To the knowledge of the Seller, no misrepresentation,
         negligence, fraud or similar occurrence with respect to a Mortgage Loan
         has taken place on the part of the Mortgagor, any appraiser, any
         builder or developer, or any other party having statutory or common law
         liabilities with respect to the origination of the Mortgage Loan or in
         any related application for insurance in relation to such Mortgage
         Loan;

               (lviii) To the knowledge of the Seller, certain Mortgage Loans
         are secured by Mortgaged Properties upon which are affixed manufactured
         housing or modular homes, provided that it is the intent and agreement
         of the parties hereto that this representation shall be deemed breached
         if any Mortgage Loan is determined to be secured by a Mortgaged
         Property upon which is affixed manufactured housing or a modular home
         and such Mortgage Loan is subject to a foreclosure which results in a
         Realized Loss;

                                      -50-
<PAGE>

               (lix) There was no fraud involved in the origination of any
         Mortgage Loans by the mortgagee or the Mortgagor, any appraiser or any
         other party involved in the origination of the Mortgage Loans;

               (lx) No Mortgage Loan is 60 days or more contractually delinquent
         as of the Cut-off Date and no Subsequent Mortgage Loan will be 60 days
         or more contractually delinquent as of its Subsequent Transfer Date
         (and accordingly there are no Restricted Mortgage Loans required to be
         listed in Schedule II);

               (lxi) All requirements for the valid transfer of each PMI Policy,
         including any assignments or notices required in each PMI Policy, have
         been satisfied;

               (lxii) As of the Closing Date with respect to each Mortgage Loan
         that is subject to a PMI Policy, the Seller has not taken any action,
         or omitted to take any action, and there are no circumstances that
         would cause the PMI Insurer to deny a claim with respect to such
         Mortgage;

               (lxiii) As of the Cut-off Date, not more than 72.91% of the
         Initial Mortgage Loans included in Group I are "cash-out refinance"
         Mortgage Loans (as such term is described under the Company's
         underwriting guidelines) and not more than 59.98% of the Initial
         Mortgage Loans included in Group II are "cash-out refinance" Mortgage
         Loans;

               (lxiv) The information set forth in the Prepayment Charge
         Schedule (including the Prepayment Charge Summary attached thereto) is
         complete, true and correct in all material respects on the date or
         dates when such information is furnished and each Prepayment Charge is
         permissible and enforceable in accordance with its terms (except to the
         extent that the enforceability thereof may be limited by bankruptcy,
         insolvency, moratorium, receivership and other similar laws relating to
         creditors' rights generally or the collectability thereof may be
         limited due to acceleration in connection with a foreclosure) under
         applicable state law;

               (lxv) The Servicer will not waive any Prepayment Charge unless it
         is waived in accordance with the standard set forth in Section 3.22;
         and

               (lxvi) On the Closing Date, as measured by the Cut-off Date
         aggregate Principal Balance, 1.66% of the Mortgage Loans having
         Loan-to-Value Ratios exceeding 80% are covered by the PMI Policy.

               (lxvii) As of the Cut-off Date, none of the Initial Mortgage
         Loans in Group I or in Group II were subject to the Home Ownership and
         Equity Protection Act of 1994 ("HOEPA") or any comparable state law.

               (lxviii) No proceeds from any Initial Mortgage Loan were used to
         finance single-premium credit, life and disability insurance policies.

                                      -51-
<PAGE>

               (lxix) No Initial Mortgage Loan imposes a prepayment charge for a
         term in excess of five years.

     It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Depositor, the Servicer or a Responsible Officer of
the Trustee of a breach of any of the foregoing representations and warranties,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Seller as to the facts stated therein, which
breach materially and adversely affects the value of the related Mortgage Loan
or the interests of the Certificateholders in the related Mortgage Loan, the
party discovering such breach shall give prompt written notice to the Trustee
which shall inform the other parties hereto, and each of the Rating Agencies and
take such other action as it deems appropriate pursuant to Section 9.01.

     Within 60 days of its discovery or its receipt of notice of such breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach has
been cured in all material respects or otherwise does not exist or continue to
exist, the Seller shall, not later than the Deposit Date in the month following
the related Collection Period in which any such cure period expired, but in all
events within 90 days of the earlier of the discovery of the breach or the
Seller's receipt of notice of breach (or at the election of the Seller, an
earlier Collection Period), either (I) repurchase such Mortgage Loan (or, in the
case of any representation and warranty stated above in terms of minimum or
maximum aggregate percentage amounts, repurchase Mortgage Loans such that, after
giving effect to such repurchase, the related representation and warranty would
be complied with) (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trust in
the same manner and subject to the same conditions as set forth in Section 2.03
or (II) remove such Mortgage Loan and substitute in its place a Qualified
Replacement Mortgage Loan (or, in the case of any representation and warranty
stated above in terms of minimum or maximum aggregate percentage amounts, remove
such Mortgage Loans and substitute in their place Qualified Replacement Mortgage
Loans such that, after giving effect to such substitution, the related
representation and warranty would be complied with) in the same manner and
subject to the same conditions as set forth in Section 2.03. Upon making any
such repurchase or substitution, the Seller shall be entitled to receive an
instrument of assignment or transfer from the Trustee, without recourse to the
Trustee, to the same extent as set forth in Section 2.03 with respect to the
repurchase of or substitution for Defective Mortgage Loans under that Section.
The Seller acknowledges that, in the event of corresponding breaches under this
Section 2.05 and Section 2.05A with respect to any affected Mortgage Loan, the
Seller's obligation to cure its breach with respect to such Mortgage Loan, or to
repurchase or substitute for such Mortgage Loan, is superior to the Depositor's
obligation to cure its corresponding breach with respect to such Mortgage Loan,
or to repurchse or substitute for such Mortgage Loan. It is understood and
agreed that the obligation of the Seller to repurchase or substitute any such
Defective Mortgage Loan (or property acquired in respect thereof or insurance
policy or current or future insurance proceeds with respect thereto) shall
constitute the sole remedy against it respecting such breach of the foregoing
representations or warranties available to the Certificateholders, the Depositor
or the Trustee, as the case may be.

                                      -52-
<PAGE>

     Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee receive an Officer's
Certificate of the Seller certifying that the Qualified Replacement Mortgage
Loan conforms to the requirements of this Agreement and an Opinion of Counsel
that such substitution will not be a "prohibited transaction" as defined in
Section 860F(a)(2) of the Code. Any substitution must be effected not later than
two years after the Closing Date, or within such longer period of time as may be
permitted under the REMIC Provisions for substitution of mortgage loans.

     Section 2.05A Representations and Warranties of the Depositor as to the
Mortgage Loans.

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

     The Depositor hereby assigns, transfers and conveys to the Trustee all of
its rights with respect to the Mortgage Loans including, without limitation, the
representations and warranties of the Seller made pursuant to Section 2.05
hereof, together with all rights of the Depositor to require the Seller to cure
any breach thereof or to repurchase or substitute for any affected Mortgage Loan
in accordance with this Agreement.

     The representations and warranties set forth in this Section shall survive
the sale and assignment of the Mortgage Loans to the Trust and the issuance,
sale and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the value of such Mortgage Loans or the interests of the Certificateholders in
such Mortgage Loans, the party discovering such breach shall give prompt written
notice to the other parties. Within 60 days of its discovery or its receipt of
notice of breach, the Depositor shall cure such breach in all material respects.
Any cure of any breach or repurchase or substitution for any affected Mortgage
Loan by the Seller under Section 2.05 shall relieve the Depositor of its
obligation to cure its corresponding breach with respect to the related Mortgage
Loan under this Section.

     Section 2.06 Execution and Authentication of Certificates. The Trustee
shall on behalf of the Trust, not in its individual capacity but solely as
Trustee, cause to be executed, and delivered on the Closing Date to or upon the
order of the Depositor, in exchange for the Mortgage Loans and the other assets
comprising the Trust, simultaneously with the sale, assignment and transfer to
the Trustee of the Mortgage Loans, each Class of Certificates duly executed by
the Trustee, and authenticated by the Trustee, pursuant to Section 6.01, in
authorized denominations, equaling, 100% of the Percentage Interests in each
Class, and collectively evidencing the entire ownership of the Trust.

     Section 2.07 Reserved.

     Section 2.08 Indemnification of the Trust. The Seller shall indemnify the
Trust for any liability incurred thereby as a result of a breach of the
representation and warranty set forth in clause (xvii) of Section 2.05 (without
regard to any limitation therein relating to the knowledge

                                      -53-
<PAGE>

of the Seller). This indemnity obligation shall be in addition to any other
obligation the Seller may have in connection with any such breach.

                                  ARTICLE III
                                  -----------

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
                               CERTIFICATE ACCOUNT

     Section 3.01 The Servicer and the Sub-Servicers. Acting directly or through
one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions and making Monthly
Advances and Servicing Advances pursuant to Section 5.02. The Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary to perform its servicing obligations hereunder in
the jurisdictions in which it services Mortgage Loans. If the Servicer commences
directly to service a material number or principal amount of Mortgage Loans with
related Mortgaged Properties located in any other state, the Servicer will use
its reasonable efforts promptly to obtain, and thereafter to maintain, all
licenses and qualifications necessary to perform its servicing obligations
hereunder in each such state. Each Sub-Servicer shall maintain all licenses and
qualifications necessary to perform its servicing obligations in the states
where the Mortgaged Properties to which the applicable Sub-Servicing Agreement
relates are located. The Servicer shall cooperate with the Trustee and furnish
to the Trustee such information in its possession as may be necessary or
appropriate to enable the Trustee to perform its tax reporting duties hereunder.
The Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.

     Without limiting the generality of the foregoing, the Servicer (i) shall
continue, and is hereby authorized and empowered by the Trustee, to execute and
deliver, on behalf of itself, the Certificateholders and the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the related Mortgaged Properties (ii) may
consent to any modification of the terms of any Mortgage Note not expressly
prohibited hereby if the effect of any such modification will not be to
materially and adversely affect the security afforded by the related Mortgaged
Property or to decrease or slow (other than as permitted by Section 3.02(a)(ii))
the timing of receipt of any payments required thereunder and (iii) shall not
consent to the placing of a lien senior to or on parity with that of the
Mortgage on the related Mortgaged Property.

                                      -54-
<PAGE>

     The Servicer may but shall not be obligated to sue to enforce or collect on
any of the Mortgage Loans or any insurance policy covering a Mortgage Loan, in
its own name if possible, or on behalf of the Trust. If the Servicer commences a
legal proceeding to enforce a Mortgage Loan or any such insurance policy, the
Trustee shall thereupon be deemed to have automatically assigned the Mortgage
Loan or the rights under such insurance policy to the Servicer for purposes of
collection only. If, however, in any suit or legal proceeding for enforcement,
it is held that the Servicer may not enforce or collect on a Mortgage Loan or
any insurance policy covering a Mortgage Loan on the ground that it is not a
real party in interest or a holder entitled to enforce such Mortgage Loan or
such insurance policy, as the case may be, then the Trustee shall, upon the
written request of a Servicing Officer, furnish the Servicer with such powers of
attorney and other documents as are necessary or appropriate to enable the
Servicer to enforce such Mortgage Loan or insurance policy, as the case may be.
Amounts expended by the Servicer under this paragraph shall be considered
Servicing Advances.

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

     The parties intend that each REMIC Pool shall constitute a REMIC, and that
the affairs of each REMIC Pool shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, (i) the Servicer covenants and agrees
that it shall act as agent (and the Servicer is hereby appointed to act as
agent) on behalf of each REMIC Pool, and that in such capacity it shall: (a) use
its best efforts to conduct the affairs of such REMIC Pool at all times that any
Certificates are outstanding so as to maintain the status thereof as a REMIC
under the REMIC Provisions; (b) not knowingly or intentionally take any action
or omit to take any action that would cause the termination of the REMIC status
of any REMIC Pool or that would subject such REMIC Pool to tax, including the
modification of a qualified mortgage that would subject such REMIC Pool to tax;
and (c) exercise reasonable care not to allow such REMIC Pool to receive income
from the performance of services or from assets not permitted under the REMIC
Provisions to be held by a REMIC, and (ii) the Holder of the Class R
Certificates covenants and agrees that it shall (a) pay the amount of any
federal income tax, including, without limitation, prohibited transaction taxes,
taxes on net income from foreclosure property, and taxes on certain
contributions to a REMIC after the Startup Day, imposed on any REMIC Pool when
and as the same shall be due and payable (but such obligation shall not prevent
the Holder of the Class R Certificates or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Holder of the Class R Certificates from withholding or depositing payment of
such tax, if permitted by law, pending the outcome of such proceedings); and (b)
pay the amount of any and all taxes imposed on any REMIC Pool pursuant to
Sections 24870, 24874 and 23153 of the California Revenue and Taxation Code. The
Holder of the Class R Certificates shall not be entitled to reimbursement for
any taxes paid pursuant to this Section.

     Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account.

         (a) The Servicer shall, to the extent such procedures shall be
     consistent with this Agreement, follow such collection procedures as it
     follows from time to time with respect to home equity mortgage loans in its
     servicing portfolio that are comparable to the Mortgage Loans; provided
     that the Servicer shall always at least follow collection

                                      -55-
<PAGE>

     procedures that are consistent with standard industry practices. Consistent
     with the foregoing, and subject to the limitations in Section 3.05, the
     Servicer may in its discretion (i) waive any assumption fees, late payment
     charges, charges for checks returned for insufficient funds, if any,
     excluding Prepayment Charges, or other fees that may be collected in the
     ordinary course of servicing the Mortgage Loans, (ii) if a Mortgagor is in
     default or about to be in default because of a Mortgagor's financial
     condition, arrange with the Mortgagor a schedule for the payment of
     delinquent payments due on the related Mortgage Loan, or (iii) modify
     payments of monthly principal and interest on any Mortgage Loan becoming
     subject to the terms of the Relief Act in accordance with the Servicer's
     general policies for comparable home equity mortgage loans subject to such
     Act.

         (b) The Servicer shall establish and maintain, or cause to be
     established and maintained, one or more Eligible Accounts that in the
     aggregate are the Collection Account. All amounts held in the Collection
     Account shall be invested by the depository institution or trust company
     then maintaining the account at the written direction of the Servicer in
     Permitted Investments that mature not later than the Deposit Date next
     succeeding the date of investment. No Permitted Investment shall be sold or
     disposed of prior to maturity. The Servicer shall not retain any cash or
     investment in the Collection Account for a period in excess of 12 months
     and cash therein shall be considered transferred to Certificate Account on
     a first-in, first-out basis. All net income realized from any such
     investment shall be for the benefit of the Servicer as additional servicing
     compensation and shall be subject to its withdrawal or order from time to
     time.

         (c) Subject to Section 3.02(d), the Servicer shall deposit in the
     Collection Account each of the following payments on and collections in
     respect of the Mortgage Loans as soon as practicable, but in no event later
     than the close of business on the second Business Day after its receipt
     thereof:

               (i) all payments in respect of or allocable to interest on the
         Mortgage Loans (including any net income from REO Properties);

               (ii) all Principal Payments;

               (iii) all Payments Ahead;

               (iv) all Net Liquidation Proceeds;

               (v) all Trust Insurance Proceeds (including, for this purpose,
         any amounts required to be credited by the Servicer pursuant to the
         last sentence of Section 3.04); and

               (vi) all Prepayment Charges.

     The Servicer shall replace such amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account on
or prior to the Deposit Date immediately following

                                      -56-
<PAGE>

 such withdrawal an amount equal to the total of all such amounts applied to the
 payment of a Servicing Advance and those amounts applied to the payment of a
 Monthly Advance required to be deposited pursuant to Section 5.01(b).

     The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees, late payment charges, charges for checks returned for
insufficient funds, if any, or extension or other administrative charges
(excluding Prepayment Charges) paid by Mortgagors or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items. The amounts deposited
in the Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay itself
the Monthly Servicing Fee pursuant to Section 3.08 and to make Servicing
Advances or to reimburse itself for Servicing Advances, as applicable, in either
case in accordance with Section 5.02(b), to make Monthly Advances or to
reimburse itself for payments of Monthly Advances, as applicable, in either case
in accordance with Section 5.02(a). In addition, if the Servicer deposits in the
Collection Account any amount not required to be so deposited or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.

         (d) Upon such terms as the Rating Agencies may approve, the Servicer
     may make the deposits to the Collection Account referred to in Section
     3.02(c) on a later day than the second Business Day after receipt of the
     amounts required to be so deposited, which terms and later day shall be
     specified by the Rating Agencies and confirmed to the Trustee and the
     Servicer in writing.

         (e) The Trustee shall establish and maintain the Certificate Account.
     The Certificate Account shall be an Eligible Account segregated on the
     books of the Trustee and held by the Trustee in trust, and the Certificate
     Account and the amounts deposited therein shall not be subject to any
     claim, liens or encumbrances of any creditors or depositors of the Trustee
     or the Company (whether made directly or indirectly through a liquidator,
     receiver or trustee in bankruptcy of the Trustee or the Company). At or
     before 2:00 p.m. Los Angeles time on each Deposit Date, the Servicer shall
     withdraw from the Collection Account all amounts on deposit therein that
     constitute any portion of Available Funds for a Mortgage Loan Group and the
     related Distribution Date (including any amounts therein that are being
     held for distribution on a subsequent Distribution Date which are being
     applied toward the Monthly Advance for the related Distribution Date
     pursuant to Section 5.02(a)) and all Prepayment Charges collected during
     the related Collection Period and remit such amounts to the Trustee for
     deposit in the Certificate Account. In addition, any Compensating Interest
     and Monthly Advances required to be made by the Servicer for the related
     Mortgage Loan Group in respect of the related Distribution Date and any
     amounts required to be deposited into the Certificate Account in connection
     with a purchase or repurchase of any Mortgage Loans in such Mortgage Loan
     Group or any shortage on such Mortgage Loans by the Seller or the Servicer
     pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01 or a substitution of a
     Qualified Replacement Mortgage Loan pursuant to Section 2.03 or 2.05, or in
     connection with a

                                      -57-
<PAGE>

     purchase of Mortgage Loans by the Servicer pursuant to Section 10.01 or in
     connection with the Servicer's failure to adjust the Mortgage Loan Rate on
     an Adjustable Rate Mortgage Loan, shall be remitted to the Trustee for
     deposit in the Certificate Account on the applicable Deposit Date. On the
     Closing Date, the Class P Deposit shall be deposited in to the Certificate
     Account. Any amounts held in the Certificate Account (other than the Class
     P Deposit) may be invested at the written direction of the Servicer in
     Permitted Investments upon the same terms and conditions as those specified
     in clause (b) above with respect to the Collection Account except that such
     investments shall mature not later than the Business Day preceding the
     Distribution Date next succeeding the date of investment, and in the
     absence of such direction the Trustee shall invest in Permitted Investments
     described in clause (E) of the definition of Permitted Investments. All net
     income realized from any such investment shall be for the benefit of the
     Servicer as additional servicing fee; except that the net investment income
     realized from such investments in respect of the Business Day immediately
     preceding any Distribution Date shall be for the benefit of the Trustee as
     additional trustee fee, and shall be subject to its withdrawal or order
     from time to time.

     Section 3.03 Additional Servicing Responsibilities for the Adjustable Rate
Mortgage Loans. The Servicer shall enforce each Adjustable Rate Mortgage Loan
and shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's records
shall, at all times, reflect then-current Mortgage Loan Rate and Monthly
Mortgage Payment and the Servicer shall timely notify the Mortgagor of any
changes to the Mortgage Loan Rate and the Monthly Mortgage Payment. If the
Servicer fails to adjust the Mortgage Loan Rate or the Monthly Mortgage Payment
in accordance with the terms of the Mortgage Note for the related Adjustable
Rate Mortgage Loan, or if the Servicer fails to notify the related Mortgagor of
any such adjustment as required under the terms of such Mortgage Note, or if any
liability, claim or defense arises with respect to any Adjustable Rate Mortgage
Loan solely as a result of any such failure, the Servicer shall pay, from its
own funds and without right of reimbursement therefor, any shortage in amounts
collected or collectible on the related Adjustable Rate Mortgage Loan that
results. The Servicer shall deposit any amounts in respect of such shortage in
the Certificate Account on the Deposit Date with respect to the related
Collection Period.

     Section 3.04 Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as

                                      -58-
<PAGE>

mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency, insuring against such hazard losses, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first sentence of this
Section, it being understood and agreed that such policy may contain a
deductible clause that is in form and substance consistent with standard
industry practice, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section, and there shall have been a
loss that would have been covered by such policy, deposit in the Collection
Account in accordance with Section 3.02 the amount not otherwise payable under
the blanket policy because of such deductible clause.

     Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage is
voluntarily conveyed by the Mortgagor, the Servicer shall enforce any
due-on-sale clause contained in the related Mortgage Note or Mortgage, to the
extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any related insurance policy or
result in legal action by the Mortgagor. Subject to the foregoing, the Servicer
may take or enter into an assumption and modification agreement from or with the
Person to whom such Mortgaged Property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
the Mortgagor remains liable thereon or, if the Person to whom such Mortgaged
Property has been or is about to be conveyed satisfies the Servicer's
then-current underwriting standards for home equity mortgage loans similar to
the Mortgage Loans, and the Servicer in its reasonable judgment finds it
appropriate, is released from liability thereon. If the Trustee is holding the
Mortgage Files, the Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee an
Officer's Certificate certifying that such agreement is in compliance with this
Section and the Servicer shall forward to the Trustee the original of such
assumption and modification agreement. Such assumption and modification
agreement shall, for all purposes, be considered a part of the related Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such agreement, the Mortgage Loan Rate
shall not be reduced (but may be increased), the Principal Balance of such
Mortgage Loan shall not be changed and the term of such Mortgage Loan will not
be extended beyond the existing term of such Mortgage Loan. Any fee collected by
the Servicer for entering into any such agreement shall be retained by the
Servicer as additional servicing compensation.

     Notwithstanding the foregoing paragraph of this Section 3.05 or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reasons of any
assumption of a Mortgage Loan, or transfer of any

                                      -59-
<PAGE>

Mortgaged Property without the assumption thereof, by operation of law or any
assumption or transfer that the Servicer reasonably believes it may be
restricted by law from preventing, for any reason whatsoever.

     Section 3.06 Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Loans, the Servicer, on behalf of the Trust, shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices (including, in the case of any default on a related Senior
Lien, the advancing of funds to correct such default) and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
first, second and third lien one- to four-family mortgage loan servicing
activities (including the procurement of a drive-by appraisal of the related
Mortgaged Property prior to foreclosure or other conversion). The foregoing is
subject to the proviso that neither the Servicer nor the Trustee shall be
required to expend its own funds in connection with any foreclosure or towards
the correction of any default on a related Senior Lien or restoration of any
Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan). Amounts expended by the Servicer under
this paragraph shall be considered Servicing Advances.

     To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly Advances or Servicing Advances
that were unreimbursed prior to the receipt of such Net Liquidation Proceeds),
such excess shall be paid to the Holder of the Class R-I Certificate.

     Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Restricted Mortgage Loan. In lieu of
foreclosure, any Restricted Mortgage Loan shall be repurchased or substituted in
accordance with and subject to the limitations contained in Section 2.05.

     Notwithstanding the foregoing, the Servicer, at its sole option, may
purchase from the Trust on any Deposit Date any Mortgage Loan as to which the
related Mortgagor has failed to make full Monthly Mortgage Payments as required
under the related Mortgage Note for three consecutive months at any time
following the Cut-off Date and prior to such Deposit Date at a price equal to
the Purchase Price by depositing such amount in the Certificate Account on such
Deposit Date pursuant to Section 3.02; provided, however, that the aggregate
Principal Balances of the Mortgage Loans purchased by the Servicer pursuant to
the exercise of the option granted in this sentence shall not exceed 3% of the
sum of the Original Pool Balance plus the amount of

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<PAGE>

the Prefunding Account Deposit and such Mortgage Loans may be purchased only in
the order of the most delinquent to the least delinquent.

     In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
Certificateholders, and the Servicer shall manage, conserve and protect each
such Mortgaged Property for the Certificateholders solely for the purpose of its
prompt disposition and sale. The Servicer shall use its best efforts to dispose
of each such Mortgaged Property as expeditiously as possible consistent with the
goal of maximizing Net Liquidation Proceeds (taking into account any
unreimbursed Monthly Advances made or expected to be made with respect to such
Mortgage Loan). Neither the Trustee nor the Servicer, acting on behalf of the
Trust, shall provide financing from the Trust to any purchaser of any such
Mortgaged Property.

     In the event that the Trust acquires any Mortgaged Property as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
such Mortgaged Property shall be disposed of by the Servicer on behalf of the
Trust no later than the last day of the third calendar year following the year
in which the foreclosure occurred. The Servicer shall further ensure that the
Mortgaged Property is administered so that it constitutes "foreclosure property"
within the meaning of Code Section 860G(a)(8) at all times, that the sale of
such property does not result in the receipt by any REMIC Pool of any income
from non-permitted assets as described in Code Section 860F(a)(2)(B), and that
no REMIC Pool derives any "net income from foreclosure property" within the
meaning of Code Section 860G(c)(2) with respect to such property.

     Section 3.07 Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit H hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02 have been so deposited) of a Servicing Officer. Such notification
shall be made each month at the time that the Servicer delivers its Servicer
Remittance Report to the Trustee pursuant to Section 4.01. Upon any such payment
in full, the Servicer is authorized to procure from such trustee under the
Mortgage that secured the related Mortgage Note a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in Section 2941(c) of the California Civil Code or
other applicable law, shall be recorded by such trustee in the office of the
County Recorder in which the Mortgage is recorded, or, as the case may be, to
procure from such trustee an instrument of satisfaction or, if the related
Mortgagor so requests, an assignment without recourse, in each case prepared by
the Servicer at its expense and executed by the Trustee, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by the
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collection or Certificate Account. From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Trustee
shall, upon written request of the Servicer and delivery to the Trustee of a
trust receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute such documents prepared by the

                                      -61-
<PAGE>

Servicer as shall be necessary to the prosecution of any such proceedings. Such
trust receipt shall state that the Servicer is holding the Mortgage File in
trust for the Trustee and shall obligate the Servicer to return the Mortgage
File to the Trustee when the need therefor by the Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that herein above specified, the
trust receipt shall be released by the Trustee to the Servicer.

     Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer. On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans for the related Collection Period, as servicing
compensation for such Collection Period, the Monthly Servicing Fee. Additional
servicing compensation shall be assumption fees, late payment charges, charges
for checks returned for insufficient funds, or extension and other
administrative charges received by the Servicer (excluding Prepayment Charges)
and any earnings on investments by the Servicer of amounts held in escrow
accounts established thereby on behalf of Mortgagors (any such investments to be
made in compliance with applicable law). The Servicer is obligated to pay
Compensating Interest out of the related Monthly Servicing Fee on each Deposit
Date, to the extent of the amount of the Monthly Servicing Fee, and shall not be
entitled to reimbursement therefor. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder (including
payment of the fees and expenses relating to the Annual Independent Public
Accountant's Servicing Report described in Section 3.10, and all other fees and
expenses not otherwise expressly stated hereunder for the account of the
Certificateholders) and shall not be entitled to reimbursement therefor except
as specifically provided herein.

     Section 3.09 Annual Statement as to Compliance.

         (a) The Servicer will deliver to the Trustee, the Seller, the Depositor
     and each Rating Agency, on or before September 30 of each year, beginning
     with September 30, 2002, an Officer's Certificate of the Servicer
     substantially in the form set forth in Exhibit F hereto stating that (a) a
     review of the activities of the Servicer during the preceding calendar year
     (or since the Closing Date in the case of the first such statement) and of
     its performance under this Agreement has been made under such officer's
     supervision and (b) to the best of such officer's knowledge, based on such
     review, the Servicer has fulfilled all its material obligations under this
     Agreement throughout such year (or since the Closing Date in the case of
     the first such statement), 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.

         (b) The Servicer shall deliver to the Trustee, the Seller, the
     Depositor and each Rating Agency, promptly after having obtained knowledge
     thereof, but in no event later than five Business Days thereafter, written
     notice by means of an Officer's Certificate of any event that with the
     giving of notice or the lapse of time, or both, would become an Event of
     Default.

     Section 3.10 Annual Independent Public Accountants' Servicing Report. On or
before May 31 of each year, beginning with May 31, 2002, the Servicer at its
expense shall cause a firm of nationally recognized independent public
accountants (who may also render other services to

                                      -62-
<PAGE>

the Servicer) to furnish a report to the Trustee, the Seller, the Depositor and
each Rating Agency to the effect that such firm has examined certain documents
and records (including the Servicer Remittance Reports delivered by the Servicer
during the period covered by such reports) relating to the servicing activities
of the Servicer (which would include servicing of Mortgage Loans under this
Agreement) for the period covered by such report, and that such examination
(which will have been conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers to the extent that the
procedures in such audit guide are applicable to the servicing obligations set
forth in this Agreement), has disclosed no exceptions or errors in records
relating to the servicing activities of the Servicer, including servicing of
Mortgage Loans subject to this Agreement, that, in the opinion of such firm, are
material, except for such exceptions as shall be set forth in such report.

     Section 3.11 Access to Certain Documentation and Information Regarding the
Mortgage Loans.

         (a) The Servicer shall provide to Certificateholders that are federally
     insured savings associations and the FDIC and its supervisory agents and
     examiners access to the documentation regarding the Mortgage Loans required
     by applicable regulations of the Office of Thrift Supervision, and to the
     Trustee all documentation relating to the Mortgage Loans that is in the
     possession of the Servicer, such access being afforded without charge but
     only upon reasonable request and during normal business hours at the
     offices of the Servicer. The Servicer shall accurately and fully provide
     information regarding payment performance of the Mortgagors to the
     nationally recognized credit repositories. Nothing in this Section shall
     derogate from the obligation of the Servicer to observe any applicable law
     prohibiting disclosure of information regarding the Mortgagors and the
     failure of the Servicer to provide access as provided in this Section as a
     result of such obligation shall not constitute a breach of this Section.

         (b) The Servicer shall supply information to the Trustee in such form
     as the Trustee shall reasonably request, by the start of the third Business
     Day preceding each Distribution Date, as is required in the Trustee's
     reasonable judgment to enable the Trustee to make required distributions
     and to furnish the certificates, statements and reports to
     Certificateholders required pursuant to this Agreement.

     Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions Policy.
The Servicer shall during the term of its service as Servicer maintain in force
a (a) policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and (b) fidelity bond in
respect of its officers, employees and agents, in each case having coverage
amounts that satisfy FNMA or FHLMC requirements for mortgage loan originators
and servicers.

     Section 3.13 Notices to the Rating Agencies and the Trustee . In addition
to the other notices required to be given to the Rating Agencies and the Trustee
by the provisions of this Agreement, the Servicer shall give notice to each
Rating Agency, the Trustee, the Depositor and the Seller of (a) any amendment to
this Agreement, (b) the final distribution on the Offered Certificates, (c) the
occurrence of an Event of Default and (d) the repurchase, purchase or

                                      -63-
<PAGE>

substitution, as applicable, of any Mortgage Loan pursuant to Section 2.03,
2.05, 3.01 or 3.06 by the Seller or Servicer, as the case may be.

     Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each calendar year beginning in 2002 the Servicer shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by
Code Section 6050J. In order to facilitate this reporting process, the Servicer,
on or before February 28th of each year, shall provide to the Internal Revenue
Service and the Trustee reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquired an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan, or
(ii) knows or has reason to know that a Mortgaged Property has been abandoned.
The reports from the Servicer shall be in form and substance sufficient to meet
the reporting requirements imposed by such Section 6050J.

     Section 3.15 Sub-Servicers and Sub-Servicing Agreements.

         (a) The Servicer may enter into Sub-Servicing Agreements for any
     servicing and administration of Mortgage Loans with any institution that is
     in compliance with the laws of each state necessary to enable it to perform
     its obligations under such Sub-Servicing Agreement. The Servicer shall give
     notice to, the Seller, the Trustee, the Depositor, the Rating Agencies and
     the PMI Insurer of the appointment of any Sub-Servicer. The Servicer shall
     not enter into any Sub-Servicing Agreement that does not provide for the
     servicing of the Mortgage Loans specified therein on a basis consistent
     with the terms of this Agreement or that otherwise violates the provisions
     of this Agreement. The Servicer may enter into, and make amendments to, any
     Sub-Servicing Agreement or enter into different forms of Sub-Servicing
     Agreements; provided, however, that any such amendments or forms shall be
     consistent with and not violate the provisions of this Agreement.

         (b) For purposes of this Agreement the Servicer shall be deemed to have
     received payments on Mortgage Loans when any Sub-Servicer has received such
     payments. With respect to the Servicer's obligations under Section 3.01 to
     make deposits in the Collection Account, the Servicer shall be deemed to
     have made such deposits when any Sub-Servicer has made such deposits into a
     Sub-Servicing Account if permitted by the related Sub-Servicing Agreement.

         (c) Any Sub-Servicing Agreement and any other transactions or services
     relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to
     be between the Sub-Servicer and the Servicer alone and the Trustee shall
     not be deemed a party thereto and shall have no claims, rights,
     obligations, duties or liabilities with respect to any Sub-Servicer, except
     that the Trustee shall have such claims or rights that arise as a result of
     any funds held by a Sub-Servicer in trust for or on behalf of the Trust.
     Notwithstanding the execution of any Sub-Servicing Agreement, the Servicer
     shall not be relieved of any liability hereunder and shall remain obligated
     and liable for the servicing and administration of the Mortgage Loans.

                                      -64-
<PAGE>

         (d) The Servicer shall be entitled to terminate any Sub-Servicing
     Agreement and the rights and obligations of any Sub-Servicer pursuant to
     any Sub-Servicing Agreement in accordance with the terms and conditions of
     such Sub-Servicing Agreement. In the event of termination of any
     Sub-Servicer, all servicing obligations of such Sub-Servicer shall be
     assumed simultaneously by the Servicer without any act or deed on the part
     of such Sub-Servicer or the Servicer, and the Servicer either shall service
     directly the related Mortgage Loans or shall enter into a Sub-Servicing
     Agreement with a successor Sub-Servicer. The Sub-Servicer shall give
     written notice to the Trustee, the Depositor and the Seller of the
     termination of any Sub-Servicer.

         (e) Any Sub-Servicing Agreement shall (i) include the provision that
     such agreement may be immediately terminated by the Trustee in accordance
     with the terms of this Agreement, in the event that the Servicer shall, for
     any reason, no longer be the Servicer (including termination due to an
     Event of Default) and (ii) clearly and unambiguously state that either (x)
     such termination is effective without a fee or (y) any termination fee is
     the sole responsibility of the Servicer and none of the Trust, the Trustee,
     the Seller, the Depositor or the Certificateholders has any liability
     therefor, regardless of the circumstances surrounding such termination.

     Section 3.16 Prefunding Account.

         (a) If a Prefunding Account is specified in Article I, the Trustee will
     establish and maintain the Prefunding Account. No later than the Closing
     Date, the Trustee will deposit in the Prefunding Account the Prefunding
     Account Deposit from the proceeds of the sale of the Offered Certificates.
     Subject to this Section, upon the conveyance of Subsequent Mortgage Loans
     to the Trust on any Subsequent Transfer Date, the Depositor shall instruct
     the Trustee to withdraw from the Prefunding Account (i) an amount equal to
     the Subsequent Purchase Price for the Subsequent Mortgage Loans to be
     included in each Mortgage Loan Group and make a corresponding reduction in
     the amount on deposit in the Prefunding Account allocated to such Mortgage
     Loan Group, and to pay such amount to or upon the order of the Depositor
     upon satisfaction of the conditions set forth in Section 2.02 of this
     Agreement with respect to such transfer.

         (b) The Prefunding Account will be part of the Trust but not part of
     any REMIC Pool. Amounts held in the Prefunding Account shall be invested in
     Permitted Investments of the type specified in clause (f) of the definition
     of Permitted Investments. The Trustee shall not be liable for any losses on
     amounts invested in accordance with the provisions hereof. Any losses
     realized in connection with any such investment shall be for the account of
     the Seller and the Seller shall deposit the amount of such loss (to the
     extent not offset by income from other investments) in the Prefunding
     Account immediately upon the realization of such loss. All interest and any
     other investment earnings on amounts held in the Prefunding Account shall
     be taxed to the Seller and for federal and state income tax purposes the
     Seller shall be deemed to be the owner of the Prefunding Account. All
     interest and any other investment earnings on amounts held in the
     Prefunding Account shall be paid by the Trustee to the Seller on the
     Distribution Date next following the end of the Funding Period.

                                      -65-
<PAGE>

         (c) On the Distribution Date next following the end of the Funding
     Period, any amounts remaining in the Prefunding Account (net of
     reinvestment earnings payable to the Seller) shall be deposited at such
     time into the Certificate Account for distribution in the related allocated
     amounts as part of the Principal Distribution Amount for the related
     Mortgage Loan Group on such Distribution Date.

     Section 3.17 Capitalized Interest Account.

         (a) Unless all Subsequent Mortgage Loans are purchased by the Trust on
     the Closing Date, or unless a Capitalized Interest Account is not specified
     in Article I, the Trustee shall establish and maintain the Capitalized
     Interest Account. On the Closing Date, the Trustee will deposit the
     Capitalized Interest Account Deposit in the Capitalized Interest Account
     or, if all Subsequent Mortgage Loans are purchased on the Closing Date, in
     the Certificate Account. The Trustee shall hold the Capitalized Interest
     Account Deposit for the benefit of the Offered Certificateholders.

         (b) The Capitalized Interest Account will be part of the Trust but not
     part of any REMIC Pool. Amounts held in the Capitalized Interest Account
     prior to the first Deposit Date shall be invested in Permitted Investments
     of the type specified in clause (f) of the definition of Permitted
     Investments, which Permitted Investments shall mature no later than the
     Deposit Date immediately following the end of the Funding Period. The
     Trustee shall not be liable for any losses on amounts invested in
     accordance with the provisions hereof. All interest and other investment
     earnings on amounts held in the Capitalized Interest Account (and any other
     amounts remaining on deposit therein in excess of the amounts to be so
     withdrawn and deposited into the Certificate Account) shall be paid or
     released by the Trustee to the Seller on the Distribution Date immediately
     following the end of the Funding Period and taxed to the Seller. For
     federal and state income tax purposes the Seller shall be deemed to be the
     owner of the Capitalized Interest Account. Any losses realized in
     connection with any such investment shall be for the account of the Seller
     and the Seller shall deposit the amount of such loss (to the extent not
     offset by income from other investments) in the Capitalized Interest
     Account immediately upon the realization of such loss. All amounts earned
     on deposit in the Capitalized Interest Account shall be taxed to the
     Seller.

         (c) On each Prefunding Distribution Date, the Trustee shall transfer
     from the Capitalized Interest Account to the Certificate Account the
     Capitalized Interest Requirement, if any, for such Distribution Date;
     provided, however, that on the final Subsequent Transfer Date the Trustee
     shall (i) transfer the Capitalized Interest Requirement, if any, for the
     following Distribution Date from the Capitalized Interest Account to the
     Certificate Account, (ii) remit the balance of the funds on deposit in the
     Capitalized Interest Account to the Seller and (iii) close the Capitalized
     Interest Account.

     Section 3.18 [Reserved]

     Section 3.19 [Reserved]

     Section 3.20 [Reserved]

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<PAGE>

     Section 3.21 Net Rate Cap Fund. The Trustee will establish the Net Rate Cap
Fund on the Closing Date. On the Closing Date, the Class C Certificateholders
will deposit, or cause to be deposited, into the Net Rate Cap Fund $10,000. On
each Distribution Date as to which there is a Net Rate Cap Carryover, the
Trustee has been directed by the Class C Certificateholders to, and therefor
will, deposit into the Net Rate Cap Fund the amounts described in Section
5.01(e)(5), rather than distributing such amounts to the Class C
Certificateholders. On each such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Offered Certificateholders, other than the
Class A-IO Certificateholders, and will distribute such amounts to the
applicable Certificateholders pursuant to Section 5.01(e)(5). If no Net Rate Cap
Carryover is payable on a Distribution Date, the Trustee shall deposit into the
Net Rate Cap Fund on behalf of the Class C Certificateholders an amount such
that when added to other amounts already on deposit in the fund, the aggregate
amount on deposit therein is equal to $10,000. For federal and state income tax
purposes, the Class C Certificateholders will be deemed to be the owners of the
Net Rate Cap Fund and all amounts deposited into the Net Rate Cap Fund (other
than the initial $10,000 deposit) shall be treated as amounts distributed by
REMIC III with respect to the Class C Distribution Amount and Class C
Carryforward Amount. Related amounts held in the Net Rate Cap Fund and not
distributable to any Offered Certificateholders on any Distribution Date will be
invested by the Trustee in investments designated in writing by the Class C
Certificateholders having maturities on or prior to the next succeeding
Distribution Date on which such related amounts will be distributable to the
applicable Class of Certificateholders; provided, that, if no such designation
is made by the Class C Certificateholders, all such amounts shall remain
uninvested. Upon the termination of the Trust, or the payment in full of the
Offered Certificateholders, other than the Class A-IO Certicateholders, all
amounts remaining on deposit in the Net Rate Cap Fund will be released from the
lien of the Trust and distributed to the Class C Certificateholders or their
designees. The Net Rate Cap Fund will be part of the Trust but not part of any
REMIC Pool and any payments to Offered Certificateholders of related Net Rate
Cap Carryover will not be payments with respect to a "regular interest" in a
REMIC within the meaning of Code Section 860G(a)(1).

     Section 3.22 Covenants and Representations Regarding Prepayment Charges.
(a) The Servicer will not waive any Prepayment Charge or part of a Prepayment
Charge unless in connection with a Mortgage Loan that is in default or for which
a default is reasonably foreseeable.

         (b) The information set forth in the Prepayment Charge Schedule
     (including the prepayment charge summary attached thereto) is complete,
     true and correct in all material respects at the date or dates respecting
     which such information is furnished and each Prepayment Charge is
     permissible and enforceable in accordance with its terms (except to the
     extent that the enforceability thereof may be limited by bankruptcy,
     insolvency, moratorium, receivership and other similar laws relating to
     creditors' rights generally) under applicable state law.

         (c) Upon discovery by the Seller, the Depositor, the Servicer or a
     Responsible Officer of the Trustee of a breach of the foregoing, which
     materially and adversely affects the right of the Holders of the Class P
     Certificates to any Prepayment Charge, the party discovering such breach
     shall give prompt written notice to the other parties. Within 60 days of
     the earlier of discovery by the Servicer or the Seller, as the case may

                                      -67-
<PAGE>

     be, or receipt of notice by the Servicer or the Seller, as the case may be,
     of a breach of clause (a) or (b) above, then in the case of clause (a)
     above the Servicer shall cure such breach in all material respects and in
     the case of clause (b) above the Seller shall cure such breach in all
     material respects. If the covenant in clause (a) above is breached, the
     Servicer must pay into the Collection Account the amount of the waived
     Prepayment Charge. If the representation in clause (b) above is breached,
     in addition to any rights the Trustee may have hereunder, the Seller must
     pay into the Collection Account the amount of the scheduled Prepayment
     Charge, less any amount previously collected and paid by the Servicer into
     the Collection Account.

     Section 3.23 Claims Upon the PMI Policy. The Servicer shall, on behalf of
the Trust, prepare and file in a timely basis with the PMI Insurer, with a copy
to the Trustee, all claims that may be made under any PMI Policy with respect to
PMI Mortgage Loans. Consistent with its rights and obligations hereunder, the
Servicer shall take all actions required under each PMI Policy as a condition to
the payment of any such claim. Any amount received from the PMI Insurer with
respect to any PMI Mortgage Loan shall be deposited by the Servicer, not later
than the Business Day following receipt thereof, into the Certificate Account
for distribution on the related Distribution Date as part of Liquidation
Proceeds for the related Mortgage Loan Group.

                                   ARTICLE IV
                                   ----------

                                REMITTANCE REPORT

     Section 4.01 Servicer Remittance Report. With respect to each Distribution
Date, not later than the fifth Business Day prior to the related Deposit Date
the Servicer shall deliver to the Trustee, the Depositor and the Seller a
computer-readable magnetic tape or disk containing the Servicer Remittance
Report detailing the payments and collections received in respect of the
Mortgage Loans in each Mortgage Loan Group during the immediately preceding
Collection Period. The computer-readable magnetic tape or disk shall include
loan-by-loan information that specifies account number, borrower name,
outstanding principal balance and activity since the last Distribution Date.
Such tape shall be in the form and have the specifications as may be agreed to
among the Servicer, the Trustee, the Depositor and the Seller from time to time
and shall include information concerning original loan-to-value ratios, the lien
positions of and number of days contractually delinquent of the Mortgage Loans
and information necessary to calculate Delinquency Events, Cumulative Loss
Events and Required Overcollateralization Amounts.

     In addition to the foregoing, the Servicer shall provide the Trustee, the
Depositor and the Seller at the time the tape is delivered to the Trustee a
Liquidation Report and accompanying Officer's Certificate with respect to each
Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period substantially in the form of Exhibits I and J hereto.

     Section 4.02 Trustee Distribution Date Statement. The Trustee shall, not
later than the Business Day prior to each Deposit Date, furnish by telecopy to
the Servicer, the Depositor and the Seller a statement derived from information
on the Servicer Remittance Report that sets forth the following information for
the Offered Certificates relating to the next succeeding Distribution Date:

                                      -68-
<PAGE>

         (a) the total amount of payments in respect of or allocable to interest
     on the Mortgage Loans received from the related Mortgagors by the Servicer
     during such Collection Period (including any net income from REO Properties
     received during the related Collection Period);

         (b) the aggregate amount of all Principal Prepayments received from the
     related Mortgagors by the Servicer during such Collection Period;

         (c) the aggregate amount of all Principal Payments received from the
     related Mortgagors by the Servicer during such Collection Period;

         (d) the total amount of Payments Ahead received during the related
     Collection Period;

         (e) the aggregate of any Trust Insurance Proceeds received by the
     Servicer during such Collection Period;

         (f) the aggregate of any Net Liquidation Proceeds received by the
     Servicer during such Collection Period;

         (g) the total amount of Compensating Interest payments to be paid by
     the Servicer pursuant to Section 3.08;

         (h) the aggregate Purchase Prices for (i) any Defective Mortgage Loans
     that the Seller is required to repurchase on the related Deposit Date
     pursuant to Section 2.03 or 2.05 and (ii) any Mortgage Loan that the
     Servicer is required to purchase on the related Deposit Date pursuant to
     Section 3.01 or 3.06;

         (i) any amounts required to be deposited by the Seller on the related
     Deposit Date in connection with the substitution of a Qualified Replacement
     Mortgage Loan pursuant to Section 2.03 or 2.05;

         (j) the amount of Monthly Advances to be made by the Servicer pursuant
     to Section 5.02(a);

         (k) the related Monthly Servicing Fee attributable to the Mortgage
     Loans in the related Mortgage Loan Group;

         (l) the amount of Monthly Advances reimbursable to the Servicer in such
     Collection Period pursuant to Section 5.02(a) and not previously
     reimbursed;

         (m) the amount of any Servicing Advance made by the Servicer pursuant
     to Section 5.02(b) and not previously reimbursed;

         (n) the amount of any Interest Shortfall for the related Distribution
     Date;

         (o) the number and Principal Balance of Mortgage Loans in each Mortgage
     Loan Group that, as of the end of the preceding calendar month were (i) 30
     or more days

                                      -69-
<PAGE>

     contractually delinquent, (ii) 60 or more days contractually delinquent,
     (iii) 90 or more days contractually delinquent, (iv) in foreclosure, (v) as
     to which the Mortgagor is in bankruptcy to the knowledge of the Servicer,
     or (vi) as to which the related Mortgaged Property was an REO Property;

         (p) the dollar amount of (i) claims paid by the PMI Insurer under the
     PMI Policy as of the related Distribution Date as reported by the Servicer
     and (ii) the claims denied by the PMI Insurer under the PMI Policy as of
     the related Distribution Date as reported by the Servicer;

         (q) Prepayment Charges collected for the related Distribution Date; and

         (r) the Pass-Through Rates for each Class of Offered Certificates.

                                    ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

     Section 5.01 Distributions. (a) On each Distribution Date, the Trustee
shall distribute to each Certificateholder of record on the related Record Date
(other than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer pursuant to Section 10.01)
by check or money order mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request by a Holder of a
Certificate, by wire transfer (in the event such Certificateholder owns of
record one or more Certificates that have principal or notional denominations
aggregating at least $5,000,000 and has given the Trustee, at least five
Business Days prior to the related Record Date, written instruction for making
such wire transfer to a bank account maintained in the United States), or by
such other means of payment as such Certificateholder and the Trustee shall
agree, such Certificateholder's Percentage Interest of the amounts (to the
extent applicable to the Class of such Holder's Certificate) and in the
following orders of priority with respect to each Mortgage Loan Group.
Notwithstanding such priorities, the aggregate of amounts distributed on all
Distribution Dates in reduction of the Certificate Principal Balance of any
Class shall not exceed the Certificate Principal Balance of such Class as of the
Closing Date.

         (b) On each Distribution Date, the Trustee shall withdraw the portion
     of Available Funds for each Mortgage Loan Group from the Certificate
     Account in such amount so as to pay concurrently, to the Trustee, the
     Trustee Fee; to the Servicer, the Monthly Servicing Fee and the applicable
     PMI Insurer Premium (in such amount, as shall have been calculated by the
     Servicer and notified in writing to the Trustee), if any, paid by the
     Servicer (in each case to the extent not otherwise reimbursed from the
     Collection Account); and to the PMI Insurer, the PMI Insurer Premium, if
     any (to the extent not paid by the Servicer), in each case for such
     Mortgage Loan Group and Distribution Date.

         (c) On each Distribution Date, after subtracting amounts payable toward
     the Trustee Fee, the Monthly Servicing Fee and the Primary Mortgage
     Insurance Premium, if any, the Trustee shall withdraw from the Certificate
     Account that portion of Available

                                      -70-
<PAGE>

     Funds for such Distribution Date consisting of the Interest Remittance
     Amount for such Distribution Date, and make the following disbursements and
     transfers in the order of priority described below, in each case to the
     extent of the related Interest Remittance Amount remaining for such
     Distribution Date:

         1. To each class of Senior Certificates, the related Class Interest
     Distribution for the applicable Distribution Date, allocated as follows:

               A. The portion of the related Class Interest Distribution
         attributable to the Group I Mortgage Loans will be distributed:

                  first, concurrently, to the Class A-IO Certificates, the Group
                  I Class A-IO Class Interest Distribution and to the Class A-1
                  Certificates, the Class Interest Distribution for the Class
                  A-1 Certificates, allocated pro rata based on entitlement
                  pursuant to this clause first; and

                  second, concurrently, to the Class A-IO Certificates, the
                  Group II Class A-IO Class Interest Distribution and to the
                  Class A-2 Certificates, the Class Interest Distribution for
                  the Class A-2 Certificates, in each case to the extent not
                  paid pursuant to clause B. below, allocated pro rata based on
                  entitlement pursuant to this clause second;

               B. The portion of the related Class Interest Distribution
         attributable to the Group II Mortgage Loans will be distributed:

                  first, concurrently, to the Class A-IO Certificates, the Group
                  II Class A-IO Class Interest Distribution and to the Class A-2
                  Certificates, the Class Interest Distribution for the Class
                  A-2 Certificates, allocated pro rata based on entitlement
                  pursuant to this clause first; and

                  second, concurrently, to the Class A-IO Certificates, the
                  Group I Class A-IO Class Interest Distribution and to the
                  Class A-1 Certificates, the Class Interest Distribution for
                  the Class A-1 Certificates, in each case to the extent not
                  paid pursuant to clause A. above, allocated pro rata based on
                  entitlement pursuant to this clause second;

         2. Sequentially, to the Class M-1, Class M-2 and Class B Certificates,
     in that order, the related Class Monthly Interest Amount for the applicable
     Distribution Date.

         (d) On each Distribution Date, the Trustee shall withdraw from the
     Certificate Account that portion of Available Funds for such Distribution
     Date consisting of amounts in respect of principal received, and distribute
     to the Holders of the Offered Certificates, other than the Class A-IO
     Certificates, such amount, to the extent of the Principal Distribution
     Amount, in the following amounts and order of priority:

                                      -71-
<PAGE>

         1. To the Class A Certificates, the Senior Principal Distribution
     Amount for the applicable Distribution Date, excluding any Subordination
     Increase Amount included in that amount, distributed as follows:

               A. To the Class A-1 Certificates, payable solely from the Basic
         Principal Amount from the Group I Mortgage Loans, an amount equal to
         the product of (a) the Senior Principal Distribution Amount, excluding
         any Subordination Increase Amount included in that amount, and (b) the
         Class A Principal Allocation Percentage applicable to the Class A-1
         Certificates, until the Certificate Principal Balance thereof is
         reduced to zero;

               B. To the Class A-2 Certificates, payable solely from the Basic
         Principal Amount from the Group II Mortgage Loans, an amount equal to
         the product of (a) the Senior Principal Distribution Amount, excluding
         any Subordination Increase Amount included in that amount, and (b) the
         Class A Principal Allocation Percentage applicable to the Class A-2
         Certificates, until the Certificate Principal Balance thereof is
         reduced to zero;

         2. To the Class M-1 Certificates, the Class M-1 Principal Distribution
     Amount for the applicable Distribution Date, excluding any Subordination
     Increase Amount included in that amount, until its Certificate Principal
     Balance is reduced to zero.

         3. To the Class M-2 Certificates, the Class M-2 Principal Distribution
     Amount for the applicable Distribution Date, excluding any Subordination
     Increase Amount included in that amount, until its Certificate Principal
     Balance is reduced to zero.

         4. To the Class B Certificates, the Class B Principal Distribution
     Amount for the applicable Distribution Date, excluding any Subordination
     Increase Amount included in that amount, until its Certificate Principal
     Balance is reduced to zero.

         If the Certificate Principal Balance of either Class of Class A
Certificates is reduced to zero, then the remaining amount of principal
distributions distributable to the Holders of the Class A Certificates on such
Distribution Date, and the amount of principal distributions distributable to
the Holders of the Class A Certificates on all subsequent Distribution Dates,
will be distributed to the Holders of the Class of Class A Certificates
remaining outstanding, until the Certificate Principal Balance of such Class of
Class A Certificates remaining outstanding has been reduced to zero.

         (e) On each Distribution Date, the Trustee shall withdraw from the
     Certificate Account that portion of Available Funds consisting of any
     Excess Interest and shall pay such amount in the following order of
     priority, in each case to the extent of the Excess Interest remaining
     undistributed:

         1. To the Offered Certificates other than the Class A-IO Certificates,
     the Subordination Increase Amount for the applicable Distribution Date,
     allocated in the order set forth in Section 5.01(d) above.

                                      -72-
<PAGE>

         2. To the Class M-1 Certificates, any related (a) Class Interest
     Carryover Shortfall and then (b) Class Principal Carryover Shortfall.

         3. To the Class M-2 Certificates, any related (a) Class Interest
     Carryover Shortfall and then (b) Class Principal Carryover Shortfall.

         4. To the Class B Certificates, any related (a) Class Interest
     Carryover Shortfall and then (b) Class Principal Carryover Shortfall.

         5. To fund a distribution to Class C Certificateholders of the Class C
     Distribution Amount plus any Class C Carryforward Amount; provided that,
     pursuant to Section 3.21 hereof, on any Distribution Date as to which there
     is any unpaid Net Rate Cap Carryover, the Trustee will deposit from amounts
     that would otherwise be distributable to the Class C Certificateholders
     funds into the Net Rate Cap Fund for immediate application pursuant to this
     clause of the distribution of the related Net Rate Cap Carryover to the
     applicable Class of Offered Certificates, other than the Class A-IO
     Certificates, in proportion to their respective Net Rate Cap Carryover, and
     such deposit will constitute payment in full of and satisfaction of all
     obligations hereunder to distribute amounts equal to the related Net Rate
     Cap Carryover to the Class C Certificateholders, including for purposes of
     Section 9.16, and the Trustee, the Servicer and the Class C
     Certificateholders agree hereby appropriately to report any deposit of Net
     Rate Cap Carryover as if corresponding distributions had been made to the
     Class C Certificateholders for federal income tax and accounting purposes
     with respect to the Class C Distribution Amount and Class C Carryforward
     Amount. (All distributions or deemed distributions with respect to the
     Class C Distribution Amount and Class C Carryforward Amount shall be
     applied first to the interest components of such amounts and second to
     reduce the Class C Certificate Principal Balance).

         6. To the Class R Certificates, the remainder.

         (f) By accepting a Class C Certificate, each Class C Certificateholder
     hereby agrees to direct the Trustee, and the Trustee hereby is directed, to
     deposit into the Net Rate Cap Fund the amounts described in Section 3.21 on
     each Distribution Date as to which there is any Net Rate Cap Carryover
     rather than distributing such amounts to the Class C Certificateholders. By
     accepting a Class C Certificate, each Class C Certificateholder further
     agrees that such direction is given for good and valuable consideration,
     the receipt and sufficiency of which is acknowledged by such acceptance.

         (g) On each Distribution Date, the Trustee shall make distributions to
     the Holders of the Class P Certificates of all Prepayment Charges on
     deposit in the Certificate Account with respect to the Mortgage Loans in
     each Mortgage Loan Group during the related Collection Period. Such
     Prepayment Charges will not be available for distributions to the Holders
     of the other Classes of Certificates and shall not reduce the Class P
     Certificate Principal Balance. If at any time the Pool Balance is $15,000
     or less, the Trustee shall withdraw a portion of the Class P Deposit from
     the Certificate Account and apply such amount to the Class P Certificate
     Principal Balance such that the remaining Class P Deposit is always less
     than 0.66% of the sum of the Pool Balance and

                                      -73-
<PAGE>

     the remaining Class P Deposit. After all of the Certificates (other than
     the Class P Certificates) have been paid in full, the Trustee shall
     withdraw the remaining Class P Deposit from the Certificate Account and
     apply such amount to reduce the Class P Certificate Principal Balance to
     zero.

     Notwithstanding any of the foregoing, the aggregate of amounts distributed
on all Distribution Dates in reduction of the Certificate Principal Balance of
any Class of Certificates shall not exceed the Certificate Principal Balance of
such Class as of the Closing Date.

     Section 5.02 Monthly Advances; Servicing Advances.

         (a) On or before each Deposit Date, the Servicer will deposit in the
     Certificate Account in respect of each Mortgage Loan Group, in same day
     funds, an amount, if any (a "Monthly Advance"), equal to the sum of (i)
     with respect to all Mortgage Loans that are delinquent as of the close of
     business on the related Determination Date, the aggregate of the interest
     portions of each Monthly Mortgage Payment in respect of the related
     Mortgage Loan Group due during the related Collection Period (net of the
     aggregate of the Monthly Servicing Fees for each Mortgage Loan Group
     attributable to such Mortgage Loans), inclusive of those amounts
     representing the interest portions of Monthly Mortgage Payments due during
     the first Collection Period, plus (ii) with respect to each Mortgaged
     Property that was acquired in foreclosure or similar action (each, an "REO
     Property") during or prior to the related Collection Period and as to which
     a final sale did not occur during the related Collection Period, an amount
     equal to the excess, if any, of interest on the Principal Balance of such
     REO Property at the related Mortgage Loan Rate (net of the Monthly
     Servicing Fee attributable to such REO Property) over the net income from
     such REO Property transferred to the Collection Account or the Certificate
     Account, as the case may be, for such Distribution Date; provided, however,
     that in no case will the Servicer be required to make advances with respect
     to any period or portion of any Collection Period following (i) the final
     due date with respect to any Mortgage Loan and (ii) to the extent that the
     Servicer reasonably believes that the amount of such advance will not be
     recoverable from subsequent collections on the related Mortgage Loan or
     from Liquidation Proceeds from the related Mortgage Loan in the event such
     Mortgage Loan is liquidated.

     The Servicer shall be permitted to fund all or a portion of any Monthly
Advance required to be made on a Deposit Date on any Business Day and to
reimburse itself for any Monthly Advance paid from the Servicer's own funds out
of amounts on deposit in the Collection Account in respect of collections on any
Mortgage Loan in the related Mortgage Loan Group that are not required to be
deposited on such Deposit Date in the Certificate Account as any portion of
Available Funds for such Mortgage Loan Group and the related Distribution Date;
provided, however, that the Servicer shall be required to replace any such
amounts by deposit to the Collection Account on or before the next Deposit Date
and the amount of such deposit shall thereafter be considered a Monthly Advance
for purposes of reimbursement under this Agreement. The Servicer may recover
Monthly Advances made from its own funds (i) from the Mortgagor on whose behalf
such Monthly Advance was made and from collections on the related Mortgage Loan,
including Liquidation Proceeds, Insurance Proceeds and such other amounts as may
be collected by the Servicer from the Mortgagor or otherwise relating to the

                                      -74-
<PAGE>

Mortgage Loan and (ii) in the case of a Monthly Advance that the Servicer
reasonably believes will not be recoverable from the related Mortgage Loan, from
collections or recoveries on any Mortgage Loan in the related Mortgage Loan
Group, in each case prior to the payment of such amounts to the Collection
Account or to any other party to this Agreement.

         (b) The Servicer shall from time to time during the term of this
     Agreement make such Servicing Advances as the Servicer shall deem
     appropriate or advisable under the circumstances and are required pursuant
     to the terms of this Agreement; provided, however, that in no case will the
     Servicer be required to make Servicing Advances with respect to any
     Mortgage Loan to the extent that the Servicer reasonably believes that the
     amount of such advance will not be recoverable from subsequent collections
     on the related Mortgage Loan or from Liquidation Proceeds from the related
     Mortgage Loan in the event such Mortgage Loan is liquidated. Servicing
     Advances may be paid by the Servicer out of amounts on deposit in the
     Collection Account in respect of the related Mortgage Loan Group from time
     to time; provided, however, that the Servicer shall be required to replace
     any such amounts by deposit to the Collection Account in respect of the
     related Mortgage Loan Group on or before the first Deposit Date occurring
     after the payment of a Servicing Advance with such amounts, and the amount
     of such deposit shall thereafter be considered a Servicing Advance for
     purposes of reimbursement under this Agreement. The Servicer may recover
     Servicing Advances made from its own funds (i) from the Mortgagor on whose
     behalf such Servicing Advance was made and from collections on the related
     Mortgage Loan, including Liquidation Proceeds, Insurance Proceeds and such
     other amounts as may be collected by the Servicer from the Mortgagor or
     otherwise relating to the Mortgage Loan and (ii) in the case of a Servicing
     Advance that subsequent to the date the advance was made the Servicer
     reasonably believes that such advance will not be recoverable from the
     related Mortgage Loan, from collections or recoveries on any Mortgage Loan
     in the related Mortgage Loan Group, in each case prior to the payment of
     such amounts to the Collection Account or to any other party to this
     Agreement.

     Section 5.03 Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall make available on its web site, located at
http://www-apps.gis.deutsche-bank.com/invr, a written statement (a "Statement to
Certificateholders") setting forth the following information with respect to the
Offered Certificates:

         (a) the amount of the distribution with respect to each Class of
     Certificates (based on a Certificate in the original principal amount of
     $1,000);

         (b) the amount of such distribution allocable to principal on the
     related Mortgage Loans in each Mortgage Loan Group, separately identifying
     the aggregate amount of any Prepayments or other recoveries of principal
     included therein;

         (c) the amount of such distribution allocable to interest on the
     related Mortgage Loans in each Mortgage Loan Group separately identifying
     the aggregate amount of any prepayment or other recoveries of principal
     included therein;

                                      -75-
<PAGE>

         (d) the Class Monthly Interest Amount and Class Interest Carryover
     Shortfall for each Class of Certificates;

         (e) the outstanding Certificate Principal Balance of each Class of
     Offered Certificates (based on a Certificate in the original principal
     amount of $1,000) that will be outstanding after giving effect to any
     payment of principal on such Distribution Date;

         (f) the aggregate of the Principal Balances of all Mortgage Loans after
     giving effect to any payments of principal on such Distribution Date by
     Mortgage Loan Group and for the entire Trust, and each Group Factor;

         (g) based upon information furnished by the Servicer, such information
     as may be required by Section 6049(d)(7)(C) of the Code and the regulations
     promulgated thereunder to assist the Certificateholders in computing their
     market discount;

         (h) the total of all amounts paid by the Seller and the Servicer during
     the related Collection Period in connection with purchases or repurchases
     from the Trust of Mortgage Loans and substitutions for Mortgage Loans of
     Qualified Replacement Mortgage Loans with respect to each Mortgage Loan
     Group and by reason for such purchase;

         (i) the weighted average Mortgage Loan Rate of the Mortgage Loans in
     each Mortgage Loan Group;

         (j) whether a Delinquency Event or a Cumulative Loss Event has occurred
     and, if so, what event;

         (k) the amount of any Excess Interest included in such distribution;

         (l) the Overcollateralization Amount, Required Overcollateralization
     Amount and Applied Realized Loss Amount, both in the aggregate and with
     respect to each applicable Class, for such Distribution Date;

         (m) the Basic Principal Amount with respect to each Mortgage Loan
     Group;

         (n) the amount of any Net Rate Cap Carryover paid and remaining unpaid
     as of such Distribution Date;

         (o) the Capitalized Interest Requirement and amounts remaining in the
     Prefunding Account each as of such Distribution Date;

         (p) the amount of any draw to be made on any PMI Policy on the related
     Distribution Date, and the amounts to be paid to the PMI Insurer, if any,
     as of such Distribution Date in respect of the PMI Insurer Premiums with
     respect to each PMI Mortgage Loan in the related Mortgage Loan Group;

         (q) with respect to each Mortgage Loan Group, the number of Mortgage
     Loans in each Mortgage Loan Group and the aggregate of their Principal
     Balances as a

                                      -76-
<PAGE>

     percentage of the Group I Balance or Group II Balance, as appropriate, that
     as of the end of the immediately preceding calendar month are (i) 30 to 59
     days delinquent, (ii) 60 to 89 days delinquent, (iii) 90 or more days
     delinquent, (iv) the subject of bankruptcy proceedings (to the actual
     knowledge of the Servicer), (v) in foreclosure and (vi) as to which the
     related Mortgaged Property is REO Property; and

         (r) the Certificate Principal Balance of each Class of Certificates
     then outstanding after giving effect to all payments or principal on such
     Distribution Date.

     In the case of information furnished pursuant to subclauses (a), (b), (c)
and (d) above, the amounts shall be expressed as a dollar amount per Certificate
with a $1,000 principal denomination.

     Within 90 days after the end of each calendar year, the Trustee shall mail
such report to Greenwich Capital Markets, Inc., 600 Steamboat Road, Greenwich,
Connecticut 06830, Attention: Mortgage Finance (which report shall include, in
addition to the information contained in reports to others hereunder, the total
amount of interest on the Mortgage Loans for the period covered by such report),
and to each Person who at any time during the calendar year was an Offered
Certificateholder, a statement for each Certificateholder containing the
information set forth in subclauses (a) through (c) above, aggregated for such
calendar year or, in the case of each Person who was an Offered
Certificateholder for a portion of such calendar year, setting forth such
information for each month thereof for the portion of the year during which such
Person was a Certificateholder. The Servicer shall provide any other information
necessary in order to report income in respect of the Certificateholders for
federal income tax purposes.

     Section 5.04 Allocation of Losses. On each Distribution Date, the Trustee
shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Certificate Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Certificate Principal Balance thereof is reduced to zero. Any
Applied Realized Loss Amount allocated to a Class of Subordinate Certificates
shall be allocated among the Subordinate Certificates of such Class in
proportion to their respective Percentage Interests.

                                   ARTICLE VI

                                THE CERTIFICATES

     Section 6.01 The Certificates.

         (a) The Certificates shall be substantially in the forms set forth in
     Exhibits A-1, A-2, A-3, A-4, B-1, B-2 and B-3 hereto, and shall, on
     original issue, be executed and delivered by the Trustee on behalf of the
     Trust, not individually but solely as Trustee to or upon the order of the
     Depositor concurrently with the sale and assignment to the Trustee of the
     Trust.

         (b) The Book-Entry Certificates will be evidenced by one or more
     certificates, beneficial ownership of which will be held in minimum dollar
     denominations of $25,000

                                      -77-
<PAGE>

     and integral multiples of $1,000 in excess thereof. The Class P
     Certificates, the Class R-I Certificate, the Class R-II Certificate and the
     Class R-III Certificate shall be issuable solely as single certificates
     evidencing the entire Percentage Interests of the Class P Certificates, the
     Class R-I Certificates, the Class R-II Certificates and the Class R-III
     Certificates, respectively, and the Class C Certificates shall be initially
     issued as a single certificate evidencing the entire Percentage Interest
     thereof.

         (c) The Certificates shall be executed by manual or facsimile signature
     by the Trustee on behalf of the Trust (not in its individual capacity but
     solely as Trustee) by an authorized officer of the Trustee. 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, notwithstanding that such individuals or any
     of them have ceased to be so authorized prior to the countersigning 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 such Certificate shall
     have been manually authenticated by the Trustee substantially in the form
     provided for herein, and such signature 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.

     Section 6.02 Registration of Transfer and Exchange of Certificates.

         (a) The Trustee shall cause to be kept at the Corporate Trust Office 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 or transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose (as designated by
the Trustee from time to time) and upon satisfaction of the conditions set forth
in Section 6.02(b) and (c), the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of a like aggregate Percentage Interest. As
of the Closing Date, the Trustee designates its office located on 123 Washington
Street, New York, New York 10006 for such purpose.

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

     Every Certificate presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed by, or 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.

                                      -78-
<PAGE>

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

     All Certificates surrendered for transfer or exchange shall be canceled by
the Trustee in accordance with its standard procedures.

         (b) No transfer of a Class R Certificate shall be made unless, as
     evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
     Trustee, each in form and substance satisfactory to the Trustee, such
     transfer is not subject to registration under the Securities Act or any
     applicable state securities laws. Any such Opinion of Counsel and Transfer
     Affidavit shall not be obtained at the expense of the Trustee, the Trust,
     the Seller, the Depositor or the Servicer. The Holder of a Class R
     Certificate desiring to effect such transfer shall, and does hereby agree
     to, indemnify the Trustee, the Seller, the Depositor and the Servicer
     against any liability that may result if the transfer is not so exempt or
     is not made in accordance with the Securities Act and such state laws.
     Neither the Seller, the Servicer, the Depositor nor the Trustee or the
     Trust is under an obligation to register the Class R Certificates under the
     Securities Act or any state securities law.

     The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.

     No legal or beneficial interest in all or any of the Class R Certificates
may be transferred directly or indirectly to: (i) a Disqualified Organization or
an agent of a Disqualified Organization (including a broker, nominee or
middleman), (ii) an entity that holds REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (a "Book-Entry
Nominee"), (iii) an individual, corporation, partnership or other Person unless
such transferee (A) is not a Foreign Person or (B) is a Foreign Person that will
hold such Class R Certificate in connection with the conduct of a trade or
business within the United States and has furnished the transferor and the
Trustee with, and agrees to periodically furnish in accordance with Treasury
regulations, an effective Internal Revenue Service Form W-8ECI (or any
applicable successor form) or (C) is a Foreign Person that has delivered (at the
expense of the transferee) to both the transferor and the Trustee an opinion of
a nationally recognized tax counsel to the effect that the transfer of the Class
R Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax purposes (any such
Person who is not covered by clause (A), (B) or (C) above being referred to
herein as a "Non-permitted Foreign Holder") or (iv) to an ERISA Plan or an
entity, including an insurance company separate account or general account,
whose underlying assets include ERISA Plan assets by reason of an ERISA Plan's
investment in the entity or a Person investing the assets of an ERISA Plan or
such an entity, whether as nominee, trustee, agent or otherwise (such plan,
entity or Person, an "ERISA Prohibited Holder"), and any such purported transfer
shall be void and have no effect.

                                      -79-
<PAGE>

     The Trustee shall not execute, and shall not authenticate and deliver, a
new Class R Certificate and shall not accept a surrender for the registration of
transfer or register the transfer of, any Class R Certificate, unless the
transferor thereof shall have provided to the Trustee a Transfer Affidavit
substantially in the form attached as Exhibit G hereto, signed by the
transferee, to the effect that the transferee is not a Disqualified Organization
and is not a nominee for a beneficial owner of the Class R Certificate from
which the transferee has not received a substantially similar affidavit, a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder. Such Transfer Affidavit shall contain (i) the consent of the transferee
to any such amendments of this Agreement as may be required to further
effectuate the foregoing restrictions on transfer of the Class R Certificates to
Disqualified Organizations, Book-Entry Nominees, Non-permitted Foreign Holders
or ERISA Prohibited Holders and (ii) a representation from the transferee that
such transferee does not have the intent or purpose to impede the assessment or
collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificates. Such Transfer Affidavit, if not
executed in connection with the initial issuance of the Class R Certificates,
also shall be accompanied by a Transferor Affidavit, substantially in the form
attached hereto as Exhibit K, signed by the transferor to the effect that as of
the time of the transfer, the transferor has no actual knowledge that such
affidavit is false and that the transferor does not have the intent or purpose
to impede the assessment or collection of any federal, state or local income
taxes legally required to be paid with respect to the Class R Certificate.

     Each Class R Certificate shall bear a legend referring to the foregoing
restrictions. Any Person acquiring the Class R Certificate, or beneficial
ownership thereof, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R Certificate, or
beneficial ownership thereof, if it is, or is acquiring the Class R Certificate
on behalf of, a "pass-through interest holder."

     Upon notice to the Servicer that any legal or beneficial interest in any
Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest of which is
held by a Disqualified Organization, the Servicer agrees to furnish to the
Internal Revenue Service and to any transferor of the Class R Certificate or
such agent or such pass-through entity such information as may be required to be
delivered thereto by the Code as necessary to the application of Code Section
860E(e) and described in Treasury regulations (Section)1.860D-1(b)(5)(ii), or
any successor provision, including, but not limited to, the present value of the
total anticipated excess inclusions with respect to the Class R Certificate (or
portion thereof) for periods after such transfer. Such information shall be
provided in the manner described in Treasury regulations
(Section)1.860E-2(a)(5), or any successor provision. At the election of the
Servicer, the cost to the Servicer of computing and furnishing such information
may be charged to the transferor or such agent referred to above; provided,
however, that the Servicer shall in no event be excused from furnishing such
information.

     The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of the Class R Certificates to reflect
any change in applicable law or regulation (or the

                                      -80-
<PAGE>

interpretation thereof) or practices relating to the resale or transfer of
restricted securities generally.

         (c) No transfer of a Class C Certificate, Class P Certificate or
     beneficial interest therein shall be made unless the Trustee shall have
     received (i) a letter from the transferor, substantially in the form
     attached hereto as Exhibit M, and (ii) a representation letter from the
     transferee, substantially in the form attached hereto as either Exhibit N-1
     or Exhibit N-2, as applicable:

     Notwithstanding anything else to the contrary herein, any purported
transfer of a Class C Certificate, or a Class P Certificate or a beneficial
interest therein to or on behalf of an employee benefit plan subject to ERISA or
to the Code or a person acting on behalf of an ERISA Plan or using the assets of
an ERISA Plan to effect such transfer shall be void and of no effect.

     To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any Class C Certificate or any Class P Certificate
that is in fact not permitted by Section 6.02(c) or for making any payments due
on such Certificate to the holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements.

     The Class C Certificates, the Class P Certificates, this Agreement and
related documents may be amended or supplemented from time to time to modify
restrictions on and procedures for resale and other transfer of such Class C
Certificates or a Class P Certificate to reflect any change in applicable law or
regulation (or the interpretation thereof) or practices relating to the resale
or transfers of restricted securities generally.

         (d) The Book-Entry Certificates shall, subject to Section 6.02(e), at
     all times remain registered in the name of the Depository or its nominee
     and at all times: (i) registration thereof may not be transferred by the
     Trustee except to another Depository; (ii) the Depository shall maintain
     book-entry records with respect to the Certificate Owners and with respect
     to ownership and transfers of such Certificates; (iii) ownership and
     transfers of registration of the Certificates issued in book-entry form on
     the books of the Depository shall be governed by applicable rules
     established by the Depository and the rights of Certificate Owners with
     respect to Book-Entry Certificates shall be governed by applicable law and
     agreements between such Certificate Owners and the Depository, Depository
     Participants, and indirect participating firms; (iv) the Depository may
     collect its usual and customary fees, charges and expenses from its
     Depository Participants; (v) the Trustee shall deal with the Depository as
     the authorized representative of the Certificate Owners of the Book-Entry
     Certificates for all purposes including the making of payments due on the
     Book-Entry Certificates and exercising the rights of Holders of Book-Entry
     Certificates under this Agreement; (vi) the Trustee may rely and shall be
     fully protected in relying upon information furnished by the Depository;
     (vii) Certificate Owners shall not be entitled to certificates for the
     Book-Entry Certificates and (viii) the Trustee may establish a reasonable
     record date in connection with solicitations of consents from or voting by
     holders of Book-Entry Certificates and give notice to the Depository of
     such record date.

                                      -81-
<PAGE>

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

         (e) If (x)(i) the Depositor or the Depository advises the Trustee in
     writing that the Depository is no longer willing, qualified or able to
     properly discharge its responsibilities as Depository, and (ii) the Trustee
     or the Depositor is unable to locate a qualified successor, (y) the
     Depositor at its option advises the Trustee in writing that it elects to
     terminate the book-entry system through the Depository or (z) after the
     occurrence of an Event of Default, Certificate Owners representing not less
     than 51% of the aggregate Certificate Principal Balance of the Book-Entry
     Certificates together advise the Trustee and the Depository in writing that
     the continuation of a book-entry system through the Depository is no longer
     in the best interests of the Certificate Owners, the Trustee shall notify
     all Certificate Owners, through the Depository, of the occurrence of any
     such event and of the availability of definitive, fully registered
     Certificates ("Definitive Certificates") to Certificate Owners requesting
     the same. Upon surrender to the Trustee of such Certificates by the
     Depository, accompanied by registration instructions from the Depository
     for registration, the Trustee shall issue the Definitive Certificates and
     the expense of any such issuance shall be reimbursed by the Trust pursuant
     to Section 9.05. Neither the Depositor 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 Depository shall be deemed applicable with
     respect to such Definitive Certificates and the Certificates as
     Certificateholders hereunder.

         (f) On or prior to the Closing Date, there shall be delivered to the
     Trustee (as agent for the Depository) one certificate for each Class of
     Book-Entry Certificates registered in the name of the Depository's nominee,
     Cede & Co. The face amount of each such Certificate shall be equal to the
     Principal Balance thereof. Each Certificate issued in book-entry form shall
     bear the following legend:

     "Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."

     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 Trustee, the Servicer, the
Depositor and the Seller such security or indemnity as may be required by them
to save each

                                      -82-
<PAGE>

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
Class and Percentage Interest. Upon the issuance of any new Certificate under
this Section, 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 duplicate Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership of the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

     Section 6.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Depositor and any of their respective agents may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and neither the Servicer, the Seller, the Trustee, the
Depositor nor any of their respective agents shall be affected by notice to the
contrary.

     Section 6.05 Actions of Certificateholders.

         (a) Any request, demand, authorization, direction, notice, consent,
     waiver or other action provided by this Agreement to be given or taken by
     Certificateholders may be embodied in and evidenced by one or more
     instruments of substantially similar tenor signed by such
     Certificateholders in person or by agent duly appointed in writing; and
     except as herein otherwise expressly provided, such action shall become
     effective when such instrument or instruments are delivered to the Trustee
     and, when required, to the Seller, the Depositor or the Servicer. Proof of
     execution of any such instrument or of a writing appointing any such agent
     shall be sufficient for any purpose of this Agreement and conclusive in
     favor of the Trustee, the Seller, the Depositor and the Servicer if made in
     the manner provided in this Section.

         (b) The fact and date of the execution by any Certificateholder of any
     such instrument or writing may be proved in any reasonable manner that the
     Trustee deems sufficient.

         (c) Any request, demand, authorization, direction, notice, consent,
     waiver or other act by a Certificateholder shall bind every Holder of every
     Certificate issued upon the registration of transfer thereof or in exchange
     therefor or in lieu thereof, in respect of anything done, or omitted to be
     done, by the Trustee, the Seller, the Depositor or the Servicer in reliance
     thereon, whether or not notation of such action is made upon such
     Certificate.

                                      -83-
<PAGE>

                                  ARTICLE VII

                   THE SERVICER, THE SELLER AND THE DEPOSITOR

     Section 7.01 Liability of the Seller, the Depositor and the Servicer. The
Seller, the Depositor and the Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Seller, the Depositor and the Servicer herein.

     Section 7.02 Merger or Consolidation of, or Assumption of the Obligations
of the Seller, the Depositor or Servicer. Any corporation or other entity (i)
into which the Seller, the Depositor or the Servicer may be merged or
consolidated, (ii) that may result from any merger, conversion or consolidation
to which the Seller, the Depositor or the Servicer shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Seller, the
Depositor or the Servicer, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, shall be the successor to the Seller, the Depositor or the Servicer,
as the case may be, under this Agreement without the execution or filing of any
document or any further act by any of the parties to this Agreement; except that
if the Servicer is not the surviving entity, then the surviving entity shall
execute and deliver to the Trustee an agreement of assumption to perform every
obligation of the Servicer hereunder.

     Section 7.03 Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Trustee, the Trust or the Certificateholders for any
action taken or for refraining from the taking of any action by the Servicer
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the duties of the Servicer or by
reason of reckless disregard of the obligations and duties of the Servicer
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve it
in any expense or liability.

     Section 7.04 Servicer Not to Resign. Subject to the provisions of Section
7.02 regarding the merger or consolidation of the Servicer into or with another
entity, the Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties or
obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement. Any
such determination permitting the resignation of the Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee. No resignation pursuant to this Section 7.04 (a) shall become
effective until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 8.02
or (b) shall relieve the Servicer of responsibility for any obligations pursuant
to this Agreement that

                                      -84-
<PAGE>

specifically survive the resignation or termination of the Servicer. Each of the
Rating Agencies shall be given written notice of a resignation of the Servicer
pursuant to this Section.

     If, at the time the Servicer is removed or resigned and the Trustee does
not appoint a different successor servicer, then the Trustee shall become the
successor servicer.

     Upon the termination or resignation of the Servicer, the Servicer also
shall promptly (and in any event no later than 10 Business Days subsequent to
such termination or resignation) deliver or cause to be delivered to the Trustee
or successor servicer all the books and records (including, without limitation,
records kept in electronic form) that the Servicer has maintained for the
Mortgage Loans, including all tax bills, assessment notices, insurance premium
notices and all other documents as well as all original documents then in the
Servicer's possession. The Servicer may retain copies of any such books and
records.

     Any collections received by the Servicer after termination or resignation
shall be endorsed by it and remitted directly and immediately to the Trustee or
the successor servicer. The Servicer shall be entitled to receive the Monthly
Servicing Fee through the day on which it is terminated as Servicer (which may
be pro rated for a partial month).

     To the extent that the Servicer, at the time of its termination or
resignation, has therefore expended any amounts as Monthly Advances or Servicing
Advances with respect to any Mortgage Loan, which Monthly Advances or Servicing
Advances remain unreimbursed as of such date ("Unrecovered Advances") the
Servicer shall thereafter be entitled to receive from the successor servicer,
monthly, such information as may be generated by the successor servicer as may
be reasonably necessary to enable the Servicer to monitor the recovery of, and
collection efforts undertaken with respect to, the Unrecovered Advances, which
information will include details of collection activities, payment records and
trial balances. To the extent that the successor servicer receives any amounts
that relate to reimbursement for Unrecovered Advances made by the prior
Servicer, such amounts shall be remitted to the prior Servicer on the related
Distribution Date. To the extent that the Servicer, based upon the information
supplied by the successor servicer, believes that any discrepancies exist
between actual Unrecovered Advances received by the successor servicer and the
amounts forwarded to the Servicer as recovered Unrecovered Advances, the
Servicer and the successor servicer shall attempt in good faith to reconcile
such discrepancies.

     The Servicer agrees to cooperate reasonably with the successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide to the successor servicer all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the successor
servicer all amounts that then have been or should have been deposited in the
Collection Account, or that are thereafter received with respect to the Mortgage
Loans. The successor servicer shall not be held liable by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer.

                                      -85-
<PAGE>

     The Servicer which is being terminated or is resigning shall give notice to
the Mortgagors of the transfer of the servicing to the successor servicer. Said
notice shall be a joint notice of servicing transfer in the form required by
applicable law.

     Section 7.05 Merger or Consolidation of the Seller or Depositor. Any
corporation or other entity (i) into which the Seller or the Depositor may be
merged or consolidated, (ii) that may result from any merger, conversion or
consolidation to which the Seller or the Depositor shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Seller or
the Depositor, which corporation or other entity shall, in any case where an
assumption shall not be effected by operation of law, execute an agreement of
assumption to perform every obligation of the Seller or the Depositor, as the
case may be, under this Agreement, shall be the successor to the Seller or the
Depositor, as the case may be, hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement, except that
if the Seller or the Depositor in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller or
the Depositor, as the case may be, hereunder.

                                  ARTICLE VIII

                                     DEFAULT

     Section 8.01 Events of Default. If any one of the following events (each an
"Event of Default") shall occur and be continuing:

         (a) Any failure by the Servicer to (i) make a required Monthly Advance
     on any Deposit Date or (ii) deposit in the Collection Account or the
     Certificate Account any other amount required to be deposited therein under
     this Agreement or failure to pay the Trustee Fee, which, in the case of a
     failure to make a required deposit to the Collection Account, continues
     unremedied for a period of five Business Days after the date upon which
     written notice of such failure shall have been given to the Servicer by the
     Trustee or to the Servicer and the Trustee by Holders of Certificates
     evidencing Voting Interests represented by all Certificates aggregating not
     less than 51%;

         (b) Failure on the part of the Servicer duly to observe or perform in
     any material respect any other covenants or agreements of the Servicer set
     forth in the Certificates or in this Agreement, which failure (i)
     materially and adversely affects the Certificateholders and (ii) continues
     unremedied for a period of 30 days after the date on which written notice
     of such failure (which notice shall refer specifically to this Section),
     requiring the same to be remedied, shall have been given to the Servicer by
     the Trustee or to the Servicer and the Trustee by the Holders of
     Certificates evidencing Voting Interests represented by all Certificates
     aggregating not less than 51%;

         (c) The entry against the Servicer of a decree or order by a court or
     agency or supervisory authority having jurisdiction in the premises for the
     appointment of a trustee, conservator, 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

                                      -86-
<PAGE>

     affairs, and the continuance of any such decree or order unstayed and in
     effect for a period of 60 consecutive days;

         (d) The consent by the Servicer to the appointment of a trustee,
     conservator or receiver or liquidator in any bankruptcy, insolvency,
     readjustment of debt, marshalling of assets and liabilities or similar
     proceedings of or relating to the Servicer or of or relating to
     substantially all of its property; or the Servicer shall admit in writing
     its inability to pay its debts generally as they become due, file a
     petition to take advantage of any applicable bankruptcy, insolvency or
     reorganization statute, make an assignment for the benefit of its
     creditors, or voluntarily suspend payment of its obligations; and

         (e) The occurrence of any merger or consolidation of the Servicer
     described in Section 7.02 following which the Servicer does not have a net
     worth of at least $10,000,000 determined in accordance with generally
     accepted accounting principles.

then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either the Trustee or the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%, by notice then given in writing to the Servicer,
the Depositor, the Seller and to the Trustee, may terminate all of the rights,
responsibilities and obligations of the Servicer as Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall pass to and be
vested in the successor servicer pursuant to and under this Section and Sections
7.04 and 8.02 and, without limitation, the successor servicer is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees to cooperate with the successor servicer in effecting the
termination of its responsibilities and rights as Servicer hereunder, including,
without limitation, the transfer to the successor servicer for the
administration by it of all cash amounts that shall at the time be held by the
Servicer that have been deposited by the Servicer in the Collection Account or
the Certificate Account or thereafter received by the Servicer with respect to
the Mortgage Loans.

     All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to the successor servicer,
amending this Agreement to reflect the appointment of a successor as Servicer
pursuant to this Section 8.01 and Sections 7.04 and 8.02 or otherwise in
connection with the assumption by the successor servicer of the duties of the
predecessor servicer hereunder shall be paid by the predecessor servicer upon
presentation of reasonable documentation of such costs and expenses.

     Section 8.02 Trustee to Act; Appointment of Successor. (a) On and after the
time the Servicer receives a notice of termination pursuant to Section 8.01, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall succeed to all the rights, powers and privileges of the
Servicer hereunder and be subject to all the responsibilities, duties and
liabilities

                                      -87-
<PAGE>

relating thereto placed on the Servicer by the terms and provisions hereof,
including without limitation, the obligation to make Monthly Advances and to pay
Compensating Interest. As compensation therefor, the Trustee shall be entitled
to such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the foregoing, if the
Trustee shall be unwilling so to act, or the Trustee is legally unable so to
act, the Trustee with the consent of the Rating Agencies may promptly appoint,
or petition a court of competent jurisdiction to appoint any established housing
and home finance institution or any institution that regularly services home
equity loans that is then servicing a home equity loan portfolio and having all
licenses, permits and approvals required by applicable law, and having a net
worth of not less than $10,000,000 as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder; provided that any such successor servicer shall be
acceptable to the Rating Agencies, which acceptance shall not be unreasonably
withheld and, if such successor servicer shall not have been appointed by the
Trustee, the Trustee shall be provided 5 Business Days' prior notice of any such
appointment; and provided further that the appointment of any such successor
servicer will not result in the qualification, reduction or withdrawal of the
rating assigned to any subclass of Offered Certificates by any Rating Agency.
Pending appointment of a successor to the Servicer hereunder, unless the Trustee
is prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer hereunder; and provided further that, if due to market conditions, the
parties thereto shall agree to compensation in excess of that permitted the
Servicer hereunder, the Trustee shall not be responsible for any such amounts in
excess thereof. Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The appointment of a successor servicer shall not affect any liability of the
predecessor Servicer that may have arisen under this Agreement prior to its
termination as Servicer (including without limitation, any liability for a
deductible amount pursuant to the last sentence of Section 3.04), nor shall any
successor servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer or the Seller or Depositor of any of
its representations or warranties contained herein or in any related document or
agreement. Each of the Rating Agencies shall be given written notice of the
appointment of a successor servicer pursuant to this Section.

         (b) The Trustee, shall be reimbursed for Transition Costs, if any,
     incurred in connection with the assumption of responsibilities of the
     successor servicer, upon its delivering to the Seller and Depositor
     documentation of such costs and expenses. The Trustee shall have no claim
     against the Servicer, any Certificateholder, the Trust or any other party
     to this Agreement for any costs and expenses incurred in effecting such
     succession in excess of the amount specified in the definition of
     "Transition Costs."

     Section 8.03 Notifications to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article Eight, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register, the PMI Insurer and
to each Rating Agency.

                                      -88-
<PAGE>

     Within 60 days of obtaining actual knowledge of the occurrence of any Event
of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders notice of such Event of Default.

     Section 8.04 Assumption or Termination of Sub-Servicing Agreements by the
Trustee or any Successor Servicer. Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub-Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.

                                   ARTICLE IX
                                   ----------

                                   THE TRUSTEE

     Section 9.01 Duties of the Trustee. The Trustee, prior to the occurrence of
an Event of Default and after the curing of all Events of Default that may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge shall have
occurred (which has not been cured) and subject to the provisions of Section
9.13, 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 man would exercise or use under the circumstances in the conduct of
his own affairs.

     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; except that:

         (a) prior to the occurrence of an Event of Default, and after the
     curing 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 liable except for
     the performance of such duties and obligations as are specifically set
     forth in this Agreement, no implied covenants or obligations shall be read
     into this Agreement against the Trustee and, in the absence of bad faith on
     the part of the Trustee, the Trustee may conclusively rely, as to the truth
     of the statements and the correctness of the opinions expressed therein,
     upon any certificates, filings or opinions furnished to the Trustee and
     conforming to the requirements of this Agreement;

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

                                      -89-
<PAGE>

         (c) the Trustee shall not be personally liable with respect to any
     action taken, suffered or omitted to be taken by it in good faith in
     accordance with the direction of the Holders of Certificates evidencing
     Voting Interests represented by all Certificates (or all affected
     Certificates, as appropriate) aggregating not less than 51% 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

         (d) the Trustee shall not be charged with knowledge of any failure by
     the Servicer to comply with the obligations of the Servicer referred to in
     clauses (a) and (b) of Section 8.01 unless a Responsible Officer obtains
     actual knowledge of such failure or the Trustee receives written notice of
     such failure from the Servicer or the Holders of Certificates evidencing
     Voting Interests represented by all Certificates aggregating not less than
     51%, as the case may be; and

         (e) the Trustee shall not be required to expend or risk its own funds
     or otherwise incur financial liability in the performance of any of its
     duties hereunder, or in the exercise of any of its rights or powers, if
     there is reasonable ground for believing that the repayment of such funds
     or adequate indemnity against such risk or liability is not reasonably
     assured to it, and none of the provisions contained in this Agreement shall
     in any event require the Trustee to perform, or be responsible for the
     manner of performance of, any of the obligations of the Servicer under this
     Agreement, except during such time, if any, as the Trustee shall be the
     successor to, and be vested with the rights, duties, powers and privileges
     of, the Servicer in accordance with the terms of this Agreement.

     Section 9.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:

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

         (b) The Trustee may consult with counsel selected by it with due care
     and any advice obtained from such counsel or 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 advice or Opinion of Counsel;

         (c) The Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Agreement, or to institute, conduct
     or defend any litigation hereunder or in relation hereto, at the request,
     order or direction of any of the Certificateholders, pursuant to the
     provisions of this Agreement, unless the Person so requesting, ordering or
     directing same shall have offered to the Trustee reasonable security or
     indemnity against the costs, expenses and liabilities that may be incurred
     therein or thereby; the right of the Trustee to perform any discretionary
     act enumerated in this Agreement shall not be construed as a duty, and the
     Trustee shall not be answerable

                                      -90-
<PAGE>

     for other than its negligence or willful misconduct in the performance of
     any such act; nothing contained herein shall, however, relieve the Trustee
     of the obligations, upon the occurrence of an Event of Default known to a
     Responsible Officer of the Trustee (which has not been cured), to exercise
     such of the rights and powers vested in it by this Agreement, subject to
     the provisions of Section 9.13, and to use the same degree of care and
     skill in their exercise as a prudent man would exercise or use under the
     circumstances in the conduct of his own affairs;

         (d) The Trustee shall not be personally liable for any action taken,
     suffered or omitted by it in good faith in accordance with the direction of
     the Holders of Certificates evidencing Voting Interests representing all
     Certificates (or all affected Certificates, as appropriate) aggregating not
     less than 51%;

         (e) Prior to the occurrence of an Event of Default and after the curing
     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 documents, unless
     requested in writing to do so by the Holders of Certificates evidencing
     Voting Interests represented by all Certificates (or all affected
     Certificates, as appropriate) aggregating not less than 51%; 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 cost,
     expense or liability as a condition to such proceeding; the reasonable
     expense of every such examination shall be paid by the Servicer or, if paid
     by the Trustee, shall be reimbursed by the Servicer upon demand; and
     nothing in this clause (e) shall derogate from the obligation of the
     Servicer to observe any applicable law prohibiting disclosure of
     information regarding the Mortgagors; and

         (f) The Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through agents or
     attorneys or a custodian. The Trustee shall not be liable or responsible
     for the misconduct of any agent, attorney or custodian appointed with due
     care by the Trustee hereunder.

     Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer.

                                      -91-
<PAGE>

     Section 9.04 Trustee May Own Certificates. The Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates with the same
rights as it would have if it were not Trustee.

     Section 9.05 Payment of the Trustee's Fees and Expenses.

         (a) On each Distribution Date, the Trust shall pay to the Trustee an
     amount equal to the Trustee Fee described in the definition thereof
     (including any fees and expenses of a co-trustee or separate trustee
     appointed under Section 9.10) as compensation for all services rendered by
     the Trustee (and any such co-trustee or separate trustee) in the execution
     of the trusts hereby created and in the exercise and performance of any of
     the powers and duties hereunder of the Trustee (and any such co-trustee or
     separate trustee).

         (b) The Trust shall pay or reimburse the Trustee the Trustee Fee
     pursuant to Section 5.01 and such other reasonable expenses, disbursements
     and advances incurred or made by the Trustee in accordance with any of the
     provisions of this Agreement (including the reasonable compensation and the
     expenses and disbursements of its counsel and of all persons not regularly
     in its employ) except any such expense, disbursement or advance as may
     arise from its negligence or bad faith or that is otherwise reimbursable to
     the Trustee by the Servicer pursuant to Section 9.05(a) above; provided,
     however, that the Trustee shall not refuse to perform any of its duties
     hereunder solely as a result of the failure of the Trust to pay or
     reimburse such expenses, disbursements or advances.

         (c) The Servicer agrees to indemnify the Trustee from, and hold it
     harmless against, any and all losses and liabilities, damages, claims or
     expenses (including reasonable attorneys' fees) arising in respect of its
     acts or omissions in connection with this Agreement or the Certificates
     except to the extent the negligence, bad faith or intentional misconduct of
     the Trustee contributes to the loss, liability, damage, claim or expense.

         (d) This Section 9.05 shall survive the termination of this Agreement
     or the resignation or removal of the Trustee as regards rights accrued
     prior to such resignation or removal.

     Section 9.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. If such corporation 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, the combined capital
and surplus of such corporation 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

                                      -92-
<PAGE>

Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 9.07.

     Section 9.07 Resignation or Removal of the Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer and each Rating Agency. Upon receiving such
notice of resignation, the Servicer shall promptly appoint a successor trustee
satisfying the criteria set forth in Section 9.06 by written instrument, copies
of which shall be delivered to the resigning Trustee, the successor trustee and
the Servicer. If no successor trustee shall have been so appointed and having
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.

     If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, 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, or the Trustee shall fail to
perform its obligations under this Agreement, then the Servicer, the Depositor
or the Seller shall remove the Trustee and appoint a successor trustee
satisfying the criteria set forth in Section 9.06 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.

     If at any time the Trustee shall fail to duly observe or perform in any
material respect any covenants or agreements of the Trustee set forth in Section
9.01 of this Agreement, which failure (i) materially and adversely affects the
Certificateholders and (ii) continues unremedied for a period of 10 days after
the date on which written notice of such failure (which notice shall refer
specifically to this Section), requiring the same to be remedied, shall have
been given to the Trustee, the Seller, the Depositor and the Servicer by the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%, then the Servicer, the Depositor or
the Seller may remove the Trustee and appoint a successor trustee satisfying the
criteria set forth in Section 9.06 by written instrument, in duplicate, one copy
of which instrument shall be delivered to Trustee so removed and one copy to the
successor trustee.

     Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 9.08. The provisions of Section 9.05 shall survive any such
resignation or removal.

     Section 9.08 Successor Trustee. Any successor trustee appointed as provided
in Section 9.07 shall execute, acknowledge and deliver to the 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 like effect as if originally
named as Trustee. The Seller, the Servicer, the Depositor and the predecessor
Trustee shall execute and deliver such

                                      -93-
<PAGE>

instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.

     No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance it shall be eligible under the provisions
of Section 9.06.

     Upon acceptance of appointment by a successor trustee as provided in this
Section, the 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 and to each Rating Agency. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Servicer.

     Section 9.09 Merger or Consolidation of the Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

     Section 9.10 Appointment of Co-Trustee or Separate Trustee. Notwithstanding
any other provisions of this Agreement, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Trust or any
Mortgaged Property may at the time be located, the Servicer and the Trustee,
acting jointly, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights, indemnities and trusts
as the Servicer and the Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in 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. Each of the Rating Agencies shall
be given written notice of the appointment of a co-trustee or a separate trustee
pursuant to this Section.

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

         (a) All rights, powers, duties and obligations conferred or imposed
     upon the Trustee shall be conferred or imposed upon and exercised or
     performed by the Trustee and such separate trustee or co-trustee jointly
     (it being understood that such separate trustee or co-trustee is not
     authorized to act separately without the Trustee joining in such

                                      -94-
<PAGE>

     act), except to the extent that under any law of any jurisdiction in which
     any particular act or acts are to be performed (whether as Trustee
     hereunder or as successor to the Servicer hereunder), the Trustee shall be
     incompetent or unqualified to perform such act or acts, in which event such
     rights, powers, duties and obligations (including the holding of title to
     the Trust or any portion thereof in any such jurisdiction) shall be
     exercised and performed singly by such separate trustee or co-trustee, but
     solely at the direction of the Trustee;

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

         (c) The Servicer and the Trustee acting jointly may at any time accept
     the resignation of or remove any separate trustee or co-trustee, except
     that following the occurrence of an Event of Default that has not been
     cured, the Trustee, acting alone may accept the resignation of or remove
     any separate or co-trustor.

     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. 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 copies thereof given to each
of the Seller, the Depositor and the Servicer.

     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.

     No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.

     Section 9.11 Compliance with REMIC Provisions. The Trustee shall neither
knowingly nor intentionally take any action or omit to take any action in the
performance of its duties hereunder that would cause any REMIC Pool to fail to
qualify as a REMIC or that would cause the imposition of a tax on any REMIC
Pool. The Trustee shall: (a) prepare and file, or cause to be prepared and
filed, such federal, state and local income tax and information returns or
reports using the calendar year as the taxable year for each REMIC Pool when and
as required by the REMIC Provisions and other applicable federal, state and
local income tax laws, which returns or reports shall be signed by the Trustee
or such other person as may be required thereby; (b) make an election, on behalf
of each REMIC Pool, to be treated as a REMIC and make the appropriate
designations, if applicable, in accordance with Section 9.16 on the federal
income tax return of the REMIC Pool for its first taxable year, in accordance
with the REMIC Provisions;

                                      -95-
<PAGE>

(c) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information reports, or furnish or cause to be furnished
by telephone, mail, publication or other appropriate method such information, as
and when required to be provided to them in accordance with the Code; (d)
exercise reasonable care not to allow the creation of any "interests" in any
REMIC Pool within the meaning of Code Section 860D(a)(2) other than the
interests represented by the Certificates (other than the Class R-I, Class R-II
and Class P Certificates) in the case of REMIC III, the REMIC II Interests in
the case of REMIC II, and the REMIC I Interests in the case of REMIC I; and (e)
within 30 days of the Startup Day, furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as may otherwise be required by the
Code, the name, title, address, and telephone number of the person that
Certificateholders may contact for tax information relating to their
Certificates (and the Trustee shall act as the representative of each REMIC Pool
for this purpose), together with such additional information as may be required
by such Form, and shall update such information at the time and in the manner
required by the Code. Each Class R Certificateholder shall designate the
Servicer, if permitted by the Code and applicable law, to act as "tax matters
person" for the related REMIC Pool within the meaning of Treasury regulations
Section 1.860F-4(d), and the Servicer is hereby designated as agent of each
Class R Certificateholder for such purpose (or if the Servicer is not so
permitted, the Holder of the related Class R Certificate shall be the tax
matters person in accordance with the REMIC Provisions).

     Section 9.12 Trustee May Enforce Claims Without Possession of Certificates.
All rights of action and claims under this Agreement or the Certificates may be
prosecuted and enforced by the Trustee without the possession of any of the
Certificates or the production thereof in any proceedings relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
or in its capacity as Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Certificateholders in respect of which such judgment has been recovered in
accordance with the terms of this Agreement.

     Section 9.13 Exercise of Trustee Powers by Certificateholders. The Holders
of Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%, may direct the time, method and place of
conducting any proceeding relating to the Trust or the Certificates or for any
remedy available to the Trustee with respect to the Certificates or exercising
any trust or power conferred on the Trustee with respect to the Certificates of
the Trust provided that:

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

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

               (iii) the Trustee may take any other action deemed proper by the
         Trustee that is not inconsistent with such direction; provided,
         however, that the Trustee need not take any action that it reasonably
         determines might involve it in liability unless it has been
         satisfactorily indemnified and, with respect to actions

                                      -96-
<PAGE>

         directed by Certificateholders, may be unjustly prejudicial to the
         Holders not so directing.

     Section 9.14 Tax Returns. The Trustee shall maintain all information in its
possession as may be required in connection with the preparation of all federal
and, if applicable, state and local income tax and information returns of each
REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool) and shall prepare, execute and file as required
all such returns. The Trustee shall include in the first federal income tax
return the information required to be included therein under the REMIC
Provisions, including, but not limited to, Treasury regulation
(Section)1.860D-1(d)(2) and Treasury regulation (Section)1.860F-4(b)(2), or any
successor provisions . The Servicer shall report all required tax information to
Mortgagors in accordance with applicable law. To the extent directly applicable,
the Prepayment Assumption used in pricing the Offered Certificates will be used
in preparing any reports concerning or touching on interest payments made or
original issue discount with respect to the Certificates.

     Section 9.15 Taxpayer Identification Number. The Trustee shall prepare and
file with the Internal Revenue Service, on behalf of each REMIC Pool within the
time period prescribed therefor, an application on IRS Form SS-4 for such REMIC
Pool. The Trustee, upon receipt from the Internal Revenue Service of the Notice
of Taxpayer Identification Number assigned to each REMIC Pool, shall promptly
forward a copy of such notice to the Servicer.

     Section 9.16 Miscellaneous REMIC Matters.

     (a) The Trustee shall elect that REMIC I, REMIC II and REMIC III shall be
treated as REMICs under Section 860D of the Code, as described in Section 9.11.
The REMIC I REMIC Pool, REMIC II REMIC Pool and REMIC III REMIC Pool shall
constitute the assets of REMIC I, REMIC II and REMIC III respectively. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such REMIC
elections.

     (b) REMIC I will be evidenced by the Class IA, Class IB, Class IC, Class
ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class IK, Class
IL and Class IM Interests and the Class P Certificates (together, the "REMIC I
Regular Interests"), which (i) (except in the case of the Class P Certificates)
will be uncertificated and non-transferable and (ii) are hereby designated as
the "regular interests" in REMIC I and (y) the Class R-I Certificate, which is
hereby designated as the single "residual interest" in REMIC I (the REMIC I
Regular Interests, together with the Class R-I Certificate, the "REMIC I
Interests"). The REMIC I Regular Interests (other than the Class P Certificates)
shall be recorded on the records of the REMIC I as being issued to and held by
the Trustee on behalf of REMIC II.

     The REMIC I Interests will have the following designations, initial
principal balances and pass-through rates:

         REMIC I                 Initial                     Pass-Through
        Interests                Balance                         Rate
        ---------                -------                         ----

                                      -97-
<PAGE>

         REMIC I                 Initial                     Pass-Through
        Interests                Balance                         Rate
        ---------                -------                         ----

            P                        $100                       0%(2)
            IA                 $7,218,750                        (1)
            IB                   $763,125                        (1)
            IC                 $1,139,875                        (1)
            ID                 $1,141,250                        (1)
            IE                 $1,768,250                        (1)
            IF                 $1,650,000                        (1)
            IG                   $756,250                        (1)
            IH                 $2,062,500                        (1)
            II                 $2,750,000                        (1)
            IJ                 $2,750,000                        (1)
            IK                 $1,375,000                        (1)
            IL                 $2,750,000                        (1)
            IM               $123,882,003.99                     (1)
           R-I                         $0                         0%

(1)  The per annum Pass-Through Rate on these REMIC I Regular Interests shall at
     any time of determination equal the weighted average of the Net Loan Rates
     of the Mortgage Loans.

(2)  The Class P Certificates shall be entitled to receive all Prepayment
     Charges collected with respect to the Mortgage Loans. Such Prepayment
     Charges shall not be available for distribution with respect to any other
     Class of REMIC I Interests. The Prepayment Charges received by the Class P
     Certificates shall not be applied to the principal balance of those
     Certificates.

     On each Distribution Date, principal collections and realized losses on the
Mortgage Loans shall be allocated first, to the Class IM Interests, and then, to
the REMIC I Regular Interests (other than the Class IM Interests and Class P
Certificates), sequentially, in reverse order to which they are listed above,
until the principal balance of each such class is reduced to zero. The Class R-I
Certificates shall have no principal balance and no pass-through rate and shall
be entitled to only those distributable assets (exclusive of the Class P
Deposit), if any, remaining in REMIC I on each Distribution Date after all
amounts required to be distributed to the REMIC I Regular Interests (other than
the Class P Certificates) and applicable Trust expenses have been paid. If, at
any time, the Pool Balance is $15,000 or less, a portion of the Class P Deposit
shall be paid as principal with respect to the Class P Certificates such that
the remaining Class P Deposit is always less than 0.66% of the sum of the Pool
Balance and the remaining Class P Deposit. After all of the REMIC I Regular
Interests (other than the Class P Certificates) have been paid in full, the
remaining available funds in REMIC I shall first be applied to reduce the
principal balance of the Class P Certificates to zero, and then shall be payable
with respect to the Class R-I Certificates. It is expected that there will not
be any distributions on the Class R-I Certificate.

                                      -98-
<PAGE>

     (c) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2, Class
II-M-1, Class II-M-2, Class II-B, the 12 components of Class II-A-IO described
in note (2) below, and Class II-Q Interests (the "REMIC II Regular Interests"),
which will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in REMIC II and (y) the Class R-II Certificates, which
are hereby designated as the single "residual interest" in REMIC II (the REMIC
II Regular Interests, together with the Class R-II Certificates, the "REMIC II
Interests"). The REMIC II Regular Interests shall be recorded on the records of
REMIC II as being issued to and held by the Trustee on behalf of REMIC III.

     The Basic Principal Distribution Amount shall be allocated 99% to the Class
II-Q Certificate and 1% to the Class II-A-1, Class II-A-2, Class II-M-1, Class
II-M-2 and Class II-B Interests until paid in full. The aggregate amount of the
Basic Principal Distribution Amount allocated to the Class II-A-1, Class II-A-2,
Class II-M-1, Class II-M-2 and Class II-B Interests shall be apportioned among
such classes in the same manner as such amount is payable with respect to the
Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates,
respectively. The Excess Overcollateralization Amount shall be allocated
entirely to the Class II-Q Certificates until paid in full.

     On any Distribution Date, any interest paid with respect to the Mortgage
Loans that is allocable to payments of principal on the Certificates pursuant to
Section 5.01(e) (the "Turbo Amount") will not be payable to the REMIC II Regular
Interests. Instead, a portion of the interest payable with respect to the Class
II-Q Interest which equals 1% of the Turbo Amount will be payable as a reduction
of the principal balances of the Class II-A-1, Class II-A-2, Class II-M-1, Class
II-M-2 and Class II-B Interests in the same manner as the Turbo Amount is
allocated among the Class A-1, Class A-2, Class M-1, Class M-2 and Class B
Certificates, respectively (and will be accrued and added to principal on the
Class II-Q Interest).

     Losses on the Mortgage Loans shall be applied such that after all
distributions have been made on such Distribution Date, the principal balances
of the Class II-A-1, Class II-A-2, Class II-M-1, Class II-M-2 and Class II-B
Interests equal 1% of the principal balances of the Class A-1, Class A-2, Class
M-1, Class M-2 and Class B Certificates, respectively, and the principal balance
of the Class II-Q Interest equals the Pool Balance less an amount equal to the
aggregate principal balances of the Class II-A-1, Class II-A-2, Class II-M-1,
Class II-M-2 and Class II-B Interests.

     The REMIC II Interests will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:

                                      -99-
<PAGE>

<TABLE>
<CAPTION>
                                                 Pass-       Allocation          Allocation
       REMIC II              Initial            Through          of                  of
       Interests             Balance              Rate        Principal           Interest
       ---------             -------              ----        ---------           --------
<S>                    <C>                      <C>           <C>              <C>
       II-A-1               $1,058,180             (1)           (3)               (4),(5)
       II-A-2                 $209,320             (1)           (3)               (4),(5)
       II-M-1                 $105,000             (1)           (3)               (4),(5)
       II-M-2                  $71,250             (1)           (3)               (4),(5)
       II-B                    $56,250             (1)           (3)               (4),(5)
       II-Q               $148,507,003.99          (1)           (3)               (4),(5)
       II-A-IO                      $0             (2)           N/A             Class A-IO
       R-II                         $0              0%           N/A                N/A(6)
</TABLE>

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

(1)      The per annum Pass-Through Rate on these REMIC II Regular Interests
         shall at any time of determination equal the weighted average of the
         Pass-Through Rates of the REMIC I Regular Interests (other than the
         Class P Certificates), after first subtracting 6.0% from the
         Pass-Through Rates of each of such regular interests (other than the
         Class IM Interests) for the Distribution Dates indicated below for each
         of such regular interests.

<TABLE>
<CAPTION>

                                    6.0% Subtraction                                    6.0% Subtraction
            REMIC I                   Distribution                REMIC I                 Distribution
            Interest                     Dates                  Certificates                 Dates
            --------                     -----                  ------------                 -----
<S>                                    <C>                       <C>                      <C>
               IA                        1 - 36                      IG                      1 - 18
               IB                        1 - 33                      IH                      1 - 15
               IC                        1 - 30                      II                      1 - 12
               ID                        1 - 27                      IJ                      1 - 9
               IE                        1 - 24                      IK                      1 - 6
               IF                        1 - 21                      IL                      1 - 3
</TABLE>

(2)  Interest on the Class II-A-IO will equal the sum of 12 strips of interest,
     with each strip being a strip off the principal balance of a REMIC I
     Regular Interest (other than the Class IM Interests and the Class P
     Certificates) at 6.0% per annum for the Distribution Dates indicated in the
     table in note (1) for such regular interest, and 0.0% thereafter. Each of
     the 12 interest strips comprising the interest on the Class II-A-IO shall
     constitute 12 separate components of the Class II-A-IO, each of which shall
     be designated as a separate REMIC II Regular Interest.

(3)  Principal will be allocated to and apportioned among the Class A-1, Class
     A-2, Class M-1, Class M-2 and Class B Certificates, in the same proportion
     as principal is payable with respect to such Certificates, except that a
     portion of such principal in an amount up to the Excess
     Overcollateralization Amount shall first be allocated as a payment of
     interest to the Class C Certificates, and all principal will be allocated
     to the Class C Certificates

                                     -100-
<PAGE>

     after the principal balances of the Class A-1, Class A-2, Class M-1, Class
     M-2 and Class B Certificates have been reduced to zero.

(4)  Except as provided in note (5), interest with respect to this REMIC II
     Regular Interest will be allocated among the Class A-1, Class A-2, Class
     M-1, Class M-2 and Class B Certificates in the same proportion as interest
     is payable on such Certificates.

(5)  Any interest with respect to this REMIC II Regular Interest in excess of
     the product of (i) 100 times the weighted average coupon of the Class
     II-A-1, Class II-A-2, Class II-M-1, Class II-M-2, Class II-B and Class II-Q
     Interests, where each of such REMIC II Regular Interests, other than the
     Class II-Q Interest, is first subject to a cap and floor equal to the Class
     A-1, Class A-2, Class M-1, Class M-2 and Class B Pass-Through Rates,
     respectively, and the Class II-Q Interest is subject to a cap equal to 0%,
     and (ii) the principal balance of this REMIC II Regular Interest, shall not
     be allocated to the Class A-1, Class A-2, Class M-1, Class M-2 or Class B
     Certificates, but will be allocated to the Class C Certificates. However,
     the Class C Certificates shall be subordinated to the extent provided in
     Section 5.01.

(6)  On each Distribution Date, available funds, if any, remaining in REMIC II
     after payments of interest and principal, as designated above, will be
     distributed to the Class R-II Certificate. It is expected that there will
     not be any distributions on the Class R-II Certificates.

          (d) The Offered Certificates and Class C Certificates, but exclusive,
     in each case, of any rights to receive any Net Rate Cap Carryover, are
     hereby designated as "regular interests" with respect to REMIC III and the
     Class R-III Certificate is hereby designated as the single "residual
     interest" with respect to REMIC III. The Class R-III Certificate shall have
     no pass-through rate and shall have no principal balance. On each
     Distribution Date, available funds, if any, remaining in REMIC III after
     payments of interest and principal on the regular interests in REMIC III
     will be distributed to the Class R-III Certificates.

          (e) The Closing Date is hereby designated as the "Startup Day" of each
     of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9)
     of the Code. The "latest possible maturity date", solely for purposes of
     Treasury regulation (Section)1.860G-1(a)(4)(iii), of each of the REMIC I
     and REMIC II Regular Interests and each of the "regular interests" with
     respect to REMIC III is August 25, 2035.

                                    ARTICLE X

                                   TERMINATION

     Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller, the Depositor and the Trustee (other than
the obligation of the Trustee to make certain payments to Certificateholders
after the final Distribution Date and the obligation of the Seller to send
certain notices as hereinafter set forth) and the Trust created hereby shall

                                     -101-
<PAGE>

terminate with respect to all Certificates upon the last action required to be
taken by the Trustee on the final Distribution Date pursuant to this Article
following the earlier of (a) the purchase by the Servicer of all Mortgage Loans
then remaining in the Trust and all property acquired by the Trust in respect of
any such Mortgage Loan at a price equal to the sum of (x) 100% of the Principal
Balance of each such Mortgage Loan (other than any Mortgage Loan as to which
title to the underlying Mortgaged Property has been acquired by the Trust and
whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date and (y) the fair market value of such acquired Mortgaged
Property (determined as described below), plus accrued and unpaid interest at
the applicable Mortgage Loan Rate on the Principal Balance of each such Mortgage
Loan (including any Mortgage Loan as to which title to the underlying Mortgaged
Property has been acquired by the Trust) through the end of the Collection
Period preceding the date of repurchase and the aggregate amount of unreimbursed
Servicing Advances made in respect of any such Mortgage Loan, less any payments
of principal and interest received by the Trust during such Collection Period in
respect of each such Mortgage Loan (the "Termination Price") or (b) the final
payment or other liquidation of the Principal Balance of the last Mortgage Loan
remaining in the Trust or the disposition of all property remaining in the Trust
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, who are living on the Closing Date. The fair market
value of Mortgaged Properties pursuant to the foregoing clause (y) shall be
determined by the Servicer as of the close of business on the third Business Day
next preceding the date upon which notice of any such termination is furnished
to Certificateholders pursuant to the third paragraph of this Section 10.01.

     The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is exercisable only on or after the related
Clean-up Call Date. If such right is exercised, (i) the Servicer shall remit the
Termination Price specified in this Section to the Trustee for deposit in the
Certificate Account pursuant to Section 3.02 (e) on or before the related
Deposit Date and (ii) the Trustee, if it has received the Mortgage Files
pursuant to Section 2.01, shall, promptly following remittance of such
Termination Price, release to the Servicer the Mortgage Files pertaining to the
Mortgage Loans being purchased and all other documents furnished by the Servicer
as are necessary to transfer the Trustee's interest in the Mortgage Loans to the
Servicer.

     Notice of any termination, specifying the Distribution Date (which shall be
a date that would otherwise be a Distribution Date) upon which the related
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation shall be given promptly by the
Trustee (upon receipt of written directions from the Servicer, which directions
shall be received by the Trustee not later than the 15th day of the month
preceding the month of such final distribution) by letter to Certificateholders
mailed not earlier than the first day and not later than the 10th day of the
month of such final distribution specifying (a) the Distribution Date upon which
final distribution of the related Certificates will be made upon presentation
and surrender of Certificates at the office or agency of the Trustee therein
designated, (b) the amount of any such final distribution and (c) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon

                                     -102-
<PAGE>

presentation and surrender of such Certificates at the office or agency of the
Trustee therein specified.

     If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, the Trustee shall cause to be distributed to
Certificateholders on the final Distribution Date, an amount equal to (i) as to
the Offered Certificates, and upon presentation and surrender thereof, to the
Holders thereof in proportion to their respective Percentage Interests the
Certificate Principal Balance, and the Class Interest Distribution applicable to
such Offered Certificate and (ii) as to the Servicer, any unpaid servicing
compensation with respect to such Distribution Date (other than amounts retained
to meet claims) after application pursuant to clause (i) above and payment to
the Servicer of any amounts to which it is entitled as reimbursement hereunder
and (iii) as to the Class C Certificateholders and upon presentation and
surrender of the Class C Certificates, in proportion to their Percentage
Interests, any amounts remaining after application pursuant to clauses (i) and
(ii), up to an amount equal to the Class C Distribution Amount and any Class C
Carryforward Amount; provided, however, that if the fair market value of any
acquired property referred to in, or covered by, clause (a)(y) of the first
paragraph of this Section is less than the Principal Balance of the related
Mortgage Loan, then the excess of such Principal Balance over such fair market
value shall be allocated in reduction of the amounts otherwise distributable on
the final Distribution Date in the following order of priority: first, to the
Holders of the applicable Class R Certificates, second to the Holders of the
Class C Certificate and third to the Holders of the Offered Certificates,
sequentially, in reverse order of priority, beginning with the Class of Offered
Certificates then outstanding with the lowest relative payment priority, in each
case until the respective Certificate Principal Balance thereof is reduced to
zero. The distribution on the final Distribution Date in connection with the
purchase by the Servicer of the assets in the Trust shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of each Class of Certificates. The Servicer shall provide in writing to the
Trustee the information with respect to the amounts so to be paid.

     In the event that all of the relevant Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
fifth day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders, and the Servicer (if
the Servicer exercised its right to purchase the assets of the Trust as provided
above) or the Trustee (in any other case) shall give a second written notice to
the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, any funds deposited in such escrow account and
remaining unclaimed shall be paid by the Trustee to the Servicer and thereafter
Certificateholders shall look only to the Servicer with respect to any claims in
respect of such funds.

     Section 10.02 Additional Termination Requirements. In the event the
Servicer exercises its purchase option as provided in Section 10.01(a), each
REMIC Pool shall be terminated in accordance with the following additional
requirements, and the Trustee shall receive an Opinion of Counsel to the effect
that the termination of such REMIC Pool (i) will constitute a "qualified

                                     -103-
<PAGE>

liquidation" of each REMIC Pool within the meaning of Code Section
860F(a)(4)(A), and (ii) will not subject such REMIC Pool to tax or cause such
REMIC Pool 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 of intention to purchase the Mortgage Loans given by the
         Servicer under Section 10.01, the Trustee, at the direction of the
         Servicer, shall adopt a plan of complete liquidation of each REMIC Pool
         on behalf of the REMIC within the meaning of Code Section
         860F(a)(4)(A)(8), which shall be evidenced by such notice; and

               (ii) At or after the time of adoption of such a plan of complete
         liquidation and at or prior to the final Distribution Date, the Trustee
         shall sell all of the assets of each REMIC Pool to the Servicer, as the
         case may be, for cash at the purchase price specified in Section 10.01
         and shall distribute such cash in the manner specified in Section
         10.01.

               (iii) The Holder of the Class R Certificates will be deemed to
         have adopted a plan of liquidation on the date that the Trustee, at the
         direction of the Servicer, has adopted such plan. The Trustee shall
         attach a statement to the final return of each REMIC Pool for which a
         plan of liquidation is adopted by the Trustee, at the direction of the
         Servicer, setting forth the date of adoption of the plan of
         liquidation.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

     Section 11.01 Amendment. This Agreement may be amended from time to time by
the Servicer, the Seller, the Depositor and the Trustee, without the consent of
any of the Certificateholders, (a) to cure any error or any ambiguity or to
correct or supplement any provisions herein which may be inconsistent with any
other provisions herein; (b) to add to the duties or obligations of the Servicer
hereunder; (c) to maintain or improve any rating then assigned by any Rating
Agency to any subclass of the Offered Certificates; (d) to add any other
provisions with respect to matters or questions arising under this Agreement, as
the case may be (including specifically amendments or supplements pursuant to
the second paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of each REMIC Pool as a REMIC at all times that any Certificates
are outstanding or to avoid or minimize the risk of the imposition of any tax on
any REMIC Pool pursuant to the Code that would be a claim against any REMIC
Pool, provided that in the case of this clause (e) the Trustee has received an
Opinion of Counsel addressed to the Trustee to the effect that such action is
necessary or desirable to maintain such qualification or to avoid or minimize
the risk of the imposition of any such tax; (f) to modify, eliminate or add to
the provisions of Section 6.02(c) or any other provisions hereof restricting
transfer of the Class R Certificates or (g) to modify, eliminate or add to the
provisions hereunder in order to provide for one or more third parties to effect
all or a portion of the Monthly Advances or Servicing Advances and to provide
for the reimbursement from the Trust Fund of such third party for such

                                     -104-
<PAGE>

Monthly Advances or Servicing Advances (i) from amounts payable to the Servicer,
(ii) from collections which the Servicer would have been permitted to otherwise
retain and (iii) from any other amounts that would otherwise be payable to the
Servicer if the Servicer had made such Monthly Advances or Servicing Advances or
from such other funds owed to the Servicer, in each case as the Servicer shall
agree; provided that in all such cases the Trustee has obtained written
confirmation from each Rating Agency that any such modifications to this
Agreement will not result in a qualification, reduction or withdrawal of the
rating assigned to any Class of Offered Certificates by such Rating Agency and
has received an Opinion of Counsel to the effect that any such modifications to
this Agreement do not give rise to a risk that any REMIC Pool or any of the
Certificateholders will be subject to a tax caused by a transfer to a
Disqualified Organization; provided, further, that in all such cases such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.

     This Agreement may also be amended from time to time by the Servicer, the
Seller, the Depositor and the Trustee and the Holders of Certificates evidencing
Voting Interests of each Class affected thereby aggregating not less than 51%,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or distributions
which are required to be made on any Certificate without the consent of the
Holder of such Certificate or (b) reduce the aforesaid percentage of each Class
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates of such Class then outstanding.

     Promptly after the execution of any such amendment or consent pursuant to
the next preceding paragraph, the Trustee shall furnish written notification of
the substance of such amendment to each affected Certificateholder and each
Rating Agency.

     It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment or consent, 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
requirements as the Trustee may prescribe.

     Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
that affects the Trustee's own rights, duties or immunities under this
Agreement.

     Notwithstanding any provisions of this Section 11.01, no amendment of this
Agreement shall be permitted without the consent of Certificateholders (other
than the Seller, Depositor, its affiliates, and agents) evidencing Voting
Interests aggregating not less than 51%, unless the Trustee is provided with an
Officer's Certificate of the Seller or the Depositor that indicates that such
amendment would not have an adverse impact on the sale treatment of the Mortgage
Loans from the Seller to the Depositor or from the Depositor to the Trust on the
Closing Date under generally accepted accounting principles and that such
amendment would not, by itself, result in

                                     -105-
<PAGE>

the consolidation of the Trust with the Seller or Depositor under generally
accepted accounting principles.

     Section 11.02 Recordation of Agreement. 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 to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel to the effect that such recordation is legally required to protect
the Trustee's interest in the Mortgage Loans.

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

     Section 11.03 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or any REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or any REMIC established pursuant to this
Agreement, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

     Except as otherwise expressly provided herein, no Certificateholder, solely
by virtue of its status as a Certificateholder, shall have any right to vote or
in any manner otherwise control the operation and management of the Trust or any
REMIC established pursuant to this Agreement, 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 person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

     No Certificateholder, solely by virtue of its status as a
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 default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall 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 provision of this
Agreement to affect, disturb or prejudice the rights of the

                                     -106-
<PAGE>

Holders of any other Certificates, or to obtain or seek to obtain priority over
or preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

     Section 11.04 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York (without regard to conflict of
laws principles and the application of the laws of any other jurisdiction), and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.

     Section 11.05 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (a) in the case of the Seller, at 350 South Grand Avenue, Los Angeles,
California 90070, Attn: Chief Financial Officer, with a copy to General Counsel;
(b) in the case of the Depositor, at 350 South Grand Avenue, Los Angeles,
California 90070, Attn: Chief Financial Officer, with a copy to General Counsel;
(c) in the case of the Trustee, at the Corporate Trust Office at 1761 East St.
Andrew Place, Santa Ana, California 92705-4934, Attn: Aames Capital Corporation,
Series 2001-2; (d) in the case of the Servicer, Countrywide Home Loans, Inc.,
4500 Park Granada, Calabasas California 91302 Attn: Dave Sambol, with a copy to
Countrywide Home Loans, Inc. 400 Countrywide Way, Simi Valley, California 93065,
Attn: Lupe Montero, Vice President; (e) in the case of S&P, to Standard &
Poor's, 55 Water Street, 41st Floor, New York, New York 10041, Attn: Mortgage
Surveillance Group; (f) in the case of Moody's, to Moody's Investors Service
Inc., 99 Church Street, New York, New York 10007, Attn: Residential Mortgage
Pass-Through Monitoring; (g) in the case of the PMI Insurer, Mortgage Guaranty
Insurance Corporation, MGIC Plaza, P.O. Box 488, Milwaukee, Wisconsin 53201,
Attention: Tim Edwards or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at its address shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. Any notice or other document required to
be delivered or mailed by the Trustee to any Rating Agency shall be given on a
best efforts basis and only as a matter of courtesy and accommodation and the
Trustee shall have no liability for failure to deliver such notice or document
to any such Rating Agency.

     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 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in this Section and Sections 7.02, 7.04 and
7.05, this Agreement may not be assigned by the Seller, the Depositor or the
Servicer without the prior written consent of the Holders of Certificates
evidencing not less than 66% of the Voting Interests of all Certificates.

                                     -107-
<PAGE>

     Section 11.08 Certificates Nonassessable and Fully Paid. The parties agree
that the Certificateholders shall not be personally liable for obligations of
the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.

                               [Signatures follow]

                                     -108-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.

                                AAMES CAPITAL CORPORATION,
                                  as Seller

                                By: /s/ John Kohler
                                   ---------------------------------
                                   Name:  John Kohler
                                   Title: Executive Vice President

                                AAMES CAPITAL ACCEPTANCE CORPORATION
                                as Depositor,

                                By: /s/ John Kohler
                                   ---------------------------------
                                   Name:  John Kohler
                                   Title: Executive Vice President

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

                                By: /s/ Barbara Campbell
                                   ---------------------------------
                                   Name:  Barbara Campbell
                                   Title: Assistant Secretary

                                COUNTRYWIDE HOME LOANS, INC.
                                as Servicer

                                By: /s/ Michael W. Schloessmann, Jr.
                                   -----------------------------------
                                   Name:  Michael W. Schloessman, Jr.
                                   Title: Vice President

                                     -109-
<PAGE>

State of California                )
                                   )      ss.:
County of Los Angeles              )

     On the 28th day of June in the year 2001, before me, the undersigned,
personally appeared ______________________, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

                                               ---------------------------------
                                               Notary Public

[Notary Seal]

                                     -110-
<PAGE>

State of California                )
                                   )      ss.:
County of Los Angeles              )

     On the 28th day of June in the year 2001, before me, the undersigned,
personally appeared ______________________, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

                                               ---------------------------------
                                               Notary Public

[Notary Seal]

                                     -111-
<PAGE>

State of ____________              )
                                   )      ss.:
County of __________               )

     On the 28th day of June in the year 2001, before me, the undersigned,
personally appeared ______________, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

                                               ---------------------------------
                                               Notary Public

[Notary Seal]

                                     -112-
<PAGE>

State of ____________              )
                                   )      ss.:
County of __________               )

     On the 28th day of June in the year 2001, before me, the undersigned,
personally appeared ______________, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

                                               ---------------------------------
                                               Notary Public

[Notary Seal]

                                     -113-
<PAGE>

                                   Schedule I
                                   ----------

                              List of Sub-Servicers

None.

<PAGE>

                                   Schedule II
                                   -----------

                      Schedule of Restricted Mortgage Loans

None.

<PAGE>
                                                                     EXHIBIT A-1

                           FORM OF CLASS A CERTIFICATE

Date of Pooling and Servicing                  Initial Certificate
Agreement and Cut-off Date:                    Balance:  $
June 1, 2001

First Distribution Date:                       CUSIP No.:
July 25, 2001

Denomination:  $                               Certificate No.:  A-_

                        Class A-_ Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-2, CLASS A-_

     evidencing a percentage interest in the distributions allocable to the
     Class A-_ Certificates with respect to a Trust consisting primarily of a
     pool of conventional, closed-end, fixed and adjustable rate residential
     mortgage loans, sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the requested owner hereof, Cede & Co. has an interest
herein.

     This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate shown above by the Initial Certificate Principal Balance for
such class) in a trust, the assets of which

                                     A-1-1

<PAGE>

consist primarily of a pool of conventional, closed-end, fixed and adjustable
rate residential mortgage loans (the "Mortgage Loans"), sold by Aames Capital
Acceptance Corp. (the "Depositor") into the Trust, serviced by Countrywide Home
Loans, Inc. (the "Servicer," which term includes any successor Servicer under
the Agreement referred to below). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, Aames Capital Corporation, as seller ("Seller"), the Servicer 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, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

     Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "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
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

     Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, 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
maintained for that purpose and as specified in such notice.

     This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
Series 2001-2, Class A-_" (herein called the "Class A-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

     The Class A-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and that the Trustee in its individual
capacity is

                                     A-1-2
<PAGE>

not personally 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 Depositor, the Servicer, and the rights of the Certificateholders
under the Agreement at any time by the Servicer and the Trustee and the Holders
of Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price

                                     A-1-3
<PAGE>

determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

             This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

                  This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-1-4
<PAGE>

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

Dated:  June  ___, 2001

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

                                     By:
                                        ---------------------------------------
                                                  Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the
Certificates referred to in
the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
        of California, N.A., as Trustee

                                     A-1-5
<PAGE>

                                                                     EXHIBIT A-2

                           FORM OF CLASS M CERTIFICATE

Date of Pooling and Servicing                Original Class M-_ Certificate
Agreement and Cut-off Date:                  Balance:  $
June __, 2001

First Distribution Date:                     CUSIP No. :
July 25, 2001

Denomination:  $                             Certificate No.:  M-_

                        Class M-_ Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-2, CLASS M-_

     evidencing a percentage interest in the distributions allocable to the
     Class M-_ Certificates with respect to a Trust consisting primarily of a
     pool of conventional, closed-end, fixed and adjustable rate residential
     mortgage loans, sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE
AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH
IN THE AGREEMENT REFERRED TO HEREIN.

     Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the requested owner hereof, Cede & Co. has an interest
herein.

                                     A-2-1
<PAGE>

     This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate shown above by the Original Class M-_ Certificate Principal
Balance) in a trust, the assets of which consist primarily of a pool of
conventional, closed-end, fixed and adjustable rate residential mortgage loans
(the "Mortgage Loans"), deposited by Aames Capital Acceptance Corp. (the
"Depositor") into the Trust, serviced by Countrywide Home Loans, Inc. (the
"Servicer," which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Depositor, Aames
Capital Corporation, as seller ("Seller"), the Servicer 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, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

     Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "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
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

     Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, 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
maintained for that purpose and as specified in such notice.

     This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
Series 2001-2, Class M-_" (herein called the "Class M-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

                                     A-2-2
<PAGE>

     The Class M-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and that the Trustee
in its individual capacity is not personally 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
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

                                     A-2-3
<PAGE>

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

     This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     A-2-4
<PAGE>

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

Dated:  June  ___, 2001

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

                                             By:
                                                --------------------------------
                                                     Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Class M-_
Certificates referred to in
the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
       of California, N.A., as Trustee

                                     A-2-5
<PAGE>

                                                                     EXHIBIT A-3

Date of Pooling and Servicing                Original Class B-_ Certificate
Agreement and Cut-off Date:                  Balance:  $
June __, 2001

First Distribution Date:                     CUSIP No. :
July 25, 2001

Denomination:  $                             Certificate No.:  B-_

                         Class B Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-2, CLASS B

     evidencing a percentage interest in the distributions allocable to the
     Class B Certificates with respect to a Trust consisting primarily of a pool
     of conventional, closed-end, fixed and adjustable rate residential mortgage
     loans, sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH
IN THE AGREEMENT REFERRED TO HEREIN.

     Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the requested owner hereof, Cede & Co. has an interest
herein.

     This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate shown

                                     A-3-1
<PAGE>

above by the Original Class B Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited
by Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Countrywide Home Loans, Inc. (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller ("Seller"), the
Servicer 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, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

     Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "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
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

     Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, 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
maintained for that purpose and as specified in such notice.

     This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
Series 2001-2, Class B" (herein called the "Class B Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

     The Class B Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely

                                     A-3-2
<PAGE>

to the funds on deposit in the Certificate Account and that the Trustee in its
individual capacity is not personally 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
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price

                                     A-3-3
<PAGE>

determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

     This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     A-3-4
<PAGE>

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

Dated:  June  ___, 2001

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

                                          By:
                                             ----------------------------------
                                                    Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Class B-_
Certificates referred to in
the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
        of California, N.A., as Trustee

                                     A-3-5
<PAGE>

                                                                     EXHIBIT A-4

                         FORM OF CLASS A-IO CERTIFICATE

Date of Pooling and Servicing               Percentage Interest: 100%
Agreement and Cut-off Date:
June __, 2001                               CUSIP No.:

First Distribution Date:                    Certificate No.:  A-IO-_
July 25, 2001

                        Class A-IO Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2001-2, CLASS A-IO

     evidencing a percentage interest in the distributions allocable to the
     Class A-IO Certificates with respect to a Trust consisting primarily of a
     pool of conventional, closed-end, fixed and adjustable rate residential
     mortgage loans, sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     THIS CLASS A-IO CERTIFICATE HAS NO PRINCIPAL BALANCE.

     Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the requested owner hereof, Cede & Co. has an interest
herein.

     This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate in a trust, the assets of which consist
primarily of a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans (the "Mortgage Loans"), deposited by Aames Capital
Acceptance Corp. (the "Depositor") into the Trust,

                                     A-4-1
<PAGE>

serviced by Countrywide Home Loans, Inc. (the "Servicer," which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, Aames Capital Corporation, as seller
("Seller"), the Servicer 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, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

     Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "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
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the applicable interest
distributable thereon, as more specifically set forth in the Agreement.

     Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, 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
maintained for that purpose and as specified in such notice.

     This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates,
Series 2001-2, Class A-IO " (herein called the "Class A-IO Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

     The Class A-IO Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and that the Trustee in its individual
capacity is not personally 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-4-2
<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
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to

                                     A-4-3
<PAGE>

purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 5% of the sum of the Original Pool Balance and the Prefunding Account
Deposit.

     This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     A-4-4
<PAGE>

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

Dated:  June  ___, 2001

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

                                            By:
                                               ---------------------------------
                                                      Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Class A-IO
Certificates referred to in
the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
      of California, N.A., as Trustee

                                     A-4-5
<PAGE>

                                                                     EXHIBIT B-1

                           FORM OF CLASS C CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRANSFEROR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING ON BEHALF OF A PLAN OR
USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE AND IS NOT AN INSURANCE
COMPANY PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT
OR SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS) OR (2) SUCH TRANSFEREE IS AN
INSURANCE COMPANY PURCHASING A CLASS C CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN SECTION V(E) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) SATISFYING SECTION III OF PTCE
95-60.

                                     B-1-1
<PAGE>

Date of Pooling and Servicing               Percentage Interest: __%
Agreement and Cut-off Date:
June __, 2001                               Certificate No.:

First Distribution Date:
July 25, 2001

                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-2, CLASS C

     evidencing a percentage interest in the distributions allocable to the
     Class C Certificate with respect to a Trust consisting primarily of a pool
     of conventional, closed-end, fixed and adjustable rate residential mortgage
     loans sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     This certifies that Capital Z Investments, L.P. is the registered owner of
the Percentage Interest specified on the face of this Class C Certificate. This
Class C Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited by
Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Countrywide Home Loans, Inc. (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller ("Seller"), the
Servicer 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, the capitalized terms used
herein have the meanings assigned to such terms in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

     No transfer of a Class C Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                     B-1-2
<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class C
Certificate.

     The Class C Certificates are entitled to the Class C Distribution Amount on
each Distribution Date. The Class C Certificates are not entitled to any
payments on and collections in respect of the Mortgage Loans on any Distribution
Date until all other distributions on the Offered Certificates for such
Distribution Date and reimbursements of certain advances have been made in
accordance with the Agreement. The Holder of this Certificate, by its acceptance
of this Certificate, agrees that the Trustee in its individual capacity is not
personally 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 the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the the Depositor, the Servicer and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.

                                     B-1-3
<PAGE>

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The the Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the the Depositor, the Trustee nor any of
their respective agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates, the right of the Servicer to purchase
being subject to the Pool Balance at the time of purchase being less than 5% of
the sum of the Original Pool Balance and the Prefunding Account Deposit..

     This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     B-1-4
<PAGE>

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

Dated:  June __, 2001

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

                                              By:
                                                 ------------------------------
                                                       Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
       of California, N.A., as Trustee

                                     B-1-5
<PAGE>

                                                                     EXHIBIT B-2

                           FORM OF CLASS R CERTIFICATE

     THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.

     FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION
6.02(b) OF THE POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH
AN AFFIDAVIT TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT
(i) A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION
860E(e)(5), OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR
SUCH DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL
SECURITIES AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH
SECURITIES THROUGH BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS
(A "BOOK-ENTRY NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER
PERSON UNLESS SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN
PERSON THAT WILL HOLD SUCH CLASS R 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 4224 OR (C) IS A
FOREIGN PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN
OPINION OF A NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER
OF THE CLASS R CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE
CODE AND THE REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE
CLASS R CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY
SUCH PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR (C) ABOVE BEING REFERRED TO
HEREIN AS A "NON-

                                     B-2-1
<PAGE>

PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT
OR EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE
(AN "ERISA PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT
OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON
OF AN ERISA PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS
OF AN ERISA PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR
OTHERWISE, (II) IT HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR
COLLECTION OF ANY FEDERAL, STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE
PAID WITH RESPECT TO THE CLASS R CERTIFICATE, AND (III) IT HAS AGREED TO SUCH
AMENDMENTS TO FURTHER EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED
ORGANIZATIONS, AGENTS THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN
HOLDERS OR ERISA PLANS. THE TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE
OF THE FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION OR
PARTNERSHIP (OR OTHER ENTITY CLASSIFIED AS A CORPORATION OR PARTNERSHIP FOR U.S.
FEDERAL INCOME TAX PURPOSES) CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE
UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i)
A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER
THE ADMINISTRATION OF THE TRUST, AND (ii) ONE OR MORE UNITED STATES PERSONS HAVE
THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.

     THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO
HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS "TAX
MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR PURPOSES
OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY
THE SERVICER, TO ACT AS TAX MATTERS PERSON.

                                     B-2-2
<PAGE>

Date of Pooling and Servicing                Percentage Interest: __%
Agreement and Cut-off Date:
June __, 2001                                Certificate No.: __

First Distribution Date:
July 25, 2001

                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-2, CLASS R

     evidencing a percentage interest in the distributions allocable to the
     Class R Certificate with respect to a Trust consisting primarily of a pool
     of conventional, closed-end, fixed rate and adjustable rate residential
     mortgage loans sold by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORP. OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT,
AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.

     This certifies that Aames Capital Acceptance Corp. is the registered owner
of the Percentage Interest specified on the face of this Class R Certificate.
This Class R Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"),
deposited by Aames Capital Acceptance Corp. (the "Depositor") into the Trust,
serviced by Countrywide Home Loans, Inc. (the "Servicer," which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, Aames Capital Corporation, as seller
("Seller"), the Servicer 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, the capitalized
terms used herein have the meanings assigned to such terms in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

     No transfer of a Class R Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                     B-2-3
<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In connection with any such transfer, the Trustee
will also require an affidavit, in the form as described in the Agreement,
stating the matters set forth on the legend of this Class R Certificate.

     The Holder of the Class R Certificate, by acceptance hereof, is deemed to
have designated the Servicer, if permitted by the Code and applicable law, to
act as the "tax matters person", to perform the functions of a "tax matters
partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the Code
and if not so permitted, the Holder of the Class R Certificate, is deemed to
have agreed to act as such "tax matters person".

     The Class R Certificate is not entitled to any payments on and collections
in respect of the Mortgage Loans on any Distribution Date until all other
distributions for such Distribution Date have been made in accordance with the
Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally 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
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of the Certificates.

     This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as

                                     B-2-4
<PAGE>

described in the Agreement, and thereupon a new Certificate evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     B-2-5
<PAGE>

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

Dated:  June __,2001

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

                                           By:
                                              ----------------------------------
                                                      Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
        of California, N.A., as Trustee

                                     B-2-6
<PAGE>

                                                                     EXHIBIT B-3

                           FORM OF CLASS P CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS
EXCEPT AS PROVIDED HEREIN.

                                     B-3-1
<PAGE>

Date of Pooling and Servicing                  Percentage Interest: 100%
Agreement and Cut-off Date:
June __, 2001                                  Certificate No.: __

First Distribution Date:
July 25, 2001

                           AAMES MORTGAGE TRUST 2001-2
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2001-2, CLASS P

     evidencing a percentage interest in the distributions allocable to the
     Class P Certificate with respect to a Trust consisting primarily of a pool
     of conventional, closed-end, fixed and adjustable rate residential mortgage
     loans sold and serviced by Aames Capital Corporation.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN AAMES
CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORP. OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT,
AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.

     This certifies that Countrywide Home Loans, Inc. is the registered owner of
the Percentage Interest specified on the face of this Class P Certificate. This
Class P Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited by
Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Countrywide Home Loans, Inc. (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller ("Seller"), the
Servicer 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, the capitalized terms used
herein have the meanings assigned to such terms in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

     No transfer of a Class P Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                     B-3-2
<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In connection with any such transfer, the Trustee
will also require an affidavit, in the form as described in the Agreement,
stating the matters set forth on the legend of this Class P Certificate.

     The Class P Certificates do not have a pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. The
Holder of this Certificate, by its acceptance of this Certificate, agrees that
the Trustee in its individual capacity is not personally 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
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

                                     B-3-3
<PAGE>

     The Depositor and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Depositor, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates, the right of the Servicer to purchase
being subject to the Pool Balance at the time of purchase being less than 5% of
the sum of the Original Pool Balance and the Prefunding Account Deposit.

     This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

     This Certificate will not be entitled to any benefit under the Agreement or
be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.

                                     B-3-4
<PAGE>

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

Dated:  June __,2001

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

                                           By:
                                              ----------------------------------
                                                     Authorized Officer

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates
referred to in the within named
Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
       of California, N.A., as Trustee

                                     B-3-5
<PAGE>

                                                                       EXHIBIT C

                                   [RESERVED]

                                      C-1
<PAGE>

                                                                       EXHIBIT D

                                   [RESERVED]

                                       D-1

<PAGE>

                                                                       EXHIBIT E

                             MORTGAGE LOAN SCHEDULE

                       [On file with Sponsor and Trustee]

                                       E-1

<PAGE>

                                                                       EXHIBIT F

                    FORM OF ANNUAL STATEMENT AS TO COMPLIANCE

     The undersigned, _____________, ___________ of Countrywide Home Loans, Inc.
(the "Servicer"), in its capacity as Servicer under that certain Pooling and
Servicing Agreement dated as of June 1, 2001 (the "Pooling and Servicing
Agreement") among Aames Capital Corporation, as seller, Aames Capital Acceptance
Corp., as depositor, Countrywide Home Loans, Inc., as servicer and Bankers Trust
Company of California, N.A., as trustee, does hereby certify pursuant to Section
3.09 of the Pooling and Servicing Agreement that as of the ___ day of
____________, ____:

     (a) a review of the activities of the Servicer for the year ended December
         31, ____ and of its performance under the Pooling and Servicing
         Agreement has been made under my supervision, and

     (b) to the best of my knowledge, based on such review, the Servicer has
         fulfilled all of its material obligations under the Pooling and
         Servicing Agreement throughout such year.

     IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day
of ___________, ____.

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

                                      F-1

<PAGE>

                                                                       EXHIBIT G

                FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

STATE OF_______________________________ )
                                        ) ss.:
COUNTY OF______________________________ )

     [NAME OF OFFICER], being first duly sworn, deposes and says:

     1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he makes this
affidavit. Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement as defined in the Class R Certificate.

     2. That the Investor's Taxpayer Identification Number is [_______________].

     3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 2001-2 Mortgage Pass-Through Certificates, Series
2001-2 (the "Class R Certificate") for the account of, or as an agent (including
a broker, nominee or middleman) of any entity as to which the Investor 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 electrical energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(c), 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 Investor is not (i) an entity that holds Class R Certificates
as nominee to facilitate the clearance and settlement of such Class R
Certificates through electronic book-entry changes in accounts of participating
organizations (a "Book-Entry Nominee"), (ii) an individual, corporation,
partnership or other person unless such transferee (A) is not a Foreign Person
or (B) is a Foreign Person that will hold such Class R 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 4224 or (C) is a Foreign Person that has delivered to both the
transferor and the Trustee an opinion of a nationally recognized tax counsel to
the effect that the transfer of a Class R Certificate to it is in accordance
with the requirements of the Code and the regulations promulgated thereunder and
that such transfer of a Class R Certificate will

                                      G-1
<PAGE>

not be disregarded for federal income tax purposes (any such person who is not
covered by clause (A), (B) or (C) above being referred to herein as a
"Non-permitted Foreign Holder") or (iii) a Person that is an employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code (an "ERISA Plan") or an entity, including an insurance company separate
account or general account, whose underlying assets include ERISA Plan assets by
reason of an ERISA Plan's investment in the entity or a Person investing the
assets of an ERISA Plan or such an entity, whether as nominee, trustee, agent or
otherwise (an "ERISA Prohibited Holder").

     5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.

     6. That the Investor has no intent or purpose to impede the assessment or
collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes and that the Investor
understands that, as the holder of the Class R Certificate, it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificates.

     7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Organization is the record
holder of an interest in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass through entities as a nominee for another Person). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.

     8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.

     9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or

                                      G-2
<PAGE>

agent, and in connection with any transfer by a Person for whom the Investor is
acting as nominee, trustee or agent, and the Investor will not transfer its
Class R Certificate to be transferred to any Person that the Investor knows is a
Disqualified Organization.

     10. The Investor is acquiring the Class R Certificate either (i) for its
own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.

                                      G-3
<PAGE>

     IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of _________, ____.

                                         [NAME OF INVESTOR]

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

     Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Investor, and acknowledged to me 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 ___________, ____.

NOTARY PUBLIC

COUNTY OF________________

STATE OF_________________

My Commission expires the ____ day of ________, ____.

                                      G-4
<PAGE>

                                                                       EXHIBIT H

                    FORM OF NOTICE REGARDING PAYMENT IN FULL
                      OF PRINCIPAL BALANCE OF MORTGAGE LOAN

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

     Re: Aames Mortgage Trust 2001-2

         Mortgage Pass-Through Certificates, Series 2001-2
         -------------------------------------------------

Ladies and Gentlemen:

     Reference is made to Section 3.07 of the Pooling and Servicing Agreement
dated as of June 1, 2001 (the "Pooling and Servicing Agreement") among Aames
Capital Corporation, as Seller, Aames Capital Acceptance Corp., as Depositor,
Countrywide Home Loans, Inc., as Servicer and Bankers Trust Company of
California, N.A., as Trustee. All capitalized terms used but not defined herein
shall have the meanings given to such terms in the Pooling and Servicing
Agreement.

     The undersigned hereby certifies that the Principal Balance of the Mortgage
Loan(s) listed on Schedule A annexed hereto has been paid in full and that all
amounts received in connection with the payment of such Mortgage Loan(s) that
were required to be deposited or credited in the Certificate Account pursuant to
Section 3.02 of the Pooling and Servicing Agreement have been so deposited or
credited.

     The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.

                                           COUNTRYWIDE HOME LOANS, INC.

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

                                      H-1

<PAGE>

                                                                       EXHIBIT I

                           FORM OF LIQUIDATION REPORT

1.   Type of Liquidation (REO disposition/charge-off/short pay-off)

        o   Date Last Paid
        o   Date of Foreclosure
        o   Date of REO
        o   Date of REO Disposition
        o   Property Sale Price; Estimated Market Value at Disposition

2.   Liquidation Proceeds

        o   Principal Prepayment                  $
                                                   -------------------------
        o   Property Sale Proceeds
                                                   -------------------------
        o   Insurance Proceeds
                                                   -------------------------
        o   Other (itemize)

        o   TOTAL                                 $
                                                   =========================

     Liquidation Expenses

        o   Servicing Advances                    $
                                                   -------------------------
        o   Monthly Advances
                                                   -------------------------
        o   Contingency Fees
                                                   -------------------------
        o   Servicing Fees
                                                   -------------------------
        o   Annual Expense Escrow Amount
                                                   -------------------------
        o   Supplemental Fee (if any)
                                                   -------------------------
        o   Additional Interest (if any)
                                                   -------------------------
        o   Monthly Sponsor Fee (if any)

        o   TOTAL                                 $
                                                   =========================
3.   Net Liquidation Proceeds*
     (Total of Item 2 minus total of Item 3)      $
                                                   -------------------------

4.   Accrued and Unpaid Interest on Mortgage
     Loan                                         $
                                                   -------------------------

5.   Principal Balance of Mortgage Loan           $
                                                   -------------------------

6.   Realized Loss on Mortgage Loan (Item 4
     plus Item 5 minus Item 3, with a Realized
     Loss resulting only if the total of this
     calculation is a positive number) $          $
                                                   -------------------------

*Applied first to Item 4 and then to Item 5.

                                      I-1
<PAGE>

                                                                       EXHIBIT J

                              OFFICER'S CERTIFICATE

     I, _____________________, hereby certify that I am the duly elected
_____________________ of Countrywide Home Loans, Inc. acting as servicer
pursuant to a Pooling and Servicing Agreement dated as of June 1, 2001 by and
among the Aames Capital Corporation, as Seller, Aames Capital Acceptance Corp.,
as Depositor, Countrywide Home Loans, Inc. and Bankers Trust Company of
California, N.A., as Trustee, and further certify, to the best of my knowledge
and after due inquiry that the following, including the attached Liquidation
Report, is a summary of the facts and circumstances surrounding the "charge-off"
of any Mortgage Loans during the Collection Period from _____ 1 through _____
30/31, ____;

[Insert the following information for each "charged-off" Mortgage Loan]

     Loan #
     Borrower Name
     Property Address
     Date of "charge-off"
     Original Principal Balance
     Outstanding Principal Balance
     Mortgage Loan Rate
     Accrued Interest at time of "charge off"
     Unreimbursed Servicing Advances at time of "charge off"
     Unreimbursed Delinquency Advances at time of "charge off"
     # of days in default at time of "charge off"
     Original Appraised Value
     Current appraised value based upon "drive by"
     Amount of outstanding first lien
     Estimate of Foreclosure Costs
         Broker Fees
         Legal Fees
         Repair and Miscellaneous Expenses
     Projected Marketing Period
     Estimate of Loss on Foreclosure and Liquidation

Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.

                                      J-1

<PAGE>

     IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal of
the Servicer.

Dated:
      --------------------------               --------------------------------
                                               Name:
                                               Title:

                                      J-2
<PAGE>

                                                                       EXHIBIT K

                          FORM OF TRANSFEROR AFFIDAVIT
                           [LETTERHEAD OF TRANSFEROR]

                             ________________,_____

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

          Re: Aames Mortgage Trust 2001-2
              Mortgage Pass-Through Certificates, Series 2001-2
              -------------------------------------------------

Ladies and Gentlemen:

     We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and have no
actual knowledge that such affidavit is not true and has no reason to believe
that the requirements set forth in paragraph 3, paragraph 4(i) or paragraph
4(ii) are not satisfied and have 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 Class R Certificate.
In addition, we have 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:

                                      K-1

<PAGE>

                                                                       EXHIBIT L

                                   [RESERVED]

                                      L-1

<PAGE>

                                                                       EXHIBIT M

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

     Re: Aames Mortgage Trust 2001-2,
         Mortgage Pass-Through Certificates,
         Series, 2001-2, Class [  ] (the "Certificates")
         -----------------------------------------------

Ladies and Gentlemen:

     In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
with respect to our disposition of the Certificates, we have no knowledge that
the transferee is not a permitted transferee.

                                        Very truly yours,

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

                                        By:
                                           -----------------------------------
                                           Authorized Officer

                                      M-1
<PAGE>

                                                                     EXHIBIT N-1

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

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

     Re:  Aames Mortgage Trust 2001-2,
          Mortgage Pass-Through Certificates,
          Series, 2001-2, Class [  ] (the "Certificates")
          -----------------------------------------------

Ladies and Gentlemen:

     In connection with our acquisition of the above-captioned Certificates, we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the Seller
and the Depositor concerning the purchase of the Certificates and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or

                                     N-1-1
<PAGE>

negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                        Very truly yours,

                                        [NAME OF TRANSFEREE]

                                        By:
                                           ------------------------------------
                                                  Authorized Officer

                                     N-1-2
<PAGE>

                                                                     EXHIBIT N-2

                            FORM OF RULE 144A LETTER

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

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

     Re:  Aames Mortgage Trust 2001-2,
          Mortgage Pass-Through Certificates,
          Series, 2001-2, Class [  ] (the "Certificates")
          -----------------------------------------------

Ladies and Gentlemen:

     In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Seller and the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (d) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with respect
to the Certificates, (e) we are a "qualified institutional buyer" as that term
is defined in Rule 144A under the Act and have completed either of the forms of

                                     N-2-1

<PAGE>

certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Act.

                                        Very truly yours,

                                        [NAME OF TRANSFEREE]

                                        By:
                                           -------------------------------------
                                                     Authorized Officer

                                     N-2-2
<PAGE>

                                                          ANNEX 1 TO EXHIBIT N-2
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

     [For Transferees Other Than Registered Investment Companies]

     The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

     (a) As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

     (b) In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $_________ (1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

     ___     Corporation, etc. The Buyer is a corporation (other than a bank,
             savings and loan association or similar institution), Massachusetts
             or similar business trust, partnership, or charitable organization
             described in Section 501(c)(3) of the Internal Revenue Code of
             1986, as amended.

     ___     Bank. The Buyer (a) is a national bank or banking institution
             organized under the laws of any State, territory or the District of
             Columbia, the business of which is substantially confined to
             banking and is supervised by the State or territorial banking
             commission or similar official or is a foreign bank or equivalent
             institution, and (b) has an audited net worth of at least
             $25,000,000 as demonstrated in its latest annual financial
             statements, a copy of which is attached hereto.

     ___     Savings and Loan. The Buyer (a) is a savings and loan association,
             building and loan association, cooperative bank, homestead
             association or similar institution, which is supervised and
             examined by a State or Federal authority having supervision over
             any such institutions or is a foreign savings and loan association
             or equivalent institution and (b) has an audited net worth of at
             least $25,000,000 as demonstrated in its latest annual financial
             statements, a copy of which is attached hereto.

--------
(1)  Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities unless Buyer is a dealer, and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $10,000,000 in securities.

                                     N-2-3
<PAGE>

     ___     Broker-dealer. The Buyer is a dealer registered pursuant to Section
             15 of the Securities Exchange Act of 1934.

     ___     Insurance Company. The Buyer is an insurance company whose primary
             and predominant business activity is the writing of insurance or
             the reinsuring of risks underwritten by insurance companies and
             which is subject to supervision by the insurance commissioner or a
             similar official or agency of a State, territory or the District of
             Columbia.

     ___     State or Local Plan. The Buyer is a plan established and maintained
             by a State, its political subdivisions, or any agency or
             instrumentality of the State or its political subdivisions, for the
             benefit of its employees.

     ___     ERISA Plan. The Buyer is an employee benefit plan within the
             meaning of Title I of the Employee Retirement Income Security Act
             of 1974.

     ___     Investment Advisor. The Buyer is an investment advisor registered
             under the Investment Advisors Act of 1940.

     ___     Small Business Investment Company. Buyer is a small business
             investment company licensed by the U.S. Small Business
             Administration under Section 301(c) or (d) of the Small Business
             Investment Act of 1958.

     ___     Business Development Company. Buyer is a business development
             company as defined in Section 202(a)(22) of the Investment Advisors
             Act of 1940.

     (c) The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

     (d) For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

                                     N-2-4

<PAGE>

     (e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

     (f) Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                         Print Name of Buyer

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

                                         Date:
                                              --------------------

                                     N-2-5
<PAGE>

                                                          ANNEX 2 TO EXHIBIT N-2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That are Registered Investment Companies]

     The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

     (a) As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

     (b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

                                     N-2-6
<PAGE>

     ___     The Buyer owned $___________ in securities (other than the excluded
             securities referred to below) as of the end of the Buyer's most
             recent fiscal year (such amount being calculated in accordance with
             Rule 144A).

     ___     The Buyer is part of a Family of Investment Companies which owned
             in the aggregate $____________ in securities (other than the
             excluded securities referred to below) as of the end of the Buyer's
             most recent fiscal year (such amount being calculated in accordance
             with Rule 144A).

     (c) The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

     (d) The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

     (e) The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.

     (f) Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                    Print Name of Buyer

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

                                    IF AN ADVISER:

                                    -------------------------------------------
                                                Print Name of Buyer

                                    Date:
                                         -----------------

                                     N-2-7
<PAGE>

                                                                       EXHIBIT O

               Mortgage Guaranty Insurance Corporation PMI Policy

                   [Available from Aames Capital Corporation]

                                      O-1
<PAGE>

                                                                       EXHIBIT P

                           List of PMI Mortgage Loans

                   [Available from Aames Capital Corporation]

                                      P-1
<PAGE>
                                                                       EXHIBIT Q

                                   [RESERVED]

                                      Q-1

<PAGE>

                                                                       EXHIBIT R

                           Prepayment Charge Schedule

                   [Available from Aames Capital Corporation]

                                      R-1<PAGE>   1

                             SCIENT VOTING AGREEMENT

         THIS SCIENT VOTING AGREEMENT (this "Agreement"), entered into on this
31st day of July 2001, by and among IXL ENTERPRISES, INC., a Delaware
corporation ("iXL"), and the stockholders of SCIENT CORPORATION, a Delaware
corporation ("Scient"), that are parties hereto (each, a "Stockholder" and,
collectively, the "Stockholders"). Defined terms not defined herein shall have
the meaning ascribed to such terms in the Merger Agreement (as defined below).

                                   WITNESSETH:

         1.       WHEREAS, iXL and Scient, concurrently with the execution and
delivery of this Agreement, are entering into that certain Agreement and Plan of
Merger, of even date herewith (the "Merger Agreement"), pursuant to which, on
the terms and subject to the conditions set forth therein, iXL will engage in a
business combination in a merger of equals with Scient (the "Scient Merger");

         2.       WHEREAS, each Stockholder is the record and beneficial owner
of the number of shares of Scient Common Stock set forth on the signature page
hereof beneath such Stockholder's name (with respect to each Stockholder, such
Stockholder's "Existing Shares" and, together with any shares of Scient Common
Stock or other voting capital stock of Scient, the beneficial ownership of which
is acquired by such Stockholders after the date hereof, whether upon the
exercise of warrants, options, conversion of convertible securities or
otherwise, such Stockholder's "Shares"); and

         3.       WHEREAS, the Stockholders agree to vote all of their
respective Shares in accordance with the terms of this Agreement.

         NOW, THEREFORE, in consideration of the execution of the Merger
Agreement by the parties thereto and the respective representations, warranties,
covenants and agreements set forth in this Agreement, and intending to be
legally bound hereby and thereby, the parties hereto agree as follows:

                               ARTICLE 1. VOTING

1.1      AGREEMENT TO VOTE. Each Stockholder hereby agrees, severally and not
jointly, that it shall, and shall cause the holder of record on any applicable
record date to, from time to time, at the Scient Stockholders Meeting and any
other meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of stockholders of Scient, however called, or in connection
with any written consent of the holders of Scient Common Stock, (a) if a meeting
is held, appear at such meeting or otherwise cause its Shares to be counted as
present thereat for purposes of establishing a quorum, and (b) vote or consent
(or cause to be voted or consented), in person or by proxy, all of its Shares in
favor of the approval and adoption of the Merger Agreement, the Scient Merger
and any action required in furtherance thereof and for any of the transactions
contemplated by the Merger Agreement.

1.2      NO OWNERSHIP INTEREST. Nothing contained in this Agreement shall be
deemed to vest in iXL any direct or indirect ownership or incidence of ownership
of or with respect to any Shares. All rights, ownership and economic benefits of
and relating to the Shares shall remain vested in and belong to the
Stockholders, and iXL shall have no authority to manage, direct, superintend,
restrict, regulate, govern, or administer any of the policies or operations of
Scient or exercise any power or authority to direct the

                                      -1-
<PAGE>   2

Stockholders in the voting of any of the Shares, except as otherwise provided
herein, or in the performance of the Stockholder's duties or responsibilities as
stockholders of Scient.

1.3      NO INCONSISTENT AGREEMENTS. Each Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
the Stockholder (a) has not entered, and shall not enter at any time while this
Agreement remains in effect, into any voting agreement or voting trust with
respect to the Shares and (b) has not granted, and shall not grant at any time
while this Agreement remains in effect, a proxy or power of attorney with
respect to the Shares, in either case, which is inconsistent with such
Stockholder' s obligations pursuant to this Agreement.

          ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

         Each Stockholder hereby, severally and not jointly, represents and
warrants to iXL as follows:

2.1      AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Such
Stockholder has full power and authority to execute and deliver this Agreement,
to perform such Stockholder's obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
such Stockholder of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by such
Stockholder and no other actions or proceedings on the part of such Stockholder
are necessary to authorize the execution and delivery by it of this Agreement
and the consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by such Stockholder, and,
assuming this Agreement constitutes a valid and binding obligation of iXL,
constitutes a valid and binding obligation of such Stockholder, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and similar laws relating to or
affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
If such Stockholder is married and any of such Stockholder's Shares constitute
community property under applicable laws, this Agreement has been duly
authorized, executed and delivered by, and constitutes the valid and binding
agreement of, such Stockholder's spouse. If this Agreement is being executed in
a representative or fiduciary capacity, the individual or entity signing this
Agreement has the full power and authority to enter into and perform this
Agreement.

2.2      NON-CONTRAVENTION. The execution, delivery and performance by such
Stockholder of this Agreement and the consummation of the transactions
contemplated hereby do not and will not result in any breach or violation of or
be in conflict with or constitute a default under any term of (i) any agreement,
judgment, injunction, order, decree, law regulation or arrangement to which such
Stockholder is a party or by which such Stockholder (or any of its assets) is
bound, except for any such breach, violation, conflict or default which,
individually or in the aggregate, would not impair or affect such Stockholder's
ability to cast all votes necessary to approve and adopt the Merger Agreement
and the transactions contemplated by the Merger Agreement or (ii) if such
Stockholder is an entity, its certificate of incorporation or bylaws.

                                      -2-
<PAGE>   3

2.3      SHARES. Such Stockholder's Existing Shares are, and all of its Shares
from the date hereof through and on the Closing Date will be, owned beneficially
by such Stockholder. As of the date hereof, such Stockholder's Existing Shares
constitute all of the shares of Scient Common Stock owned of record or
beneficially by such Stockholder. Such Stockholder has or will have the voting
power, power of disposition, power to issue instructions with respect to the
matters set forth in Article I hereof, and power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of such
Stockholder's Existing Shares and with respect to all of such Stockholder's
Shares on the Closing Date, with no limitations, qualifications or restrictions
on such rights, subject to applicable federal securities laws and the terms of
this Agreement.

2.4      FINDER'S FEE. No investment banker, broker, finder or other
intermediary is entitled to a fee or commission from Scient or iXL in respect of
this Agreement based upon any arrangement or agreement made by or on behalf of
such Stockholder.

               ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF INDIA

iXL represents and warrants to each Stockholder as follows:

3.1      CORPORATE AUTHORIZATION. The execution, delivery and performance by iXL
of the transactions contemplated hereby are within the corporate powers of iXL
and have been duly authorized by all necessary corporate action.

3.2      BINDING OBLIGATION. This Agreement has been duly executed and delivered
by iXL, and, assuming this Agreement constitutes a valid and binding obligation
of each Stockholder, constitutes a valid and binding obligation of iXL,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and similar
laws relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

                           ARTICLE 4. OTHER COVENANTS

4.1      FURTHER AGREEMENTS.

(a)      Each Stockholder, severally and not jointly, hereby agrees, while this
         Agreement is in effect, not to sell, transfer, pledge, encumber, assign
         or otherwise dispose of or enforce or permit the execution of the
         provisions of any redemption, share purchase or sale, recapitalization
         or other agreement with Scient or enter into any contract, option or
         other arrangement or understanding with respect to the offer for sale,
         sale, transfer, pledge, encumbrance, assignment or other disposition
         of, any of its Existing Shares, any Shares acquired after the date
         hereof, any securities exercisable for or convertible into Scient
         Common Stock, any other capital stock of Scient or any interest in any
         of the foregoing with any Person.

                                      -3-
<PAGE>   4

(b)      In the event of a stock dividend or distribution, or any change in
         Scient Common Stock by reason of any stock dividend or distribution, or
         any change in Scient Common Stock by reason of any stock dividend,
         split-up, recapitalization, combination, exchange of shares or the
         like, the term " Shares" shall be deemed to refer to and include the
         Shares as well as all such stock dividends and distributions and any
         securities into which or for which any or all of the Shares may be
         changed or exchanged or which are received in such transaction.

(c)      Each Stockholder covenants and agrees with the other Stockholders and
         for the benefit of Scient (which shall be a third party beneficiary of
         this Section 4.1(c)) to comply with and perform all its obligations
         under this Agreement. Notwithstanding any provision in this Agreement
         to the contrary, it is understood and agreed that all representations,
         warranties, covenants and agreements made by a Stockholder pursuant to
         this Agreement are made (i) on a several, not joint, basis and (ii)
         only as to such Stockholder.

                         ARTICLE 5. GENERAL PROVISIONS

5.1      TERMINATION. This Agreement shall terminate and no party shall have any
rights or duties hereunder upon the earlier of (a) the Effective Time or (b)
termination of the Merger Agreement pursuant to Section 8.1 thereof. Nothing in
this Section 5.1 shall relieve or otherwise limit any party of liability for
breach of this Agreement.

5.2      NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or facsimile, upon confirmation of receipt, (b) on
the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the tenth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:

                  IF TO IXL TO:
                  iXL Enterprises, Inc.
                  1600 Peachtree St
                  Atlanta, GA 30309
                  Fax: 404/279-3844
                  Attention: Theodore W. Browne
                  e-mail: tbrowne@ixl.com

                  WITH A COPY TO:
                  Greenberg Traurig, LLP.
                  3290 Northside Parkway, N.W.
                  Suite 400
                  Atlanta, GA 30327
                  Phone: (678) 553-2444
                  Fax: (678) 553-2445
                  e-mail: altenbachj@gtlaw.com
                  Attention: James Altenbach, Esq.

                                      -4-
<PAGE>   5

                  AND A COPY TO:
                  Greenberg Traurig, LLP
                  The MetLife Building
                  200 Park Avenue
                  New York, New York 10021
                  Tel: (212) 801-9383
                  Fax: (212) 801-6400
                  email: neimethc@gtlaw.com
                  Attention: Clifford E. Neimeth, Esq.

                  IF TO THE STOCKHOLDERS PARTY HERETO:
                  to the address set forth below the name of such
                  Stockholders on the signature pages hereof

5.3      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart. Signatures transmitted by facsimile
or other comparable means shall be deemed an original.

5.4      GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (without giving effect to
choice of law principles thereof).

5.5      ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity

5.6      SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

5.7      ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of (i) iXL, in the case of an assignment by any Stockholder, and (ii)
those Stockholders holding more than 50% of the Scient Common Stock held by all
Stockholders, in the case of an assignment by iXL, and any attempt to make any
such assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns
(including, in the case of an individual, any executors, administrators, estates
or legal representatives of such individual).

                                      -5-
<PAGE>   6

5.8      SUBMISSION TO JURISDICTION; WAIVERS. Each of the parties to this
Agreement irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by any other party hereto or its successors or assigns shall be
brought and determined in the Chancery or other Courts of the State of Delaware,
and each party hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts with
respect to any such matter. Each party hereby irrevocably waives, and agrees not
to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts, and (d) any right to a trial by jury.

5.9      EXPENSES. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.

5.10     AMENDMENTS. This Agreement may not be modified or amended, except upon
the execution and delivery of a written agreement executed by the parties
hereto.

5.11     CERTAIN DEFINITIONS. For purposes of this Agreement, (i) the term
"beneficial ownership" (or any similar term) shall have the meaning set forth in
Rule 13d-3 under the Securities Exchange Act of 1934, and (ii) the term "Merger
Agreement" shall include the Merger Agreement as amended from time to time (but
only to the extent any such amendment does not materially adversely affect the
rights and interests of the Stockholders).

5.12     ACTION IN STOCKHOLDER CAPACITY ONLY. Each representation, warranty,
covenant and agreement made by a Stockholder hereunder is made in such
Stockholder's capacity as a stockholder only, not as an officer or director of
Scient. Nothing herein shall limit or affect any Stockholder's ability to take
any action in his or her capacity as an officer or director of Scient.

                                      -6-
<PAGE>   7

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its respective officers thereunto duly authorized, all
as of the date first written above.

                                             IXL:

                                             iXL Enterprises, Inc.

                                             By: /s/ Michael J. Casey
                                                 -------------------------------
                                             NAME: Michael J. Casey
                                             TITLE: Executive Vice President and
                                                    Chief Financial Officer

                                      -7-
<PAGE>   8

                                  STOCKHOLDERS:

/s/ Robert M. Howe
--------------------------------------------------------------------
Robert M. Howe

/s/ Stephen A. Mucchetti
--------------------------------------------------------------------
Stephen A. Mucchetti

/s/ Eric Greenberg
--------------------------------------------------------------------
Eric Greenberg

INNOVATION INVESTMENTS, LLC

By:    /s/ Eric Greenberg
       -------------------------------------------------------------
Name:  Eric Greenberg
Title: President and Chief Executive Officer

BENCHMARK CAPITAL PARTNERS II, L.P., as nominee for
     Benchmark Capital Partners II, L.P.
     Benchmark Founders' Fund II, L.P.
     Benchmark Founders' Fund II-A, L.P.
     Benchmark Members' Fund II, L.P.

By:  Benchmark Capital Management Co. II, L.L.C.,
     its General Partner

By:    /s/ David Beirne
       -------------------------------------------------------------
Name:  David Beirne
Title: Managing Member

                      [SIGNATURE PAGE TO VOTING AGREEMENT]

                                      -8-
<PAGE>   9
Sequoia Capital VII
Sequoia Technology Partners VII
Sequoia International Partners

By: SC VII-A Management, LLC
A California Limited Liability Company,
General Partner of Each

By: /s/ Douglas Leone
   -----------------------------------------------------------------
    Managing Member

Sequoia 1997, LLC

By: /s/ Douglas Leone
   -----------------------------------------------------------------

SQP 1997

By: /s/ Douglas Leone
   -----------------------------------------------------------------

SEQUOIA CAPITAL FRANCHISE FUND
SEQUOIA CAPITAL FRANCHISE PARTNERS

By: SCFF Management, LLC
    A Delaware Limited Liability Company
    General Partner of Each

By: /s/ Douglas Leone
   -----------------------------------------------------------------
    Managing Member

                      [SIGNATURE PAGE TO VOTING AGREEMENT]

                                      -9-
<PAGE>   10
HOWE FAMILY TRUST

By:    /s/ Robert M. Howe
       -------------------------------------------------------------
Name:  Robert M. Howe

HOWE 2000 GRANTOR RETAINED ANNUITY TRUST

By:    /s/ Robert M. Howe
       -------------------------------------------------------------
Name:  Robert M. Howe

HOWE FAMILY FOUNDATION

By:    /s/ Robert M. Howe
       -------------------------------------------------------------
Name:  Robert M. Howe
Title:

                      [SIGNATURE PAGE TO VOTING AGREEMENT]

/s/ Stephen A. Mucchetti
--------------------------------------------------------------------
Stephen A. Mucchetti, as Joint Tenant with right of survivorship

/s/ Rebecca S. Mucchetti
--------------------------------------------------------------------
Rebecca S. Mucchetti, as Joint Tenant with right of survivorship

                      [SIGNATURE PAGE TO VOTING AGREEMENT]

                                      -10-
<PAGE>   11

                       SCHEDULE OF COMMON STOCK OWNERSHIP
<TABLE>
<CAPTION>
                                                      NUMBER OF SHARES OF
SHAREHOLDER                                           SIERRA COMMON STOCK
-----------                                           -------------------
<S>                                                   <C>
Robert M. Howe                                             1,050,001
Eric Greenberg                                                47,088
Innovation Investments, LLC                                8,440,366
Benchmark Capital Partners II, L.P., as nominee for        1,753,910
  Benchmark Capital Partners II, L.P.
  Benchmark Founders' Fund II, L.P.
  Benchmark Founders' Fund II-A, L.P.
  Benchmark Members' Fund II, L.P.
Sequoia Capital VII                                        5,791,199
Sequoia Technology Partners VII                              253,169
Sequoia International Partners                               101,267
Sequoia 1997, LLC                                             66,078
SQP 1997                                                     117,470
Sequoia Capital Franchise Fund                             1,171,494
Sequoia Capital Franchise Partners                           130,166
Howe Family Trust                                          4,728,609
Howe 2000 Grantor Retained Annuity Trust                     500,000
Howe Family Foundation                                        40,000
Stephen A. Mucchetti and Rebecca S. Mucchetti, as
Joint Tenants with right of survivorship                   1,170,000
                                                          ----------
TOTAL                                                     25,360,817
</TABLE>

                                      -11-

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