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AMENDED & RESTATED EMPLOYMENT AGREEMENT

 

Exhibit 10.3

POLO RALPH LAUREN CORPORATION

EMPLOYMENT AGREEMENT

     AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made
effective as of the 1st day of July, 2004 (the “Effective Date”), by and
between POLO RALPH LAUREN CORPORATION, a Delaware corporation (the
“Corporation”), and Gerald M. Chaney (the “Executive”).

     WHEREAS, the Executive has been employed with the Corporation pursuant to
an Employment Agreement dated July 1, 2001 (the “2001 Employment Agreement”);
and

     WHEREAS, the Corporation and Executive wish to amend and restate such 2001
Employment Agreement effective as of the date hereof;

     NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties hereby agree as follows:

ARTICLE I

EMPLOYMENT

     1.1 Employment Term. The Corporation hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Corporation, on the
terms and conditions set forth herein. The employment of the Executive by the
Corporation shall be effective as of the date hereof and continue until the
close of business on the second anniversary of the Effective Date of this
Agreement (the “Term”), unless terminated earlier in accordance with Article II
hereof.

     1.2 Position and Duties. During the Term the Executive shall faithfully,
and in conformity with the directions of the Board of Directors of the
Corporation (the “Board”) or the management of the Corporation (“Management”),
perform the duties of his employment, and shall devote to the performance of
such duties his full time and attention. During the Term the Executive shall
serve in such position as the Board or Management may from time to time direct.
During the Term, the Executive may engage in outside activities provided those
activities do not conflict with the duties and responsibilities enumerated
hereunder, and provided further that the Executive gives written notice to the
Board of any outside business activity that may require significant expenditure
of the Executive’s time in which the Executive plans to become involved,
whether or not such activity is pursued for profit. The Executive shall be
excused from performing any services hereunder during periods of temporary
incapacity and during vacations in accordance with the Corporation’s disability
and vacation policies.

     1.3 Place of Performance. The Executive shall be employed at the
principal offices of the Corporation located in New York, New York, except for
required travel on the Corporation’s business.

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     1.4 Compensation and Related Matters.

          (a) Base Compensation. In consideration of his services during the Term,
the Corporation shall pay the Executive cash compensation at an annual rate not
less than the base salary as set forth on Exhibit A hereto (“Base
Compensation”). Executive’s Base Compensation shall be subject to such
increases as may be approved by the Board or Management. The Base Compensation
shall be payable as current salary, in installments not less frequently than
monthly, and at the same rate for any fraction of a month unexpired at the end
of the Term.

          (b) Bonus. During the Term, the Executive shall have the opportunity to
earn an annual bonus in accordance with any annual bonus program the
Corporation maintains that would be applicable to the Executive.

          (c) Options. During the Term, the Executive shall be eligible to
participate in the Polo Ralph Lauren stock option program. Stock options are
granted annually in June of each year and are subject to ratification by the
Compensation Committee of the Board of Directors. Stock options will vest one
third each year from the date of the grant and will be fully vested after three
years in accordance with the terms of the Company’s stock option program.

          (d) Car Allowance. During the Term, the Corporation shall pay Executive a
car allowance of $1,500 per month.

          (e) Expenses. During the Term, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in
performing services hereunder, including all reasonable expenses of travel and
living while away from home, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by the
Corporation.

          (f) Vacations. During the Term, the Executive shall be entitled to the
number of vacation days in each calendar year, and to compensation in respect
of earned but unused vacation days, determined in accordance with the
Corporation’s vacation program. The Executive shall also be entitled to all
paid holidays given by the Corporation to its employees.

          (g) Other Benefits. The Executive shall be entitled to participate in all
of the Corporation’s employee benefit plans and programs in effect during the
Term as would by their terms be applicable to the Executive, including, without
limitation, any pension and retirement plan, supplemental pension and
retirement plan, deferred compensation plan, incentive plan, stock option plan,
life insurance plan, medical insurance plan, dental care plan, accidental death
and disability plan, and vacation, sick leave or personal leave program. After
the Executive becomes employed, the Corporation shall not make any changes in
such plans or programs that would adversely affect the Executive’s benefits
thereunder, unless such change occurs pursuant to a program applicable to other
similarly situated employees of the Corporation and does not result in a
proportionately greater reduction in the rights or benefits of the Executive as
compared with other similarly situated employees of the Corporation. Except as
otherwise specifically provided herein, nothing paid to the Executive under any
plan or program

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presently in effect or made available in the future shall be in lieu of
the Base Compensation or any bonus payable under Sections 1.4(a) and 1.4(b)
hereof.

ARTICLE II

TERMINATION OF EMPLOYMENT

     2.1 Termination of Employment. The Executive’s employment may terminate
prior to the expiration of the Term under the following circumstances:

          (a) Without Cause. The Executive’s employment shall terminate upon the
Corporation’s notifying the Executive that his services will no longer be
required.

          (b) Death. The Executive’s employment shall terminate upon the
Executive’s death.

          (c) Disability. If, as a result of the Executive’s incapacity due to
physical or mental illness, the Executive shall have been absent and unable to
perform the duties hereunder on a full-time basis for an entire period of six
consecutive months, the Executive’s employment may be terminated by the
Corporation following such six-month period.

          (d) Cause. The Corporation may terminate the Executive’s employment for
Cause. For purposes hereof, “Cause” shall mean:

               (i) deliberate or intentional failure by the Executive to substantially
perform the material duties of the Executive hereunder (other than due to
Disability);

               (ii) an intentional act of fraud, embezzlement, theft or any other
material violation of law;

               (iii) intentional wrongful damage to material assets of the Corporation;

               (iv) intentional wrongful disclosure of material confidential information
of the Corporation;

               (v) intentional wrongful engagement in any competitive activity which
would constitute a breach of this Agreement and/or of the Executive’s duty of
loyalty; or

               (vi) intentional breach of any material employment policy of the
Corporation.

No act, or failure to act, on the part of the Executive shall be deemed
“intentional” if it was due primarily to an error in judgment or negligence,
but shall be deemed “intentional” only if done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in, or not opposed to, the best interest of the Corporation.
Failure to meet

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performance standards or objectives of the Corporation shall not constitute
Cause for purposes hereof.

          (e) Voluntary Termination. The Executive may voluntarily terminate the
Executive’s employment with the Corporation at any time, with or without Good
Reason. For purposes of this Agreement, “Good Reason” shall mean (A) a
material diminution in or adverse alteration to Executive’s title, base salary,
position or duties, (B) the relocation of the Executive’s principal office
outside the area which comprises a fifty (50) mile radius from New York City,
or (C) a failure of the Corporation to comply with any material provision of
this Agreement provided that the events described in clauses (A), (B), and (C)
above shall not constitute Good Reason unless and until such diminution,
change, reduction or failure (as applicable) has not been cured within thirty
(30) days after notice of such noncompliance has been given by the Executive to
the Corporation.

     2.2 Date of Termination. The date of termination shall be:

          (a) if the Executive’s employment is terminated by the Executive’s death,
the date of the Executive’s death;

          (b) if the Executive’s employment is terminated by reason of Executive’s
Disability or by the Corporation pursuant to Sections 2.1(a) or 2.1(d), the
date specified by the Corporation; and

          (c) if the Executive’s employment is terminated by the Executive, the date
on which the Executive notifies the Corporation of his termination.

     2.3 Effect of Termination of Employment.

          (a) If the Executive’s employment is terminated by the Corporation,
pursuant to Section 2.1(a), or if the Executive resigns for Good Reason
pursuant to Section 2.1(e), the Executive shall only be entitled to the
following:

               (i) Severance. Subject to Section 4.1(a) hereof, the Corporation shall:
(a) continue to pay the Executive, in accordance with the Corporation’s normal
payroll practice, his Base Compensation, as in effect immediately prior to such
termination of employment, for the longer of the balance of the Term or the
one-year period commencing on the date of such termination (whichever period is
applicable shall be referred to herein as the “Severance Period”); and (b) pay
to the Executive, on the last business day of the Severance Period, an amount
equal to the bonus paid to the Executive for the calendar year prior to the
year in which his employment is terminated. Notwithstanding the foregoing, in
order to receive any severance benefits under this Section 2.3(a)(i), the
Executive must sign and not timely revoke a release and waiver of claims
against the Corporation, its successors, affiliates, and assigns, substantially
in the form attached to this Agreement as Exhibit C.

               (ii) Stock Options. The Executive’s rights with respect to any stock
options granted to the Executive by the Corporation shall be governed by the
provisions of the Corporation’s stock option plan and respective award
agreements, if any, under which such stock options were granted, except as
provided in Section 4.1(a).

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               (iii) Welfare Plan Coverages. The Executive shall continue to participate
during the Severance Period in any group medical, dental or life insurance plan
he participated in prior to the date of his termination, under substantially
similar terms and conditions as an active employee; provided that participation
in such group medical, dental and life insurance plan shall correspondingly
cease at such time as the Executive (a) becomes eligible for a future
employer’s medical, dental and/or life insurance coverage (or would become
eligible if the Executive did not waive coverage) or (b) violates any of the
provisions of Article III as determined by the Corporation. Notwithstanding
the foregoing, the Executive may not continue to participate in such plans on a
pre-tax or tax-favored basis.

               (iv) Retirement Plans. Without limiting the generality of the foregoing,
it is specifically provided that the Executive shall not accrue additional
benefits under any pension plan of the Corporation (whether or not qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended) during
the Severance Period.

          (b) If the Executive’s employment is terminated by reason of the
Executive’s death or Disability, pursuant to Sections 2.1(b) and 2.1(c), the
Executive (or the Executive’s designee or estate) shall only be entitled to
whatever welfare plans benefits are available to the Executive pursuant to the
welfare plans the Executive participated in prior to such termination, and
whatever stock options may have been granted to the Executive by the
Corporation the terms of which shall be governed by the provisions of the
respective award agreements under which such stock options were granted.

          (c) If the Executive’s employment is terminated by either the Corporation
for Cause or by the Executive for other than Good Reason pursuant to Section
2.1(e) hereof, the Executive shall receive only that portion of the Executive’s
then current Base Compensation payable through the Executive’s termination
date. The Executive’s rights with respect to any stock options granted to the
Executive by the Corporation shall be governed by the provisions of the
respective award agreements under which such stock options were granted. The
Corporation shall have no further obligations to the Executive as a result of
the termination of the Executive’s employment.

ARTICLE III

COVENANTS OF THE EXECUTIVE

     3.1 Non-Compete.

          (a) The Corporation and the Executive acknowledge that: (i) the
Corporation has a special interest in and derives significant benefit from the
unique skills and experience of the Executive; (ii) the Executive will use and
have access to proprietary and valuable Confidential Information (as defined in
Section 3.2 hereof) during the course of the Executive’s employment; and (iii)
the agreements and covenants contained herein are essential to protect the
business and goodwill of the Corporation or any of its subsidiaries, affiliates
or licensees. Accordingly, except as hereinafter noted, the Executive
covenants and agrees that during the Term, and for the remainder of such Term
following the termination of Executive’s employment, the Executive shall not
provide any labor, work, services or assistance (whether as an officer,
director, employee, partner, agent, owner, independent contractor, stockholder
or

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otherwise) to a “Competing Business.” For purposes hereof, “Competing
Business” shall mean any business engaged in the designing, marketing or
distribution of premium lifestyle products, including but not limited to
apparel, home, accessories and fragrance products, which competes in any
material respects with the Corporation or any of its subsidiaries, affiliates
or licensees, and shall include, without limitation, those brands and companies
that the Corporation and the Executive have jointly designated in writing on
the date hereof, which is incorporated herein by reference and which is
attached as Exhibit B, as being in competition with the Corporation as of the
date hereof. Thus, Executive specifically acknowledges that Executive
understands that, except as provided in Section 3.1(b) he may not become
employed by any Competing Business in any capacity during the Term.

          (b) The non-compete provisions of this Section shall no longer be
applicable to Executive if he has been notified pursuant to Section 2.1(a)
hereof that his services will no longer be required during the Term or if the
Executive has terminated his employment for Good Reason pursuant to Section
2.1(e).

          (c) It is acknowledged by the Executive that the Corporation has
determined to relieve the Executive from any obligation of non-competition for
periods after the Term, and/or if the Corporation terminates the Executive’s
employment under Section 2.1(a) or if the Executive has terminated his
employment for Good Reason pursuant to Section 2.1(e). In consideration of
that, and in consideration of all of the compensation provisions in this
Agreement (including the potential for the award of stock options that may be
made to the Executive), Executive agrees to the provisions of Section 3.1 and
also agrees that the non-competition obligations imposed herein, are fair and
reasonable under all the circumstances.

     3.2 Confidential Information.

          (a) The Corporation owns and has developed and compiled, and will own,
develop and compile, certain proprietary techniques and confidential
information as described below which have great value to its business (referred
to in this Agreement, collectively, as “Confidential Information”).
Confidential Information includes not only information disclosed by the
Corporation and/or its affiliates and licensees to Executive, but also
information developed or learned by Executive during the course of, or as a
result of, employment hereunder, which information Executive acknowledges is
and shall be the sole and exclusive property of the Corporation. Confidential
Information includes all proprietary information that has or could have
commercial value or other utility in the business in which the Corporation is
engaged or contemplates engaging, and all proprietary information the
unauthorized disclosure of which could be detrimental to the interests of the
Corporation. Whether or not such information is specifically labeled as
Confidential Information by the Corporation is not determinative. By way of
example and without limitation, Confidential Information includes any and all
information developed, obtained or owned by the Corporation and/or its
affiliates and licensees concerning trade secrets, techniques, know-how
(including designs, plans, procedures, processes and research records),
software, computer programs, innovations, discoveries, improvements, research,
development, test results, reports, specifications, data, formats, marketing
data and plans, business plans, strategies, forecasts, unpublished financial
information, orders, agreements and other forms of documents, price and cost
information, merchandising opportunities, expansion plans, designs, store
plans, budgets, projections, customer, supplier and subcontractor

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identities, characteristics and agreements, and salary, staffing and
employment information. Notwithstanding the foregoing, Confidential
Information shall not in any event include (A) Executive’s personal knowledge
and know-how relating to merchandising and business techniques which Executive
has developed over his career in the apparel business and of which Executive
was aware prior to his employment, or (B) information which (i) was generally
known or generally available to the public prior to its disclosure to
Executive; (ii) becomes generally known or generally available to the public
subsequent to disclosure to Executive through no wrongful act of any person or
(iii) which Executive is required to disclose by applicable law or regulation
(provided that Executive provides the Corporation with prior notice of the
contemplated disclosure and reasonably cooperates with the Corporation at the
Corporation’s expense in seeking a protective order or other appropriate
protection of such information).

          (b) Executive acknowledges and agrees that in the performance of his
duties hereunder the Corporation will from time to time disclose to Executive
and entrust Executive with Confidential Information. Executive also
acknowledges and agrees that the unauthorized disclosure of Confidential
Information, among other things, may be prejudicial to the Corporation’s
interests, and an improper disclosure of trade secrets. Executive agrees that
he shall not, directly or indirectly, use, make available, sell, disclose or
otherwise communicate to any corporation, partnership, individual or other
third party, other than in the course of his assigned duties and for the
benefit of the Corporation, any Confidential Information, either during his
term of employment or thereafter.

          (c) The Executive agrees that upon leaving the Corporation’s employ, the
Executive shall not take with the Executive any software, computer programs,
disks, tapes, research, development, strategies, designs, reports, study,
memoranda, books, papers, plans, information, letters, e-mails, or other
documents or data reflecting any Confidential Information of the Corporation,
its subsidiaries, affiliates or licensees.

          (d) During Executive’s term of employment, Executive will disclose to the
Corporation all designs, inventions and business strategies or plans developed
for the Corporation, including without limitation any process, operation,
product or improvement. Executive agrees that all of the foregoing are and
will be the sole and exclusive property of the Corporation and that Executive
will at the Corporation’s request and cost do whatever is necessary to secure
the rights thereto, by patent, copyright or otherwise, to the
Corporation.

     3.3 Non-Solicitation of Employees. The Executive covenants and agrees
that during the Term, and for the remainder of such Term following the
termination of Executive’s employment for any reason whatsoever hereunder, the
Executive shall not directly or indirectly solicit or influence any other
employee of the Corporation, or any of its subsidiaries, affiliates or
licensees, to terminate such employee’s employment with the Corporation, or any
of its subsidiaries, affiliates or licensees, as the case may be, or to become
employed by a Competing Business.

     3.4 Nondisparagement. The Executive agrees that during the Term and
thereafter whether or not he is receiving any amounts pursuant to Sections 2.3
and 4.1, the Executive shall not make any statements or comments that
reasonably could be considered to shed an adverse light on the business or
reputation of the Corporation or any of its subsidiaries, affiliates or

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licensees, the Board or any officer of the Corporation or any of its
subsidiaries, affiliates or licensees; provided, however, the foregoing
limitation shall not apply to (i) compliance with legal process or subpoena, or
(ii) statements in response to inquiry from a court or regulatory body.

     3.5 Remedies.

          (a) The Executive acknowledges and agrees that in the event the
Corporation reasonably determines that the Executive has breached any provision
of this Article III, that such conduct will constitute a failure of the
consideration for which stock options had been awarded, and notwithstanding the
terms of any stock option award agreement, plan document, or other provision of
this Agreement to the contrary, the Corporation may notify the Executive that
he may not exercise any unexercised stock options and the Executive shall
immediately forfeit the right to exercise any stock option of the Corporation
that remains unexercised at the time of such notice and Executive waives any
right to assert that any such conduct by the Corporation violates any federal
or state statute, case law or policy.

          (b) If the Corporation reasonably determines that the Executive has
breached any provision contained in this Article III, the Corporation shall
have no further obligation to make any payment or provide any benefit
whatsoever to the Executive pursuant to this Agreement, and may also recover
from the Executive all such damages as it may be entitled to at law or in
equity. In addition, the Executive acknowledges that any such breach is likely
to result in immediate and irreparable harm to the Corporation for which money
damages are likely to be inadequate. Accordingly, the Executive consents to
injunctive and other appropriate equitable relief upon the institution of
proceedings therefor by the Corporation in order to protect the Corporation’s
rights hereunder. Such relief may include, without limitation, an injunction
to prevent: (i) the breach or continuation of Executive’s breach; (ii) the
Executive from disclosing any trade secrets or Confidential Information (as
defined in Section 3.2); (iii) any Competing Business from receiving from the
Executive or using any such trade secrets or Confidential Information; and/or
(iv) any such Competing Business from retaining or seeking to retain any
employees of the Corporation.

     3.6 The provisions of this Article III shall survive the termination of
this Agreement and Executive’s Term of employment.

ARTICLE IV

CHANGE IN CONTROL

     4.1 Change in Control.

          (a) Effect of a Change in Control. Notwithstanding anything contained
herein to the contrary, if the Executive’s employment is terminated within 12
months following a Change in Control (as defined in Section 4.1(b) hereof)
during the Term by the Corporation for any reason other than Cause, then:

               (i) Severance. The Corporation shall pay to the Executive, in lieu of any
amounts otherwise due him under Section 2.3(a) hereof, within 15 days of the
Executive’s termination of employment, a lump sum amount equal to two times the
sum of:

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(A) the Executive’s Base Compensation, as in effect immediately prior to
such termination of employment; and (B) the bonus actually paid to the
Executive during the year prior to the Executive’s termination.

               (ii) Stock Options. The Executive shall immediately become vested in any
unvested stock options granted to the Executive by the Corporation prior to the
Change in Control and Executive will have six (6) months from the date of
termination under this circumstance to exercise all vested options.

          (b) Definition. For purposes hereof, a “Change in Control” shall mean the
occurrence of any of the following: (i) the sale, lease, transfer, conveyance
or other disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Corporation to any “person” or “group”
(as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934 (“Act”)) other than Permitted Holders; (ii) any person or
group, other than Permitted Holders, is or becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Act, except that a person shall be
deemed to have “beneficial ownership” of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50 percent of
the total voting power of the voting stock of the Corporation, including by way
of merger, consolidation or otherwise; (iii) during any period of two
consecutive years, Present and/or New Directors cease for any reason to
constitute a majority of the Board; or (iv) the Permitted Holders’ beneficial
ownership of the total voting power of the voting stock of the Corporation
falls below 30 percent and either Ralph Lauren is not nominated for a position
on the Board of Directors, or he stands for election to the Board of Directors
and is not elected. For purposes of this Section 4.1(b), the following terms
have the meanings indicated: “Permitted Holders” shall mean, as of the date of
determination: (A) any and all of Ralph Lauren, his spouse, his siblings and
their spouses, and descendants of them (whether natural or adopted)
(collectively, the “Lauren Group”); and (B) any trust established and
maintained primarily for the benefit of any member of the Lauren Group and any
entity controlled by any member of the Lauren Group. “Present Directors” shall
mean individuals who at the beginning of any such two consecutive year period
were members of the Board. “New Directors” shall mean any directors whose
election by the Board or whose nomination for election by the shareholders of
the Corporation was approved by a vote of a majority of the directors of the
Corporation who, at the time of such vote, were either Present Directors or New
Directors.

          (c) Excise Tax Gross-Up. If the Executive becomes entitled to one or more
payments (with a “payment” including the vesting of restricted stock, a stock
option, or other non-cash benefit or property), whether pursuant to the terms
of this Agreement or any other plan or agreement with the Corporation or any
affiliated company (collectively, “Change of Control Payments”), which are or
become subject to the tax (“Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), the Corporation shall
pay to the Executive at the time specified below such amount (the “Gross-up
Payment”) as may be necessary to place the Executive in the same after-tax
position as if no portion of the Change of Control Payments and any amounts
paid to the Executive pursuant to this paragraph 4(c) had been subject to the
Excise Tax. The Gross-up Payment shall include, without limitation,
reimbursement for any penalties and interest that may accrue in respect of such
Excise Tax. For purposes of determining the amount of the Gross-up Payment,
the Executive shall be deemed:

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(A) to pay federal income taxes at the highest marginal rate of federal
income taxation for the year in which the Gross-up Payment is to be made; and
(B) to pay any applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-up Payment is to be
made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes if paid in such year. If
the Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, the Executive shall
repay to the Corporation at the time that the amount of such reduction in
Excise Tax is finally determined (but, if previously paid to the taxing
authorities, not prior to the time the amount of such reduction is refunded to
the Executive or otherwise realized as a benefit by the Executive) the portion
of the Gross-up Payment that would not have been paid if such Excise Tax had
been used in initially calculating the Gross-up Payment, plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-up Payment is made, the
Corporation shall make an additional Gross-up Payment in respect of such excess
(plus any interest and penalties payable with respect to such excess) at the
time that the amount of such excess is finally determined.

          The Gross-up Payment provided for above shall be paid on the 30th day (or
such earlier date as the Excise Tax becomes due and payable to the taxing
authorities) after it has been determined that the Change of Control Payments
(or any portion thereof) are subject to the Excise Tax; provided, however, that
if the amount of such Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Corporation shall pay to the Executive on
such day an estimate, as determined by counsel or auditors selected by the
Corporation and reasonably acceptable to the Executive, of the minimum amount
of such payments. The Corporation shall pay to the Executive the remainder of
such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined. In
the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by the Corporation to the Executive, payable on the fifth day after demand by
the Corporation (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code). The Corporation shall have the right to control
all proceedings with the Internal Revenue Service that may arise in connection
with the determination and assessment of any Excise Tax and, at its sole
option, the Corporation may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing authority in
respect of such Excise Tax (including any interest or penalties thereon);
provided, however, that the Corporation’s control over any such proceedings
shall be limited to issues with respect to which a Gross-up Payment would be
payable hereunder, and the Executive shall be entitled to settle or contest any
other issue raised by the Internal Revenue Service or any other taxing
authority. The Executive shall cooperate with the Corporation in any
proceedings relating to the determination and assessment of any Excise Tax and
shall not take any position or action that would materially increase the amount
of any Gross-up Payment hereunder.

ARTICLE V

MISCELLANEOUS

     5.1 Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have

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been duly given when delivered by hand or by facsimile or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:

	 	 	 	 	 
	

	 	If to the Executive:
	 	Gerald M. Chaney

125 Deertrail N.

Ramsey, NJ 07446
	 
	 	 	 	 
	

	 	If to the Corporation:
	 	Polo Ralph Lauren Corporation

650 Madison Avenue

New York, New York 10022

Attn: Mitchell Kosh

Senior Vice President – Human Resources

Fax: (212) 318-7277

or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

     5.2 Modification or Waiver; Entire Agreement. No provision of this
Agreement may be modified or waived except in a document signed by the
Executive and the Corporation. This Agreement, along with any documents
incorporated herein by reference, constitute the entire agreement between the
parties regarding their employment relationship and supersede all prior
agreements, promises, covenants, representations or warranties, including the
Executive’s 2001 Employment Agreement with the Corporation. To the extent that
this Agreement is in any way inconsistent with any prior or contemporaneous
stock option agreements between the parties, this Agreement shall control. No
agreements or representations, oral or otherwise, with respect to the subject
matter hereof have been made by either party that are not set forth expressly
in this Agreement.

     5.3 Governing Law. The validity, interpretation, construction,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of New York without reference to New York’s choice of law rules. In
the event of any dispute, the Executive agrees to submit to the jurisdiction of
any court sitting in New York State.

     5.4 No Mitigation or Offset. In the event the Executive’s employment with
the Corporation terminates for any reason, the Executive shall not be obligated
to seek other employment following such termination and there shall be no
offset of the payments or benefits set forth herein.

     5.5 Withholding. All payments required to be made by the Corporation
hereunder to the Executive or the Executive’s estate or beneficiaries shall be
subject to the withholding of such amounts as the Corporation may reasonably
determine it should withhold pursuant to any applicable law.

     5.6 Attorney’s Fees. Each party shall bear its own attorney’s fees and
costs incurred in any action or dispute arising out of this Agreement and/or
the employment relationship.

11

 

     5.7 No Conflict. Executive represents and warrants that he is not party
to any agreement, contract, understanding, covenant, judgment or decree or
under any obligation, contractual or otherwise, in any way restricting or
adversely affecting his ability to act for the Corporation in all of the
respects contemplated hereby.

     5.8 Enforceability. Each of the covenants and agreements set forth in
this Agreement are separate and independent covenants, each of which has been
separately bargained for and the parties hereto intend that the provisions of
each such covenant shall be enforced to the fullest extent permissible. Should
the whole or any part or provision of any such separate covenant be held or
declared invalid, such invalidity shall not in any way affect the validity of
any other such covenant or of any part or provision of the same covenant not
also held or declared invalid. If any covenant shall be found to be invalid
but would be valid if some part thereof were deleted or the period or area of
application reduced, then such covenant shall apply with such minimum
modification as may be necessary to make it valid and effective. The failure
of either party at any time to require performance by the other party of any
provision hereunder will in no way affect the right of that party thereafter to
enforce the same, nor will it affect any other party’s right to enforce the
same, or to enforce any of the other provisions in this Agreement; nor will the
waiver by either party of the breach of any provision hereof be taken or held
to be a waiver of any prior or subsequent breach of such provision or as a
waiver of the provision itself.

     5.9 Miscellaneous. No right or interest to, or in, any payments shall be
assignable by the Executive; provided, however, that this provision shall not
preclude the Executive from designating in writing one or more beneficiaries to
receive any amount that may be payable after the Executive’s death and shall
not preclude the legal representative of the Executive’s estate from assigning
any right hereunder to the person or persons entitled thereto. If the
Executive should die while any amounts would still be payable to the Executive
hereunder, all such amounts shall be paid in accordance with the terms of this
Agreement to the Executive’s written designee or, if there be no such designee,
to the Executive’s estate. This Agreement shall be binding upon and shall
inure to the benefit of, and shall be enforceable by, the Executive, the
Executive’s heirs and legal representatives and the Corporation and its
successors. The section headings shall not be taken into account for purposes
of the construction of any provision of this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date and year first above written.

	 	 	 	 	 
	POLO RALPH LAUREN CORPORATION	 	 
	 
	 	 	 	 
	/s/ MITCHELL KOSH

	 	/s/ GERALD M. CHANEY

	By:

	 	Mitchell Kosh
	 	Gerald M. Chaney
	Title:

	 	Senior Vice President

Human Resources	 	 

12

 

Exhibit 10.3

EXHIBIT A

Base Compensation

Gerald M. Chaney

Effective July 1, 2004, annual base compensation is $500,000.

13<PAGE>

                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                   Depositor,

                          CENDANT MORTGAGE CORPORATION
                                    Servicer,

                                       and

                              WELLS FARGO BANK N.A.

                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT

                            Dated as of July 1, 2004

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

           MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2004-HB1
                       MORTGAGE PASS-THROUGH CERTIFICATES

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>                                                                                                <C>
ARTICLE I. DEFINITIONS..........................................................................     6

         Section 1.01.  Definitions.............................................................     6

         Section 1.02.  Calculations Respecting Mortgage Loans..................................    37

ARTICLE II. DECLARATION OF TRUST;  ISSUANCE OF CERTIFICATES.....................................    37

         Section 2.01.  Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans....    37

         Section 2.02.  Acceptance of Trust Fund by Trustee; Review of Documentation for Trust
                        Fund....................................................................    38

         Section 2.03.  Representations and Warranties of the Depositor and the Servicer........    40

         Section 2.04.  Discovery of Breach; Repurchase or Substitution of Mortgage Loans.......    45

         Section 2.05.  Grant Clause............................................................    47

ARTICLE III. THE CERTIFICATES...................................................................    48

         Section 3.01.  The Certificates........................................................    48

         Section 3.02.  Registration............................................................    49

         Section 3.03.  Transfer and Exchange of Certificates...................................    49

         Section 3.04.  Cancellation of Certificates............................................    53

         Section 3.05.  Replacement of Certificates.............................................    53

         Section 3.06.  Persons Deemed Owners...................................................    53

         Section 3.07.  Temporary Certificates..................................................    54

         Section 3.08.  Appointment of Paying Agent.............................................    54

         Section 3.09.  Book-Entry Certificates.................................................    54

ARTICLE IV. ADMINISTRATION OF THE TRUST FUND....................................................    56

         Section 4.01.  Custodial Accounts; Distribution Account................................    56

         Section 4.02.  Reports to Trustee and Certificateholders...............................    57

ARTICLE V. DISTRIBUTIONS TO HOLDERS OF CERTIFICATES.............................................    59

         Section 5.01.  Distributions Generally.................................................    59

         Section 5.02.  Distributions from the Distribution Account.............................    60

         Section 5.03.  Allocation of Losses....................................................    63

         Section 5.04.  Advances................................................................    64
</TABLE>

                                       -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>                                                                                                <C>
ARTICLE VI. CONCERNING THE TRUSTEE; EVENTS OF DEFAULT...........................................    64

         Section 6.01.  Duties of Trustee.......................................................    64

         Section 6.02.  Certain Matters Affecting the Trustee...................................    66

         Section 6.03.  Trustee Not Liable for Certificates.....................................    68

         Section 6.04.  Trustee May Own Certificates............................................    68

         Section 6.05.  Eligibility Requirements for Trustee....................................    68

         Section 6.06.  Resignation and Removal of Trustee......................................    68

         Section 6.07.  Successor Trustee.......................................................    69

         Section 6.08.  Merger or Consolidation of Trustee......................................    70

         Section 6.09.  Appointment of Co-Trustee, Separate Trustee or Custodian................    70

         Section 6.10.  Authenticating Agents...................................................    71

         Section 6.11.  Indemnification of Trustee..............................................    72

         Section 6.12.  Fees and Expenses of the Trustee........................................    73

         Section 6.13.  Collection of Monies....................................................    73

         Section 6.14.  Events of Default; Trustee To Act; Appointment of Successor.............    73

         Section 6.15.  Additional Remedies of Trustee Upon Event of Default....................    75

         Section 6.16.  Waiver of Defaults......................................................    76

         Section 6.17.  Notification to Holders.................................................    76

         Section 6.18.  Directions by Certificateholders and Duties of Trustee During Event of
                        Default.................................................................    76

         Section 6.19.  Preparation of Tax Returns and Other Reports............................    76

         Section 6.20.  Annual Certificate by Trustee...........................................    77

ARTICLE VII. PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE TRUST FUND.......................    78

         Section 7.01.  Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase or
                        Liquidation of All Mortgage Loans.......................................    78

         Section 7.02.  Procedure Upon Termination of Trust Fund................................    78

         Section 7.03.  Additional Trust Fund Termination Requirements..........................    79

ARTICLE VIII. RIGHTS OF CERTIFICATEHOLDERS......................................................    80
</TABLE>

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>                                                                                                <C>
         Section 8.01.  Limitation on Rights of Holders.........................................    80

         Section 8.02.  Access to List of Holders...............................................    81

         Section 8.03.  Acts of Holders of Certificates.........................................    81

ARTICLE IX. ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS..................................    82

         Section 9.01.  Servicer to Act as Servicer.............................................    82

         Section 9.02.  Title, Management and Disposition of REO Property.......................    83

         Section 9.03.  Trustee and Depositor's Right to Examine Servicer Records...............    85

         Section 9.04.  Legal Proceedings Involving the Servicer and/or the Mortgage Loans......    85

         Section 9.05.  Material Changes........................................................    85

         Section 9.06.  Servicer Shall Provide Information as Reasonably Required...............    86

         Section 9.07.  Servicer Not to Resign..................................................    86

         Section 9.08.  Custodial Accounts and Escrow Accounts..................................    87

         Section 9.09.  Assumption Processing...................................................    87

         Section 9.10.  Books and Records.......................................................    87

         Section 9.11.  Annual Statement as to Compliance.......................................    87

         Section 9.12.  Annual Independent Certified Public Accountants' Servicing Reports......    87

         Section 9.13.  Officer's Certificate...................................................    88

         Section 9.14.  Servicing Compensation..................................................    88

         Section 9.15.  Indemnification.........................................................    89

         Section 9.16.  Non Solicitation........................................................    89

         Section 9.17.  Successor to the Servicer...............................................    90

         Section 9.18.  Statements to the Trustee...............................................    90

         Section 9.19.  Limitation on Liability of the Servicer.................................    91

ARTICLE X. REMIC ADMINISTRATION.................................................................    91

         Section 10.01. REMIC Administration....................................................    91

         Section 10.02. Prohibited Transactions and Activities..................................    94
</TABLE>

                                      -iii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>                                                                                                <C>
         Section 10.03. Indemnification with Respect to Prohibited Transactions or Loss of REMIC
                        Status..................................................................    94

         Section 10.04. REO Property............................................................    94

ARTICLE XI. MISCELLANEOUS PROVISIONS............................................................    95

         Section 11.01. Binding Nature of Agreement; Assignment.................................    95

         Section 11.02. Entire Agreement........................................................    95

         Section 11.03. Amendment...............................................................    96

         Section 11.04. Voting Rights...........................................................    97

         Section 11.05. Provision of Information................................................    97

         Section 11.06. Governing Law...........................................................    97

         Section 11.07. Notices.................................................................    97

         Section 11.08. Severability of Provisions..............................................    98

         Section 11.09. Indulgences; No Waivers.................................................    98

         Section 11.10. Headings Not To Affect Interpretation...................................    98

         Section 11.11. Benefits of Agreement...................................................    98

         Section 11.12. Special Notices to the Rating Agencies..................................    98

         Section 11.13. [RESERVED]..............................................................    99

         Section 11.14. Counterparts............................................................    99

         Section 11.15. No Petitions............................................................   100
</TABLE>

                                      -iv-
<PAGE>

         This POOLING AND SERVICING AGREEMENT, dated as of July 1, 2004 (the
"Agreement"), by and among MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), CENDANT MORTGAGE CORPORATION, a New
Jersey corporation, as servicer (the "Servicer") and WELLS FARGO BANK N.A., as
Trustee (the "Trustee"), and acknowledged by MERRILL LYNCH CREDIT CORPORATION a
Delaware corporation, as seller (the "Seller"), for purposes of Section 2.04.

                              PRELIMINARY STATEMENT

         The Depositor has acquired the Mortgage Loans from the Seller and at
the Closing Date is the owner of the Mortgage Loans and the other property being
conveyed by the Depositor to the Trustee hereunder for inclusion in the Trust
Fund. On the Closing Date, the Depositor will acquire the Certificates from the
Trustee as consideration for the Depositor's transfer to the Trust Fund of the
Mortgage Loans and the other property constituting the Trust Fund. The Depositor
has duly authorized the execution and delivery of this Agreement to provide for
the conveyance to the Trustee of the Mortgage Loans and the other property
constituting the Trust Fund. All covenants and agreements made by the Seller in
the Mortgage Loan Purchase and Sale Agreement and in this Agreement and all
covenants and agreements made by the Depositor, the Servicer and the Trustee
herein with respect to the Mortgage Loans and the other property constituting
the Trust Fund are for the benefit of the Holders from time to time of the
Certificates. The Depositor, the Servicer and the Trustee are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.

         As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as comprising three real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1," "REMIC 2"
and the "Upper Tier REMIC," respectively) in a tiered structure. The
Certificates, other than the Class A-R Certificate, shall represent ownership of
regular interests in the Upper Tier REMIC. For federal income tax purposes, in
addition to representing ownership of a REMIC regular interest, (i) each of the
Class A-1 and Class A-2 Certificates represents the right to receive payments in
respect of Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls, and (ii) each
of the Class B-1, Class B-2 and Class B-3 Certificates represents the right to
receive payments in respect of Basis Risk Shortfalls and Unpaid Basis Risk
Shortfalls as provided in Section 5.02. For federal income tax purposes, (i)
each Class X-A Certificate will represent two REMIC regular interests and the
obligation to make certain non-REMIC payments to the holders of the Class A-1
and Class A-2 Certificates and (ii) each Class X-B Certificate will represent
three REMIC regular interests and the obligation to make certain non-REMIC
payments to the holders of the Class B-1, Class B-2 and Class B-3 Certificates
in respect of Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls. The Class
A-R Certificate represents the sole class of residual interest in each of REMIC
1, REMIC 2 and the Upper Tier REMIC.

         The Upper Tier REMIC shall hold as its assets the several classes of
uncertificated REMIC 2 Regular Interests. REMIC 2 shall hold as its assets the
several uncertificated classes of REMIC 1 Regular Interests. REMIC 1 shall hold
as its assets the property of the Trust Fund other than the REMIC 1 Interests,
the REMIC 2 Interests and the interests in the grantor trusts described herein.

         Each Upper Tier REMIC Regular Interest is hereby designated as a
regular interest in the Upper Tier REMIC for purposes of the REMIC Provisions.
Each REMIC 2 Regular Interest is

                                        1
<PAGE>

hereby designated as a regular interest in REMIC 2 for purposes of the REMIC
provisions. Each REMIC 1 Regular Interest is hereby designated as a regular
interest in REMIC 1 for purposes of the REMIC Provisions.

         The Class LT1-R Interest is hereby designated as the sole class of
residual interest in REMIC 1 for purposes of the REMIC Provisions. The Class
LT2-R Interest is hereby designated as the sole class of residual interest in
REMIC 2 for purposes of the REMIC provisions. The Class A-R Certificate, other
than the portion thereof representing the right to receive payments in respect
of the Class LT1-R Interest or the Class LT2-R Interest is hereby designated as
the sole class of residual interest in the Upper Tier REMIC for purposes of the
REMIC provisions and will also represent the Class LT1-R Interest and the Class
LT2-R Interest.

THE REMIC 1 INTERESTS

         The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and related pool of Mortgage Loans for
each class of REMIC 1 Interests:

<TABLE>
<CAPTION>
                                          Interest   Related Mortgage Pool
Class Designation    Principal Amount       Rate     or Pools
-----------------    ----------------     --------   -------------------------
<S>                  <C>                  <C>        <C>
LT11A                $     91,668.6780      (2)      Pool 1
LT11B                $  1,666,669.6780      (3)      Pool 1
LT12A                $     34,920.6032      (2)      Pool 2
LT12B                $    634,920.6032      (4)      Pool 2
LT13A                $    148,419.8807      (2)      Pool 3
LT13B                $  2,698,419.8807      (5)      Pool 3
LT1Z                 $494,725,996.8662      (2)      Pool 1, Pool 2 and Pool 3
LT1-R                     (1)               (1)      N/A
</TABLE>

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

(1)      The Class LT1-R Interest represents the sole class of residual interest
         in REMIC 1 and has neither a principal amount nor an interest rate. The
         Class LT1-R Interest shall be represented by the Class A-R Certificate.

(2)      The Class LT11A Interest, the Class LT12A Interest, the Class LT13A
         Interest, and the Class LT1Z Interest shall have an interest rate for
         each Distribution Date (and the related Accrual Period) equal to the
         Net WAC.

(3)      The Class LT11B Interest shall have an interest rate for any
         Distribution Date (and the related Accrual Period) equal to the Pool 1
         Net WAC.

(4)      The Class LT12B Interest shall have an interest rate for any
         Distribution Date (and the related Accrual Period) equal to the Pool 2
         Net WAC.

(5)      The Class LT13B Interest shall have an interest rate for any
         Distribution Date (and the related Accrual Period) equal to the Pool 3
         Net WAC.

         On each Distribution Date, the Trustee shall first pay or charge as an
expense of REMIC 1 all expenses of the Trust for such Distribution Date.

         Principal distributions shall be deemed to be made on the REMIC 1
Interests first, so as to keep the uncertificated principal balance of each
REMIC 1 Interest ending with the designation "A" equal to 1% of the excess of
(x) the aggregate Principal Balance of the Mortgage Loans in the related
Mortgage Pool over (y) the aggregate class principal amounts of the Certificates
in the

                                       2
<PAGE>

Certificate Group related to such Mortgage Pool (except that if 1% of any such
excess is greater than the principal amount of the corresponding REMIC 1
Interest ending with the designation "A", the least amount of principal shall be
distributed to such REMIC 1 Interests such that the REMIC 1 Subordinated Balance
Ratio is maintained); second, to each REMIC 1 Interest ending with the
designation "B" so as to keep the uncertificated principal balance of each such
REMIC 1 Interest equal to 1% of the aggregate Principal Balance of the Mortgage
Loans in the related Mortgage Pool and finally, all remaining principal amounts
shall be distributed in respect of the Class LT1Z Interest. Realized Losses with
respect to principal shall be allocated among the REMIC 1 Interests first, so as
to keep the uncertificated principal balance of each REMIC 1 Interest ending
with the designation "A" equal to 1% of the excess of (x) the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool over (y)
the aggregate class principal amounts of the Certificates in the Certificate
Group related to such Mortgage Pool (except that if 1% of any such excess is
greater than the principal amount of the corresponding REMIC 1 Interest ending
with the designation "A", the least amount of losses shall be allocated to such
REMIC 1 Interests such that the REMIC 1 Subordinated Balance Ratio is
maintained); second, to each REMIC 1 Interest ending with the designation "B" so
as to keep the uncertificated principal balance of each such REMIC 1 Interest
equal to 1% of the aggregate Principal Balance of the Mortgage Loans in the
related Mortgage Pool and finally, all remaining Realized Losses with respect to
principal shall be distributed in respect of the Class LT1Z Interest.

         If on any Distribution Date the Certificate Principal Amount of any
Class of Certificates is increased pursuant to the penultimate sentence of the
definition of "Certificate Principal Amount", then there shall be an equivalent
aggregate increase in the principal amounts of the REMIC 1 Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the REMIC 1 Regular Interests on such Distribution Date)
among the REMIC 1 Regular Interests as follows: (i) first, to each REMIC 1
Interest ending with the designation "B" so as to keep the uncertificated
principal balance of each such REMIC 1 Interest equal to 1% of the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool, (ii)
second, to each REMIC 1 Regular Interest ending with the designation "A", so
that the uncertificated principal balance of each REMIC 1 Regular Interest
ending with the designation "A" is as close as possible to (but does not exceed)
1% of the excess of (x) the aggregate Principal Balance of the Mortgage Loans in
related Mortgage Pool over (y) the aggregate class principal balance of the
Certificates in the Certificate Group related to such Mortgage Pool; provided,
however, that (a) the REMIC 1 Subordinated Balance Ratio is maintained and (b)
amounts allocated to any REMIC 1 Regular Interest pursuant to this clause (ii)
shall not exceed the amount of any previous realized losses allocated to such
REMIC 1 Regular Interest not previously offset by distributions or increases in
the principal amount of such REMIC 1 Regular Interest and (iii) finally, all
remaining amounts to the Class LT1Z Interest.

         All computations with respect to the REMIC 1 Interests shall be
computed to eight decimal places.

THE REMIC 2 INTERESTS

         The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and corresponding class of certificates
or components for each class of REMIC 2 Interests:

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                       Interest  Corresponding Class of
Class Designation   Principal Amount     Rate    Certificates or Components
-----------------   ----------------     ----    --------------------------
<S>                 <C>                <C>       <C>
LT2A1               $157,500,000.00       (2)    Class A-1, X-A1 Component
LT2A2               $ 60,000,000.00       (3)    Class A-2, X-A2 Component
LT2A3               $255,000,000.00       (4)    Class A-3
LT2B1               $ 11,250,000.00       (5)    Class B-1, Component X-B1
LT2B2               $  5,750,000.00       (5)    Class B-2, Component X-B2
LT2B3               $  4,250,000.00       (5)    Class B-3, Component X-B3
LT2B4               $  2,000,000.00       (5)    Class B-4
LT2B5               $  1,250,000.00       (5)    Class B-5
LT2B6               $  3,000,916.19       (5)    Class B-6
LT2AR               $        100.00       (6)    Class A-R
LT2-R                        (1)          (1)    N/A
</TABLE>

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

(1)      The Class LT2-R Interest represents the sole class of residual interest
         in REMIC 2 and has neither a principal amount nor an interest rate. The
         Class LT2-R Interest shall be represented by the Class A-R Certificate.

(2)      The Class LT2A1 Interest shall have an interest rate for each
         Distribution Date (and the related Accrual Period) equal to the Pool 1
         Net WAC.

(3)      The Class LT2A2 Interest shall have an interest rate for each
         Distribution Date (and the related Accrual Period) equal to the Pool 2
         Net WAC.

(4)      The Class LT2A3 Interest shall have an interest rate for each
         Distribution Date (and the related Accrual Period) equal to the Pool 3
         Net WAC.

(5)      Each of the Class LT2B1 Interest, the Class LT2B2 Interest, the Class
         LT2B3 Interest, the Class LT2B4 Interest, the Class LT2B5 Interest and
         the Class LT2B6 Interest shall have an interest rate for each
         Distribution Date (and the related Accrual Period) equal to the
         Subordinate Net WAC which is the numerical equivalent of the weighted
         average of the interest rates on the Class LT11A Interest, the Class
         LT12A Interest and the Class LT13A Interest (treating, for purposes of
         computing this weighted average, the Class LT11A Interest as subject to
         a cap and a floor equal to the interest rate on the Class LT11B
         Interest, the Class LT12A Interest as subject to a cap and a floor
         equal to the interest rate on the Class LT12B Interest and the Class
         LT13A Interest as subject to a cap and a floor equal to the interest
         rate on the Class LT13B Interest).

(6)      The Class LT2AR Interest shall have an interest rate for each
         Distribution Date (and the related Accrual Period) equal to the Pool 1
         Net WAC.

         Principal payments shall be deemed made and Realized Losses with
respect to principal shall be allocated among the REMIC 2 Interests in the same
manner as such payments are made or such Realized Losses are allocated among the
Corresponding Classes of Certificates (treating the initial Class Principal
Amount of the Class B-6 Certificates, for purposes of this sentence, as being
$3,000,916.19, treating the first $0.19 of distributions to the Class A-R
Certificate under Section 5.02(a)(vi) from principal payments on the Mortgage
Loans as distributed to the Class B-6 Certificates and disregarding Section
5.03(c)).

         The principal amount of each REMIC 2 Regular Interest shall be
increased on any Distribution Date on which, and in the amount by which, the
Certificate Principal Amount of any Corresponding Class of Certificates is
increased pursuant to the penultimate sentence of "Certificate Principal
Amount."

THE CERTIFICATES

         The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount (or initial Class
Notional Amount), and minimum denomination for each Class of Certificates
comprising interests in the Trust Fund created hereunder.

                                       4
<PAGE>

<TABLE>
<CAPTION>
               Related Class or
                  Classes of                           Initial Class
   Class       interests in the     Certificate     Principal Amount or      Minimum Denominations
Designation    Upper Tier REMIC    Interest Rate   Class Notional Amount    or Percentage Interest
-----------   ------------------   -------------   ---------------------    ----------------------
<S>           <C>                  <C>             <C>                      <C>
 Class A-1     Upper Tier REMIC         (1)              $57,500,000              $ 25,000.00
              Class A-1 Interest
 Class A-2     Upper Tier REMIC         (2)              $60,000,000              $ 25,000.00
              Class A-2 Interest
 Class A-3        Class A-3             (3)              $55,000,000              $ 25,000.00
 Class X-A    X-A1 Component and        (4)                         (4)           $ 25,000.00
                X-A2 Component
 Class X-B     X-B1 Component,          (5)                         (5)           $ 25,000.00
              X-B2 Component and
                X-B3 Component
 Class A-R        Class A-R             (6)              $       100                      100%
 Class B-1     Upper Tier REMIC         (7)              $11,250,000              $ 25,000.00
              Class B-1 Interest
 Class B-2     Upper Tier REMIC         (8)              $ 5,750,000              $ 25,000.00
              Class B-2 Interest
 Class B-3     Upper Tier REMIC         (9)              $ 4,250,000              $100,000.00
              Class B-3 Interest
 Class B-4        Class B-4             (10)             $ 2,000,000              $100,000.00
 Class B-5        Class B-5             (10)             $ 1,250,000              $100,000.00
 Class B-6        Class B-6             (10)             $ 3,000,916              $100,000.00
</TABLE>

(1)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class A-1 Certificates will be
         the least of (i) LIBOR plus 0.360%; (ii) the Pool 1 Net WAC and (iii)
         11.75%; provided, however, if the Mortgage Loans and related property
         are not purchased pursuant to Section 7.01(c) on the Initial Optional
         Purchase Date, then with respect to each subsequent Distribution Date
         the per annum rate calculated pursuant to clause (i) above with respect
         to the Class A-1 Certificates will be LIBOR plus 0.720%.

(2)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class A-2 Certificates will be
         the least of (i) LIBOR plus 0.380%; (ii) the Pool 2 Net WAC and (iii)
         11.75%; provided, however, if the Mortgage Loans and related property
         are not purchased pursuant to Section 7.01(c) on the Initial Optional
         Purchase Date, then with respect to the Distribution Date occurring in
         the month in which the next LIBOR Determination Date with respect to
         the Class A-2 Certificates occurs and each subsequent Distribution Date
         the per annum rate calculated pursuant to clause (i) above with respect
         to the Class A-2 Certificates will be LIBOR plus 0.760%.

(3)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class A-3 Certificates will be
         the Pool 3 Net WAC.

(4)      The Class X-A Certificates consist of two components, the X-A1
         Component and X-A2 Component. On any Distribution Date, the Class X-A
         Certificate will have a Class Notional Amount equal to the sum of the
         Component Notional Amount of the X-A1 Component and X-A2 Component. The
         Class X-A Certificates are entitled to receive on each Distribution
         Date the sum of the amount of interest accrued on the X-A1 Component
         and X-A2 Component.

                                       5
<PAGE>

(5)      The Class X-B Certificates will represent a 100% interest in each of
         X-B1 Component, X-B2 Component and X-B3 Component. See the definitions
         of "X-B1 Component," "X-B2 Component" and "X-B3 Component" for the
         interest rate and notional balance of these Components. On any
         Distribution Date, the Class X-B Certificates will have a Class
         Notional Amount equal to the sum of the Component Notional Amount of
         X-B1 Component, X-B2 Component and X-B3 Component.

(6)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class A-R Certificate will
         equal the Pool 1 Net WAC.

(7)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class B-1 Certificates will be
         the least of (i) LIBOR plus 0.550%; (ii) the Subordinate Net WAC and
         (iii) 11.75%; provided, however, if the Mortgage Loans and related
         property are not purchased pursuant to Section 7.01(c) on the Initial
         Optional Purchase Date, then with respect to each subsequent
         Distribution Date the per annum rate calculated pursuant to clause (i)
         above with respect to the Class B-1 Certificates will be LIBOR plus
         0.825%.

(8)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class B-2 Certificates will be
         the least of (i) LIBOR plus 0.950%; (ii) the Subordinate Net WAC and
         (iii) 11.75%; provided, however, if the Mortgage Loans and related
         property are not purchased pursuant to Section 7.01(c) on the Initial
         Optional Purchase Date, then with respect to each subsequent
         Distribution Date the per annum rate calculated pursuant to clause (i)
         above with respect to the Class B-2 Certificates will be LIBOR plus
         1.425%.

(9)      The Certificate Interest Rate with respect to any Distribution Date
         (and the related Accrual Period) for the Class B-3 Certificates will be
         the least of (i) LIBOR plus 1.650%; (ii) the Subordinate Net WAC and
         (iii) 11.75%; provided, however, if the Mortgage Loans and related
         property are not purchased pursuant to Section 7.01(c) on the Initial
         Optional Purchase Date, then with respect to each subsequent
         Distribution Date the per annum rate calculated pursuant to clause (i)
         above with respect to the Class B-3 Certificates will be LIBOR plus
         2.475%.

(10)     The Certificate Interest Rates with respect to any Distribution Date
         (and the related Accrual Period) for the Class B-4, Class B-5 and Class
         B-6 Certificates will be equal to the Subordinate Net WAC.

         As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $500,001,016.19.

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

                                   ARTICLE I.

                                   DEFINITIONS

         Section 1.01. Definitions.

         The following words and phrases, unless the context otherwise requires,
shall have the following meanings:

         Accepted Servicing Practices: The Servicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.

                                       6
<PAGE>

         Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.

         Accrual Period: With respect to any Distribution Date and any Class of
LIBOR Certificates, the period commencing on the 25th day of the month preceding
the month in which the Distribution Date occurs and ending on the 24th day of
the month in which the Distribution Date occurs; provided, however, that the
first Accrual Period with respect to the LIBOR Certificates shall be the period
beginning on the Closing Date and ending on August 24, 2004. The Accrual Period
applicable to the Components, the Class A-3, Class A-R, Class B-4, Class B-5,
Class B-6 Certificates and each Class of Lower Tier REMIC Interests shall be the
calendar month immediately preceding the month in which the related Distribution
Date occurs. Interest shall accrue on all Classes of Certificates, all
Components and on all Lower Tier REMIC Interests on the basis of a 360-day year
consisting of twelve 30-day months.

         Act: The Securities Act of 1933, as amended.

         Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.

         Advance: With respect to a Mortgage Loan, the payments required to be
made by the Trustee solely in its capacity as successor servicer or by the
Servicer with respect to any Distribution Date pursuant to this Agreement, the
amount of any such payment being equal to the aggregate of the payments of
principal and interest (net of the applicable Servicing Fee and net of any net
income in the case of any REO Property) on the Mortgage Loans that were due on
the related Due Date and not received as of the close of business on the related
Determination Date, less the aggregate amount of any such delinquent payment
that either the Trustee or the Servicer has determined would constitute
Nonrecoverable Advances if advanced.

         Adverse REMIC Event: As defined in Section 10.01(f) hereof.

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

         Aggregate Senior Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate of
the Class Principal Amounts of the Class A-1, Class A-2, Class A-3 and Class A-R
Certificates and the denominator of which is the Aggregate Stated Principal
Balance, but in no event greater than 100%.

         Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans (and when such
term is used with respect to a particular Mortgage Pool, the aggregate of the
Stated Principal Balances of the Mortgage Loans in such Mortgage Pool) which
were outstanding on the Due Date in the month preceding the month of such
Distribution Date.

                                       7
<PAGE>

         Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.

         Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.

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

         Allocable Share: With respect to each Class of Subordinate Certificates
and any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the Class Principal Amount of such Class and the
denominator of which is the aggregate of the Class Principal Amounts of each
Class of Subordinate Certificates.

         Ancillary Fees: With respect to any Mortgage Loan, (i) all late
charges, (ii) all fees payable pursuant to Cendant's "Speed Pay" program, (iii)
all returned-item charges (e.g. insufficient funds charges) and (iv)
modification or conversion fees.

         Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Subordination
Percentages of such Class and the aggregate Class Subordination Percentage of
all other Classes of Subordinate Certificates having higher numerical Class
designations than such Class.

         Apportioned Principal Balance: As to any Distribution Date and each
Class of Subordinate Certificates and any Mortgage Pool, the Class Principal
Amount thereof multiplied by a fraction, the numerator of which is the
applicable Pool Subordinate Amount (i.e., the Pool 1 Subordinate Amount, the
Pool 2 Subordinate Amount or the Pool 3 Subordinate Amount as the case may
require), and the denominator of which is the sum of such Pool Subordinate
Amounts on such date.

         Appraised Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.

         Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.

         Authenticating Agent: The Trustee or any authenticating agent appointed
by the Trustee pursuant to Section 6.10 until any successor authenticating agent
for the Certificates is named, and thereafter "Authenticating Agent" shall mean
any such successor.

                                       8
<PAGE>

         Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.

         Available Distribution Amount: With respect to any Distribution Date
and each Mortgage Pool, the total amount of all cash received by the Trustee on
the Mortgage Loans in such Mortgage Pool from the Servicer or otherwise through
the Distribution Account Deposit Date for deposit into the Distribution Account
in respect of such Distribution Date, including (1) all scheduled installments
of interest (net of the Servicing Fee) and principal collected on the related
Mortgage Loans and due during the Due Period related to such Distribution Date,
together with any Advances in respect thereof, (2) all Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries and the proceeds of any Additional
Collateral from the related Mortgage Loans, in each case for such Distribution
Date, (3) all partial or full Principal Prepayments, together with any accrued
interest thereon, identified as having been received from the related Mortgage
Loans during the related Prepayment Period, (4) any amounts received from the
Servicer in respect of Prepayment Interest Shortfalls with respect to the
related Mortgage Loans; and (5) the aggregate Purchase Price of all Defective
Mortgage Loans and Converted Mortgage Loans (if any) in such Mortgage Pool
purchased from the Trust Fund during the related Prepayment Period, minus:

         (A)      all related fees, charges and amounts payable or reimbursable
to the Trustee under this Agreement, to the extent that, if paid by the Trust
Fund, such fees, charges or other amounts would constitute "unanticipated
expenses" (within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii)) of any of the REMICs provided for herein and up to an
aggregate maximum amount equal to $300,000 annually, such annual aggregate
maximum amount shall exclude (i) any Servicing Transfer Costs or amounts
reimbursable to the Servicer under this Agreement and (ii) any costs, damages or
expenses incurred by the Trustee in connection with any "high cost" home loans
or any predatory or abusive lending laws, which amounts shall in no case be
subject to any such limitation;

         (B)      in the case of (2), (3), (4) and (5) above, any related
unreimbursed expenses incurred by the Servicer in connection with a liquidation
or foreclosure and any unreimbursed Advances or Servicing Advances due to the
Servicer (or, pursuant to Section 5.04, the Trustee);

         (C)      any related unreimbursed Nonrecoverable Advances due to the
Servicer (or, pursuant to Section 5.04, the Trustee); and

         (D)      in the case of (1) through (4) above, any related amounts
collected which are determined to be attributable to a subsequent Due Period or
Prepayment Period.

         Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator, dissolution, or termination, as the case may be, of such Person
pursuant to the provisions of either the Bankruptcy Code or any other similar
state laws.

         Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.

         Basis Risk Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the excess, if any, of (i) the amount of Current
Interest that would have been payable

                                       9
<PAGE>

on such Class for such Distribution Date if the Certificate Interest Rate for
such Class as set forth in the Preliminary Statement hereto were determined
without regard to clause (ii) in the definition thereof, over (ii) the actual
Current Interest payable on such Class for such Distribution Date.

         BBA: The British Banker's Association.

         Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a Clearing
Agency as described in Section 3.09; provided, that after the occurrence of a
Book-Entry Termination whereupon book-entry registration and transfer are no
longer permitted and Definitive Certificates are to be issued to Certificate
Owners, such Book-Entry Certificates shall no longer be "Book-Entry
Certificates." As of the Closing Date, the following Classes of Certificates
constitute Book-Entry Certificates: the Class A-1, Class A-2, Class A-3, Class
X-A, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class
X-B.

         Book-Entry Termination: The occurrence of any of the following events:
(i) the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.

         Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in New York, New York or, if other than New
York, any city in which the Corporate Trust Office of the Trustee is located, or
the States of Maryland or Minnesota, are authorized or obligated by law or
executive order to be closed.

         Cendant: Cendant Mortgage Corporation or its successors in interest.

         Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Authenticating Agent in substantially the forms attached
hereto as Exhibit A.

         Certificate Group: Each of the Group 1 Certificates, the Group 2
Certificates and the Group 3 Certificates.

         Certificate Interest Rate: With respect to each Class of Certificates
and any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.

         Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).

         Certificate Principal Amount: With respect to any Certificate (other
than a Class X Certificate), at the time of determination, the maximum specified
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth on
the face of such Certificate, less (i) the amount of all principal distributions
previously made with respect to such Certificate; (ii) all Realized Losses
allocated to such Certificate; and (iii) in the case of a Subordinate
Certificate, any Subordinate Certificate Writedown Amount allocated to such
Certificates. Notwithstanding the foregoing, on any Distribution Date relating
to a Due Period in which a Subsequent Recovery has been received by

                                       10
<PAGE>

the Servicer, the Certificate Principal Amount of any Class of Certificates then
outstanding for which any Realized Loss or any Subordinate Certificate Writedown
Amount has been applied will be increased, in order of seniority, by an amount
equal to the lesser of (i) the amount such Class of Certificates has been
written down in respect of Realized Losses or Subordinate Certificate Writedown
Amounts, to the extent not previously offset by increases in Certificate
Principal Amount pursuant to this sentence and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced (x) by the
amount of the increase in the Certificate Principal Amount of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date and
(y) to reflect a proportionate amount of the increase in the Certificate
Principal Amount of any pari passu Class of Certificates on such Distribution
Date pursuant to this sentence). For purposes of Article V hereof, unless
specifically provided to the contrary, Certificate Principal Amounts shall be
determined as of the close of business of the immediately preceding Distribution
Date, after giving effect to all distributions made on such date.

         Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.

         Certificateholder: The meaning provided in the definition of "Holder."

         Civil Relief Act: The Servicemembers Civil Relief Act, as amended.

         Class: Collectively, Certificates bearing the same class designation.
In the case of the REMIC 1, REMIC 2 and the Upper Tier REMIC, the term "Class"
refers to all REMIC Interests having the same alphanumeric designation.

         Class A-1 Excess Interest Amount: The product of (i) the initial Class
Principal Amount of the Class A-1 Certificates, (ii) the initial Certificate
Interest Rate of the Class A-1 Certificates and (iii) a fraction, the numerator
of which is the excess of 30 over the number of days in the initial Accrual
Period for the Class A-1 Certificates and the denominator of which is 360.

         Class A-2 Excess Interest Amount: The product of (i) the initial Class
Principal Amount of the Class A-2 Certificates, (ii) the initial Certificate
Interest Rate of the Class A-2 Certificates and (iii) a fraction, the numerator
of which is the excess of 30 over the number of days in the initial Accrual
Period for the Class A-2 Certificates and the denominator of which is 360.

         Class A-R Certificate: The Class A-R Certificate executed by the
Trustee, and authenticated and delivered by the Authenticating Agent,
substantially in the form annexed hereto as Exhibit A, and evidencing the
ownership of the Class LT1-R Interest, the Class LT2-R Interest and the residual
interest in the Upper Tier REMIC.

         Class B-1 Excess Interest Amount: The product of (i) the initial Class
Principal Amount of the Class B-1 Certificates, (ii) the initial Certificate
Interest Rate of the Class B-1 Certificates and (iii) a fraction, the numerator
of which is the excess of 30 over the number of days in the initial Accrual
Period for the Class B-1 Certificates and the denominator of which is 360.

         Class B-2 Excess Interest Amount: The product of (i) the initial Class
Principal Amount of the Class B-2 Certificates, (ii) the initial Certificate
Interest Rate of the Class B-2 Certificates and (iii) a fraction, the numerator
of which is the excess of 30 over the number of days in the initial Accrual
Period for the Class B-2 Certificates and the denominator of which is 360.

                                       11
<PAGE>

         Class B-3 Excess Interest Amount: The product of (i) the initial Class
Principal Amount of the Class B-3 Certificates, (ii) the initial Certificate
Interest Rate of the Class B-3 Certificates and (iii) a fraction, the numerator
of which is the excess of 30 over the number of days in the initial Accrual
Period for the Class B-3 Certificates and the denominator of which is 360.

         Class Notional Amount: With respect to the Class X-A and Class X-B
Certificates, the class notional amount calculated as provided in the
Preliminary Statement hereto.

         Class Principal Amount: With respect to each Class of Certificates
(other than a Class X Certificate) the aggregate of the Certificate Principal
Amounts of all Certificates of such Class at the date of determination.

         Class X Certificates: Any of the Class X-A or Class X-B Certificates.

         Class Subordination Percentage: With respect to each Class of
Subordinate Certificates, for each Distribution Date, the percentage obtained by
dividing the Class Principal Amount of such Class immediately prior to such
Distribution Date by the sum of the Class Principal Amounts of all Classes of
Certificates immediately prior to such Distribution Date.

         Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.

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

         Closing Date: July 28, 2004.

         Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

         Compensating Interest Payment: As to any Distribution Date, the lesser
of (1) the Servicing Fee for such date and (2) any Prepayment Interest Shortfall
for such date.

         Component Interest Rate: With respect to the X-A1 Component and any
Distribution Date, the interest rate specified in the definition of X-A1
Component. With respect to the X-A2 Component and any Distribution Date, the
interest rate specified in the definition of X-A2 Component. With respect to
X-B1 Component and any Distribution Date, the interest rate specified in the
definition of X-B1 Component. With respect to X-B2 Component and any
Distribution Date, the interest rate specified in the definition of X-B2
Component. With respect to X-B3 Component and any Distribution Date, the
interest rate specified in the definition of X-B3 Component.

         Component Notional Amount: With respect to the X-A1 Component and any
Distribution Date, the notional amount specified in the definition of X-A1
Component. With respect to the X-A2 Component and any Distribution Date, the
notional amount specified in the definition of X-A2 Component. With respect to
the X-B1 Component and any Distribution Date, the notional amount specified in
the definition of X-B1 Component. With respect to the X-B2 Component and any
Distribution Date, the notional amount specified in the definition of X-B2

                                       12
<PAGE>

Component. With respect to the X-B3 Component and any Distribution Date, the
notional amount specified in the definition of X-B3 Component.

         Components: Each of the X-A1 Component, X-A2 Component, X-B1 Component,
X-B2 Component and X-B3 Component.

         Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

         Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.

         Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.

         Cooperative Shares: Shares issued by a Cooperative Corporation.

         Corporate Trust Office: With respect to the presentment of Certificates
for registration of transfer, exchange or final payment, Wells Fargo Bank N.A.,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:
Corporate Trust Services - MLMI Series MLCC 2004-HB1 and for all other purposes,
Wells Fargo Bank N.A., 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Corporate Trust Services - MLMI Series MLCC 2004-HB1, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders.

         Corresponding Classes of Certificates or Components: With respect to
each Lower Tier REMIC Interest, the Class or Classes of Certificates or
Components appearing opposite such Lower Tier REMIC Interest as described in the
Preliminary Statement hereto.

         Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amounts of the Subordinate
Certificates have been reduced to zero.

         Current Interest: With respect to each Class of Certificates and each
Component on each Distribution Date, the aggregate amount of interest accrued at
the applicable Certificate Interest Rate or Component Interest Rate during the
related Accrual Period on the Class Principal Amount or Component Notional
Amount of such Class or Component; provided, however, that with respect to the
first Distribution Date only, (i) the aggregate Current Interest for the X-A1
Component will be increased by the Class A-1 Excess Interest Amount, (ii) the
aggregate Current Interest for the X-A2 Component will be increased by the Class
A-2 Excess Interest Amount, (iii) the aggregate Current Interest for the X-B1
Component will be increased by the Class B-1 Excess Interest Amount, (vi) the
aggregate Current Interest for the X-B2 Component will be increased by the Class
B-2 Excess Interest Amount and (v) the aggregate Current Interest for the X-B3
Component will be increased by the Class B-3 Excess Interest Amount.

         Custodial Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the Fannie Mae Servicing Guide which
shall be entitled "Wells Fargo Bank N.A., in trust for the registered holders
for Merrill Lynch Mortgage Investors Trust Series MLCC

                                       13
<PAGE>

2004-HB1 Mortgage Pass-Through Certificates." The Custodial Account shall be an
Eligible Account.

         Custodial Agreement: The Custodial Agreement, dated as of December 15,
2000, between Merrill Lynch Credit Corporation and Wells Fargo Bank Minnesota,
N.A., as custodian, as amended by Amendment No. 1, dated as of January 16, 2002
a copy of which (excluding all exhibits thereto) is attached hereto as Exhibit
O.

         Custodian: Wells Fargo Bank N.A., any successor in interest or any
successor custodian appointed pursuant to the Custodial Agreement.

         Cut-off Date: July 1, 2004.

         Cut-off Date Balance: With respect to the Mortgage Loans in the Trust
Fund on the Closing Date, the Aggregate Stated Principal Balance as of the
Cut-off Date.

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

         Defective Mortgage Loan: The meaning specified in Section 2.04(a).

         Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the Bankruptcy Code.

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

         Deleted Mortgage Loan: As defined in Section 2.04(a).

         Delinquent: Any Mortgage Loan with respect to which the Scheduled
Payment due on a Due Date is not received.

         Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation, having its principal place of business at 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, or its successors in
interest.

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

         Disqualified Organization: A "disqualified organization" as defined in
Section 860E(e)(5) of the Code.

         Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.01 in the name of the Trustee
for the benefit of the

                                       14
<PAGE>

Certificateholders and designated "Wells Fargo Bank N.A., in trust for
registered holders of Merrill Lynch Mortgage Investors Trust Series MLCC
2004-HB1, Mortgage Pass-Through Certificates." Funds in the Distribution Account
(exclusive of any earnings on investments made with funds deposited in the
Distribution Account) shall be held in trust for the Trustee and the
Certificateholders for the uses and purposes set forth in this Agreement.

         Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in August 2004.

         Distribution Date: The 25th day of each month or, if such 25th day is
not a Business Day, the next succeeding Business Day, commencing in August 2004.

         Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note as indicated in the
Mortgage Note, which is the first day of the calendar month.

         Due Period: As to any Distribution Date, the period beginning on the
second day of the month preceding the month of such Distribution Date, and
ending on the first day of the month of such Distribution Date.

         EDP: The electronic data processing system used by the Seller and the
Servicer, which are licensees of ALLTEL Information Services, Inc.

         Effective Loan-to-Value Ratio: A fraction, expressed as a percentage,
the numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any, and the denominator of which is the
Appraised Value of the related Mortgage Property at such date.

         Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee, any Paying Agent, or the Servicer.

         ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Labor regulations issued pursuant
thereto in temporary or final form.

                                       15
<PAGE>

         ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.

         ERISA-Restricted Certificate: The Class A-R, Class B-4, Class B-5 or
Class B-6 Certificates.

         Escrow Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the Fannie Mae Servicing Guide which
shall be entitled "Wells Fargo Bank N.A., in trust for the registered holders
for Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1 Mortgage
Pass-Through Certificates." The Escrow Account shall be an Eligible Account.

         Event of Default: As defined in Section 6.14.

         Fannie Mae: The entity formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

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

         FHA: The Federal Housing Administration or any successor thereto.

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

         Final Certification: As referred to in Section 2.02(c), the form of
which is set forth at Exhibit L.

         Fitch Ratings: Fitch, Inc., or any successor in interest.

         GNMA: The Government National Mortgage Association, or any successor
thereto.

         Global Securities: The global certificates representing the Book-Entry
Certificates.

         Group 1: All of the Group 1 Certificates.

         Group 1 Certificate: Any Class A-1 or Class A-R Certificate.

         Group 2: All of the Group 2 Certificates.

         Group 2 Certificate: Any Class A-2 Certificate.

         Group 3: All of the Group 3 Certificates.

         Group 3 Certificate: Any Class A-3 Certificate.

         Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee or the
Servicer, or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent

                                       16
<PAGE>

has been obtained, except that, in determining whether the Trustee shall be
protected in relying upon any such consent, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the Depositor
and the Servicer in determining whether any Certificates are registered to an
Affiliate of the Depositor or the Servicer.

         HUD: The United States Department of Housing and Urban Development, or
any successor thereto.

         Indemnified Parties: As defined in Section 9.15.

         Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.

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

         Initial Certification: As referred to in Section 2.02(a), the form of
which is set forth at Exhibit K.

         Initial LIBOR Rate: 1.46188% with respect to the Class A-1, Class B-1,
Class B-2 and Class B-3 Certificates and 1.93000% with respect to the Class A-2
Certificates.

         Initial Optional Purchase Date: The first Distribution Date following
the date on which the Aggregate Stated Principal Balance is less than 10.00% of
the Cut-off Date Balance.

         Insurance Policy: With respect to any Mortgage Loan, any insurance
policy, including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.

         Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor), in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.

         Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.

         Interest Distribution Amount: For each Class of Certificates or
Component, on any Distribution Date, the Current Interest for such Class or
Component, as reduced by such Class's or Component's share of Net Prepayment
Interest Shortfalls and Relief Act Reductions. Any such shortfalls and
reductions shall be allocated among (i) all Classes of Certificates (other than
the Interest Only Certificates) of the related Certificate Group from such
Mortgage Pool, (ii) the X-A1 Component (in the case of Net Prepayment Interest
Shortfalls or

                                       17
<PAGE>

Relief Act Reductions related to Pool 1) or the X-A2 Component (in the case of
Net Prepayment Interest Shortfalls or Relief Act Reductions related to Pool 2),
and (iii) the Subordinate Certificates proportionately on the basis of (1) in
the case of the Senior Certificates (other than the Class X Certificates),
Current Interest otherwise distributable thereon on such Distribution Date; (2)
in the case of the X-A1 Component and X-A2 Component, if applicable, the Current
Interest otherwise distributable thereon on such Distribution Date and (3) in
the case of Subordinate Certificates, interest accrued at the Net WAC of the
applicable Mortgage Pool on their Apportioned Principal Balance before taking
into account any reductions in such amounts from Net Interest Shortfalls for
that Distribution Date. Amounts so allocated to the Class B-1, Class B-2 or
Class B-3 Certificates will be allocated between the Class B-1 Certificates and
the X-B1 Component or between the Class B-2 Certificates and the X-B2 Component
or between the Class B-3 Certificates and the X-B3 Component, as the case may
be, proportionately, based on the Current Interest otherwise distributable in
respect thereof on such Distribution Date

         Interest-Only Certificates: Any of the Class X-A and Class X-B
Certificates.

         Interest Shortfall: As to any Class of Certificates or Component and
any Distribution Date, (i) the amount by which the Interest Distribution Amount
(exclusive of any payments to such Class in respect of Basis Risk Shortfalls or
Unpaid Basis Risk Shortfalls) for such Class or Component on such Distribution
Date and all prior Distribution Dates exceeds (ii) amounts distributed in
respect thereof to such Class or Component on prior Distribution Dates (as
determined without reduction for amounts not paid to such Class or in respect of
such Component as a result of the provisos set forth in Sections 5.02(a)(i) and
5.02(b) hereof.

         Interest Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, an amount equal to one month's interest on the
applicable Principal Transfer Amount at the related Mortgage Pool's Net WAC,
plus any shortfall of interest on the Senior Certificates related to such
Undercollateralized Group remaining unpaid from prior Distribution Dates.

         Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.

         Latest Possible Maturity Date: The Distribution Date in July 2029.

         LIBOR: With respect to the first Accrual Period, the Initial LIBOR
Rate. With respect to each subsequent Accrual Period, a per annum rate
determined on the LIBOR Determination Date in the following manner by the
Trustee on the basis of the "Interest Settlement Rate" set by the BBA for
one-month (or six-month with respect to the Class A-2 Certificates) United
States dollar deposits, as such rates appear on the Telerate Page 3750, as of
11:00 a.m. (London time) on such LIBOR Determination Date.

         (a)      If on such a LIBOR Determination Date, the BBA's Interest
Settlement Rate does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time), or if the Telerate Page 3750 is not available on such date, the
Trustee will obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page
"BBAM." If such rate is not published for such LIBOR Determination Date, LIBOR
for such date will be the most recently published Interest Settlement Rate. In
the event that the BBA no longer sets an Interest Settlement Rate, the Trustee
will designate an alternative index that has performed, or that the Trustee
expects to perform, in a manner substantially similar to the BBA's Interest
Settlement Rate. The Trustee will select a particular index as the alternative
index only if it receives an Opinion of Counsel, which opinion shall be an
expense reimbursed from the Distribution Account, that the selection of such
index will not cause any of the REMICs to lose their classification as REMICs
for federal income tax purposes.

                                       18
<PAGE>

         (b)      The establishment of LIBOR by the Trustee and the Trustee's
subsequent calculation of the Certificate Interest Rate applicable to the LIBOR
Certificates for the relevant Accrual Period, in the absence of manifest error,
will be final and binding.

         LIBOR Business Day: Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.

         LIBOR Certificate: Any Class A-1, Class A-2, Class B-1, Class B-2 and
Class B-3 Certificate.

         LIBOR Determination Date: With respect to any LIBOR Certificates other
than the Class A-2 Certificates, the second LIBOR Business Day immediately
preceding the commencement of each Accrual Period and with respect to the Class
A-2 Certificates, the second LIBOR Business Day immediately preceding every
sixth Accrual Period beginning with the Accrual Period commencing during July
2004.

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

         Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.

         Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any
date of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.

         Loss: With respect to any indemnification arising under Section 9.15 of
this Agreement, any and all losses, claims, damages, penalties, liabilities,
obligations, judgments, settlements, awards, demands, offsets, defenses,
counterclaims, actions or proceedings, reasonable out-of-pocket costs, expenses
and attorneys' fees of an Indemnified Party (including but not limited to, (a)
any reasonable costs, expenses and attorneys' fees incurred by such Indemnified
Party in enforcing such right of indemnification against any Indemnifying Party
or with respect to any appeal, and (b) interest on any amount for which an
Indemnified Party is entitled to be indemnified from the date such Indemnified
Party notifies the Servicer of the expenditure or such amounts until such
amounts are paid by the Servicer; provided, however, that in no event shall a
"Loss" include a claim for consequential damages, indirect damages or lost
profits except when the Loss results from the gross negligence, fraud or willful
misconduct of the Servicer.

         Lower Tier REMIC Interests: Any of the REMIC 1 Interests or the REMIC 2
Interests.

         Lower Tier Regular Interests: Any of the REMIC 1 Regular Interests or
the REMIC 2 Regular Interests.

                                       19
<PAGE>

         Margin: As to each Mortgage Loan, the percentage amount set forth on
the related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.

         Material Defect: As defined in Section 2.02(b).

         Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on
the related Mortgage Note at which interest can accrue on such Mortgage Loan.

         MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware or any successor
thereto.

         MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System.

         MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.

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

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.02.

         Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.

         Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Trustee pursuant to this Agreement.

         Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.

         Mortgage Loan Purchase and Sale Agreement: The Mortgage Loan Purchase
and Sale Agreement, dated as of July 1, 2004, between the Seller and the
Depositor with respect to the sale and purchase of the Mortgage Loans.

         Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things (1) identify the
designated Mortgage Pool in which such Mortgage Loan is included and (2)
separately identify One-Month LIBOR Loans and Six-Month LIBOR Loans.

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

         Mortgage Pools: Any of Pool 1, Pool 2 and Pool 3.

                                       20
<PAGE>

         Mortgage Rate: As to any Mortgage Loan, the annual rate of interest
borne by the related Mortgage Notes.

         Mortgaged Property: The underlying property securing a Mortgage Loan
which, with respect to a Cooperative Loan, is the related Cooperative Shares and
Property Lease.

         Mortgagor: The obligor on a Mortgage Note.

         Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan
or any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and any
other accrued and unpaid fees received and retained in connection with the
liquidation of such Mortgage Loan or Mortgaged Property.

         Net Interest Shortfalls: With respect to any Distribution Date, any Net
Prepayment Interest Shortfalls for that Distribution Date and the amount of
interest that would otherwise have been received with respect to any Mortgage
Loan which was subject to (i) a Relief Act Reduction or (ii) the interest
portion of any Debt Service Reduction or Deficient Valuation, after exhaustion
of the respective amounts of coverage provided by the Subordinate Certificates
for those type of losses.

         Net Mortgage Rate: With respect to any Mortgage Loan and any
Distribution Date, the related Mortgage Rate as of the Due Date in the month
preceding the month of such Distribution Date reduced by the Servicing Fee Rate
for such Mortgage Loan.

         Net Prepayment Interest Shortfall: With respect to any Mortgage Loan
and any Distribution Date, the amount by which any Prepayment Interest Shortfall
for such date exceeds the amount payable by the Servicer in respect of such
shortfall.

         Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the first day of the calendar month
immediately preceding the calendar month of such Distribution Date, weighted on
the basis of their outstanding Stated Principal Balances at such time. When the
term "Net WAC" is used herein with reference to only the One-Month LIBOR Loans
or only the Six-Month LIBOR Loans, such weighted average shall be computed with
reference solely to the Mortgage Loans in the relevant group.

         Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.

         Non-permitted Foreign Holder: As defined in Section 3.03(f).

         Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Servicer (as certified in an
Officer's Certificate of the Servicer) or by the Trustee pursuant to Section
5.04, which in the good faith judgment of such party, shall not be ultimately
recoverable by such party from the related Mortgagor, related Liquidation
Proceeds or otherwise.

         Non-U.S. Person: Any person other than a "United States person" within
the meaning of Section 7701(a)(30) of the Code.

         Offering Document: The Prospectus.

                                       21
<PAGE>

         Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries (or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with a
particular subject) of the Depositor or the Trustee, as the case may be, and
delivered to the Depositor or the Trustee, as the case may be, as required by
this Agreement.

         Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Servicer, or (ii) if provided for herein, signed by a
Servicing Officer, as the case may be, and delivered to the Trustee or the
Depositor, as the case may be.

         One-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for one-month U.S. dollar deposits.

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

         Optional Termination Price: An amount equal to the sum of (i) 100% of
the Stated Principal Balance of the Mortgage Loans (other than any Mortgage Loan
that has become an REO Property) plus accrued interest thereon at the applicable
Mortgage Rate through the Due Date in the month in which the Optional
Termination Price is to be distributed to the Certificateholders and the fair
market value of any REO Property plus accrued interest thereon; (ii) any
unreimbursed costs and damages incurred by the Trust Fund (or the Trustee on
behalf of the Trust Fund) in connection with the violation of any anti-predatory
or anti-abusive lending laws; and (iii) the payment of all amounts (including,
without limitation, all previously unreimbursed Advances and Servicing Advances
and accrued and unpaid Servicing Fees) payable or reimbursable to the Servicer
or Trustee.

         Original Applicable Credit Support Percentage: With respect to each
Class of Subordinate Certificates, the corresponding percentage set forth
opposite its Class designation: Class B-1 - 5.50%; Class B-2 - 3.25%; Class B-3
- 2.10%; Class B-4 - 1.25%; Class B-5 - 0.85%; and Class B-6 - 0.60%.

         Original Subordinate Principal Amount: The aggregate of the initial
Class Principal Amounts of the Classes of Subordinated Certificates.

         Originator: With respect to any Mortgage Loan, HomeBanc Mortgage
Corporation.

         Overcollateralized Group: On any Distribution Date, any Certificate
Group which is not an Undercollateralized Group.

                                       22
<PAGE>

         Paying Agent: Any paying agent appointed by the Trustee pursuant to
Section 3.08.

         Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than a Class X-A Certificate, a Class X-B
Certificate or the Class A-R Certificate, the Percentage Interest evidenced
thereby shall equal the initial Certificate Principal Amount thereof divided by
the initial Class Principal Amount of all Certificates of the same Class. With
respect to the Class A-R Certificate, the Percentage Interest evidenced thereby
shall be as specified on the face thereof, or otherwise, be equal to 100%. With
respect to any Class X-A Certificate, the Percentage Interest evidenced thereby
shall equal its initial Class Notional Amount as set forth on the face thereof
divided by the initial Class Notional Amount of such Class. With respect to any
Class X-B Certificate, the Percentage Interest represented thereby shall equal
the initial Class Notional Amount thereof divided by the initial Class Notional
Amount of all of the Certificates of the same class.

         Permitted Investments: At any time, any one or more of the following
obligations and securities:

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

                           (ii)     general obligations of or obligations
                  guaranteed by any state of the United States or the District
                  of Columbia receiving the highest long-term debt rating of
                  each Rating Agency, or such lower rating as shall not result
                  in the downgrading or withdrawal of the ratings then assigned
                  to the Certificates by the Rating Agencies, as evidenced by a
                  signed writing delivered by each Rating Agency;

                           (iii)    commercial or finance company paper which is
                  then receiving the highest commercial or finance company paper
                  rating of each Rating Agency rating such paper, or such lower
                  rating as shall not result in the downgrading or withdrawal of
                  the ratings then assigned to the Certificates by the Rating
                  Agencies, as evidenced by a signed writing delivered by each
                  Rating Agency;

                           (iv)     certificates of deposit, demand or time
                  deposits, or bankers' acceptances issued by any depository
                  institution or trust company incorporated under the laws of
                  the United States or of any state thereof and subject to
                  supervision and examination by federal and/or state banking
                  authorities, provided that the commercial paper and/or
                  long-term unsecured debt obligations of such depository
                  institution or trust company (or in the case of the principal
                  depository institution in a holding company system, the
                  commercial paper or long-term unsecured debt obligations of
                  such holding company, but only if Moody's is not the
                  applicable Rating Agency) are then rated one of the two
                  highest long-term and the highest short-term ratings of each
                  Rating Agency for such securities, or such lower ratings as
                  shall not result in the downgrading or withdrawal of the
                  ratings then assigned to the Certificates by the Rating
                  Agencies, as evidenced by a signed writing delivered by each
                  Rating Agency;

                           (v)      guaranteed reinvestment agreements issued by
                  any bank, insurance company or other corporation acceptable to
                  the Rating Agencies at the

                                       23
<PAGE>

                  time of the issuance of such agreements, as evidenced by a
                  signed writing delivered by each Rating Agency;

                           (vi)     repurchase obligations with respect to any
                  security described in clauses (i) and (ii) above, in either
                  case entered into with a depository institution or trust
                  company (acting as principal) described in clause (iv) above;

                           (vii)    securities (other than stripped bonds,
                  stripped coupons or instruments sold at a purchase price in
                  excess of 115% of the face amount thereof) bearing interest or
                  sold at a discount issued by any corporation incorporated
                  under the laws of the United States or any state thereof
                  which, at the time of such investment, have one of the two
                  highest ratings of each Rating Agency (except if the Rating
                  Agency is Moody's, such rating shall be the highest commercial
                  paper rating of Moody's for any such series), or such lower
                  rating as shall not result in the downgrading or withdrawal of
                  the ratings then assigned to the Certificates by the Rating
                  Agencies, as evidenced by a signed writing delivered by each
                  Rating Agency;

                           (viii)   interests in any money market fund which at
                  the date of acquisition of the interests in such fund and
                  throughout the time such interests are held in such fund has
                  the highest applicable rating by each Rating Agency rating
                  such fund or such lower rating as shall not result in a change
                  in the rating then assigned to the Certificates by each Rating
                  Agency including funds for which the Trustee or any of its
                  Affiliates is investment manager or adviser;

                           (ix)     short-term investment funds sponsored by any
                  trust company or national banking association incorporated
                  under the laws of the United States or any state thereof which
                  on the date of acquisition has been rated by each applicable
                  Rating Agency in their respective highest applicable rating
                  category or such lower rating as shall not result in a change
                  in the rating then specified stated maturity and bearing
                  interest or sold at a discount acceptable to each Rating
                  Agency as shall not result in the downgrading or withdrawal of
                  the ratings then assigned to the Certificates by the Rating
                  Agencies; and

                           (x)      such other investments having a specified
                  stated maturity and bearing interest or sold at a discount
                  acceptable to the Rating Agencies as shall not result in the
                  downgrading or withdrawal of the ratings then assigned to the
                  Certificates by the Rating Agencies;

         provided, that no such instrument shall be a Permitted Investment if
(i) such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) such instrument
would require the Depositor to register as an investment company under the
Investment Company Act of 1940, as amended, or (iii) such instrument would not
be a "permitted investment" within the meaning of such term as provided for in
Section 860G(a)(5) of the Code and the Treasury Regulations thereunder.

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

                                       24
<PAGE>

         Pool Net WAC: The Pool 1 Net WAC, Pool 2 Net WAC, or Pool 3 Net WAC, as
the context may require.

         Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.

         Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.

         Pool 1 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances at
such time.

         Pool 1 Subordinate Amount: For any Distribution Date, the excess of (a)
the Aggregate Stated Principal Balance of the Pool 1 Mortgage Loans as of the
first day of the month preceding the month in which such Distribution Date
occurs over (b) the sum of the Class Principal Amounts of the Class A-1 and
Class A-R Certificates immediately before such Distribution Date.

         Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.

         Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.

         Pool 2 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances at
such time.

         Pool 2 Subordinate Amount: For any Distribution Date, the excess of (a)
the Aggregate Stated Principal Balance of the Pool 2 Mortgage Loans as of the
first day of the month preceding the month in which such Distribution Date
occurs over (b) the Class Principal Amount of the Class A-2 Certificates
immediately before such Distribution Date.

         Pool 3: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 3.

         Pool 3 Mortgage Loans: Any Mortgage Loan in Pool 3.

         Pool 3 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 3 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances at
such time.

         Pool 3 Subordinate Amount: For any Distribution Date, the excess of (a)
the Aggregate Stated Principal Balance of the Pool 3 Mortgage Loans as of the
first day of the month preceding the month in which such Distribution Date
occurs over (b) the Class Principal Amount of the Class A-3 Certificates
immediately before such Distribution Date.

         Pool Percentage: With respect to each Mortgage Pool and any
Distribution Date, a fraction, expressed as a percentage, the numerator of which
is the Aggregate Stated Principal

                                       25
<PAGE>

Balance of such Mortgage Pool and the denominator of which is the Aggregate
Stated Principal Balance as of such Due Date.

         Pool Subordinate Amount: Any of the Pool 1 Subordinate Amount, Pool 2
Subordinate Amount or the Pool 3 Subordinate Amount.

         Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.

         Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.

         Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.

         Principal Distribution Amount: With respect to any Mortgage Pool and
any Distribution Date, the sum of (a) each Scheduled Payment of principal
collected or advanced on the related Mortgage Loans (before taking into account
any Deficient Valuations or Debt Service Reductions) and due during the related
Due Period, (b) that portion of the Purchase Price representing principal of any
Mortgage Loans in such Mortgage Pool purchased in accordance with Section 2.04
hereof and received during the related Prepayment Period, (c) the principal
portion of any related Substitution Amount received during the related
Prepayment Period, (d) the principal portion of all Insurance Proceeds received
during the related Prepayment Period with respect to Mortgage Loans in such
Mortgage Pool that are not yet Liquidated Mortgage Loans, (e) the principal
portion of all Net Liquidation Proceeds received during the related Prepayment
Period with respect to Liquidated Mortgage Loans in such Mortgage Pool, (f) all
Subsequent Recoveries received during the related Prepayment Period with
respect to Liquidated Mortgage Loans in such Mortgage Pool, (g) the principal
portion of all partial and full principal prepayments of Mortgage Loans in such
Mortgage Pool applied by the Servicer during the related Prepayment Period and
(h) on the Distribution Date on which the Trust Fund is to be terminated
pursuant to Article X hereof, that portion of the Optional Termination Price
in respect of principal for such Mortgage Pool.

         Principal Prepayment: Any Mortgagor payment of principal or other
recovery of principal on a Mortgage Loan that is recognized as having been
received or recovered in advance of its scheduled Due Date and applied to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or this Agreement.

         Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.

         Principal Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, the excess, if any, of the aggregate Class Principal
Amount of such Undercollateralized Group immediately prior to such Distribution
Date over the Aggregate Stated Principal Balance of the related Mortgage Pool
immediately prior to such Distribution Date.

         Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

                                       26
<PAGE>

         Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.

         Pro Rata Senior Percentage: With respect to each Distribution Date and
each Mortgage Pool, the percentage equivalent of a fraction the numerator of
which is the aggregate Class Principal Amount of the Class or Classes of the
Related Certificate Group immediately prior to such Distribution Date and the
denominator of which is the Aggregate Stated Principal Balance of the related
Mortgage Pool for such Distribution Date.

         Prospectus: The prospectus supplement dated July 26, 2004, together
with the accompanying prospectus dated June 18, 2004, relating to the initial
sale of the Class A-1, Class A-2, Class A-3, Class A-R, Class X-A, Class X-B,
Class B-1, Class B-2 and Class B-3 Certificates.

         Purchase Date: Any Distribution Date on which Certificates may be
repurchased pursuant to Section 7.01(c).

         Purchase Price: With respect to any Mortgage Loan required or permitted
to be purchased by the Depositor pursuant to this Agreement, by the Servicer
pursuant to this Agreement, or by the Seller pursuant to the Mortgage Loan
Purchase Agreement, an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, (ii)
accrued interest thereon at the applicable Net Mortgage Rate from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders and
(iii) any unreimbursed costs, penalties and/or damages incurred by the Trust
Fund in connection with any violation relating to such Mortgage Loan of any
predatory or abusive lending law.

         Rapid Prepayment Conditions: As to any Distribution Date either of the
following conditions: if (1) the Aggregate Subordinate Percentage on such date
is less than 200% of the Aggregate Subordinate Percentage on the Closing Date or
(2) the outstanding Stated Principal Balance of the Mortgage Loans in any
Mortgage Pool delinquent 60 days or months, as a percentage of such Mortgage
Pool's Pool Subordinate Amount, is greater than or equal to 50%.

         Rating Agency: Each of Moody's, S&P and Fitch Ratings.

         Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Net Liquidation Proceeds, if any, received
during the month in which such liquidation occurred, to the extent applied as
recoveries of interest at the Net Mortgage Rate and to principal of the
Liquidated Mortgage Loan. With respect to each Mortgage Loan which has become
the subject of a Deficient Valuation, if the principal amount due under the
related Mortgage Note has been reduced, the difference between the principal
balance of the Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the principal balance of the Mortgage Loan as reduced by the
Deficient Valuation.

                                       27
<PAGE>

         Record Date: As to any Distribution Date (i) with respect to the LIBOR
Certificates, the last Business Day preceding such Distribution Date (or the
Closing Date, in the case of the first Distribution Date) unless such
Certificates shall no longer be Book-Entry Certificates, in which case the
Record Date shall be the last Business Day of the month preceding the month of
such Distribution Date and (ii) in the case of all other Certificates (including
LIBOR Certificates that are subsequently reissued as Definitive Certificates),
the last Business Day of the month preceding the month of each Distribution
Date.

         Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.

         Related Certificate Group: The Certificate Group related to a
particular Mortgage Pool as indicated by the same numerical designation (i.e.,
Group 1 Certificates are related to Pool 1, Group 2 Certificates are related to
Pool 2 and Group 3 Certificates are related to Pool 3).

         Related Class of Upper Tier REMIC Interest: With respect to any Class
of Certificates, the interest in the Upper Tier REMIC appearing opposite such
Class in the Preliminary Statement hereto.

         Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.

         REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.

         REMIC Components: Each of the X-A1 Component, X-A2 Component, X-B1
Component, X-B2 Component and X-B3 Component.

         REMIC Interests: Any regular or residual interest in any of REMIC 1,
REMIC 2 or the Upper Tier REMIC, as described in the Preliminary Statement.

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

         REMIC 1: As described in the Preliminary Statement.

         REMIC 1 Interest: Each class of interest in REMIC 1 as described in the
Preliminary Statement.

         REMIC 1 Regular Interest: Each of the REMIC 1 Interests other than the
Class LT1-R Interest.

         REMIC 1 Subordinated Balance Ratio: The ratio among the uncertificated
principal balances of each of the REMIC 1 Interests ending with the designation
"A" that is equal to the ratio among, with respect to each such REMIC 1
Interest, the excess of (x) the aggregate

                                       28
<PAGE>

Scheduled Principal Balance of the Mortgage Loans in the related Mortgage Pool
over (y) the aggregate Class Principal Amount of the Certificates in the
Certificate Group related to such Mortgage Pool.

         REMIC 2: As described in the Preliminary Statement.

         REMIC 2 Interest: Each class of interest in REMIC 2 as described in the
Preliminary Statement.

         REMIC 2 Regular Interest: Each of the REMIC 2 Interests other than the
Class LT2-R Interest.

         REO Disposition: The final sale by the Servicer of an REO Property.

         REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.

         Replacement Mortgage Loan: A mortgage loan substituted by the Seller
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release substantially in the form attached to this
Agreement, (i) have a Stated Principal Balance, after deduction of the principal
portion of the Scheduled Payment due in the month of substitution, not in excess
of, and not more than 10% less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) have a Maximum Rate not less than (and not more than two
percentage points greater than) the Maximum Rate of the Deleted Mortgage Loan;
(iii) have a gross margin not less than that of the Deleted Mortgage Loan and,
if Mortgage Loans equal to 1% or more of the balance of the related Mortgage
Pool as of the Cut-off Date have become Deleted Mortgage Loans, not more than
two percentage points more than that of the Deleted Mortgage Loan; (iv) have an
Effective Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;
(v) have Adjustment Dates that are no more or less frequent than the Deleted
Mortgage Loan; (vi) have a remaining term to maturity no greater than (and not
more than one year less than that of) the Deleted Mortgage Loan; (vii) not
permit conversion of the related Mortgage Rate to a permanent fixed Mortgage
Rate; (viii) not be a Cooperative Loan unless the Deleted Mortgage Loan was a
Cooperative Loan; (ix) have the same or better FICO credit score; (x) have an
initial interest adjustment date no earlier than five months before (and no
later than five months after) the initial adjustment date of the Deleted
Mortgage Loan, (xi) comply with each representation and warranty set forth in
Schedule B of this Agreement; and (xii) shall be accompanied by an Opinion of
Counsel that such Replacement Mortgage Loan would not adversely affect the REMIC
status of the Trust Estate or would not otherwise be prohibited by this
Indenture.

         Request for Release: A request for release, substantially in the form
of Exhibit N attached hereto, properly completed and signed by a Servicing
Officer (or, if delivered on behalf of the Seller or Depositor, an Authorized
Officer thereof).

         Residual Certificate: The Class A-R Certificate.

         Residual Interest: The Residual Certificate, other than the portion
thereof representing the right to payments in respect of the Class LT1-R
Interest and the Class LT2-R Interest.

                                       29
<PAGE>

         RESPA: The Real Estate Settlement Procedures Act, 12 U.S.C Section 2601
et seq., and Regulation X, 24 C.F.R. Section 3500.21, thereunder, as the
foregoing may be amended from time to time.

         Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.

         Restricted Certificate: Any Class B-4, Class B-5 or Class B-6
Certificate.

         Restricted Global Security: As defined in Section 3.01(c).

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

         SAIF: The Saving's Association Insurance Fund, or any successor
thereto.

         Schedule of Exceptions: As defined in Section 2.02(a) of this
Agreement.

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

         Section 302 Requirements: Any rules or regulations promulgated pursuant
to the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

         Seller: Merrill Lynch Credit Corporation, a Delaware corporation.

         Senior Certificate: Any one of the Class A-1, Class A-2, Class A-3,
Class X-A, Class X-B or Class A-R Certificates.

         Senior Percentage: Except as provided in this definition, for each
Mortgage Pool with respect to any Distribution Date before August 2014, 100%.
The Senior Percentage for each Mortgage Pool for any Distribution Date occurring
(i) before the Distribution Date in August 2014, but in or after August 2007 on
which the Two Times Test is satisfied, or (ii) in or after August 2014, is the
related Pro Rata Senior Percentage. If the Two Times Test is satisfied with
respect to any Distribution Date prior to the Distribution Date in August 2007,
the Senior Percentage for such Mortgage Pool is the Pro Rata Senior Percentage
plus 50% of an amount equal to 100% minus the related Pro Rata Senior
Percentage. With respect to any Distribution Date after the Senior Termination
Date, the Senior Percentage for such Mortgage Pool will equal zero. If on any
Distribution Date the allocation to the Senior Certificates of the related
Certificate Group then entitled to distributions of principal of full and
partial principal prepayments and other amounts in the percentage required above
would reduce the sum of the Class Principal Amounts of those Certificates to
below zero, the Senior Percentage for such Distribution Date shall be limited to
the percentage necessary to reduce such Class Principal Amounts to zero.

         Senior Prepayment Percentage: With respect to any Distribution Date,
during the ten years beginning on the first Distribution Date, 100%. Except as
provided herein, the related

                                       30
<PAGE>

Senior Prepayment Percentage for each Mortgage Pool and any Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date shall
be as follows: (i) from August 2014 through July 2015, the Senior Percentage
plus 70% of the Subordinate Percentage for that Distribution Date; (ii) from
August 2015 through July 2016, the Senior Percentage plus 60% of the Subordinate
Percentage for that Distribution Date; (iii) from August 2016 through July 2017,
the Senior Percentage plus 40% of the Subordinate Percentage for that
Distribution Date; (iv) from August 2017 through July 2018, the related Senior
Percentage plus 20% of the Subordinate Percentage for that Distribution Date;
and (v) from and after August 2018, the Senior Percentage for that Distribution
Date; provided, however, that there shall be no reduction in the Senior
Prepayment Percentage for a Mortgage Pool unless both Step Down Conditions are
satisfied; and provided, further, that if on any such Distribution Date the Pro
Rata Senior Percentage exceeds the initial Pro Rata Senior Percentage, the
Senior Prepayment Percentage for a Mortgage Pool for that Distribution Date
shall again equal 100%.

         Notwithstanding the above, if on any Distribution Date the Two Times
Test is satisfied, the Senior Prepayment Percentage for a Mortgage Pool shall
equal the related Senior Percentage for such Distribution Date. In addition, if
on any Distribution Date the allocation to the Senior Certificates of the
related Certificate Group then entitled to distributions of principal of full
and partial principal prepayments and other amounts in the percentage required
above would reduce the sum of the Class Principal Amounts of those Certificates
to below zero, the Senior Prepayment Percentage for a Mortgage Pool for such
Distribution Date shall be limited to the percentage necessary to reduce the
related Class Principal Amounts to zero.

         Senior Principal Distribution Amount: With respect to any Mortgage Pool
and Distribution Date, the sum of:

                  (1)      the related Senior Percentage of all amounts
         described in clause (a) of the definition of "Principal Distribution
         Amount" for that Distribution Date;

                  (2)      with respect to each Mortgage Loan in the related
         Mortgage Pool which became a Liquidated Mortgage Loan during the
         related Prepayment Period, the lesser of

                           (x)      the related Senior Percentage of the Stated
                  Principal Balance of that Mortgage Loan and

                           (y)      the related Senior Prepayment Percentage of
                  the amount of the Net Liquidation Proceeds allocable to
                  principal received with respect to that Mortgage Loan; and

                  (3)      the related Senior Prepayment Percentage of the
         amounts described in clauses (b), (c), (d), (f), (g) and (h) of the
         definition of "Principal Distribution Amount".

         Senior Termination Date: For each Certificate Group, the Distribution
Date when the aggregate of the Class Certificate Principal Balances of that
Group has been reduced to zero.

         Servicer: Cendant and its successors and assigns.

         Servicer Advance: The outstanding moneys that have been advanced by the
Servicer from its funds in connection with its servicing of a Mortgage Loan
(including, but not limited to, taxes, ground rents, assessments, insurance
premiums, release fees, foreclosure and bankruptcy fees and expenses, and other
expenses) (i) that have been made by the Servicer in accordance

                                       31
<PAGE>

with the terms and provisions herein, (ii) that are recoverable through
Liquidation Proceeds and/or Insurance Proceeds, or that are made at the
direction of the Seller or to preserve its security interest in the related
Mortgaged Property and (iii) for which the Servicer has a right of
reimbursement.

         Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.

         Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution Date, 0.25% 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 facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date and attached hereto as Exhibit
M, as such list may from time to time be amended.

         Servicing Transfer Costs: As defined in Section 6.14(b).

         Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.

         Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.

         Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous Principal Prepayments and
Liquidation Proceeds allocable to principal and to the payment of principal due
on such Due Date and irrespective of any delinquency in payment by the related
Mortgagor.

         Step Down Conditions: As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding Stated
Principal Balance of all Mortgage Loans 60 days or more Delinquent (including
Mortgage Loans in bankruptcy, REO and foreclosure) (averaged over the preceding
six month period), as a percentage of the aggregate of the Class Principal
Amounts of the Classes of Subordinate Certificates on such Distribution Date,
does not equal or exceed 50% and (ii) cumulative Realized Losses with respect to
the Mortgage Loans do not exceed (a) with respect to each Distribution Date from
August 2014 through July 2015, 30% of the Original Subordinate Principal Amount,
(b) with respect to each Distribution Date from August 2015 through July 2016,
35% of the Original Subordinate Principal Amount, (c) with respect to each
Distribution Date from August 2016 through July 2017, 40% of the Original
Subordinate Principal Amount, (d) with respect to each Distribution Date from
August 2017 through July 2018, 45% of the Original Subordinate Principal Amount
and (e) with respect to each Distribution Date from and after August 2018, 50%
of the Original Subordinate Principal Amount.

         Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 or Class B-6 Certificates.

         Subordinate Certificate Writedown Amount: The amount described in
Section 5.03(b)(iii).

                                       32
<PAGE>

         Subordinate Class Percentage: As to any Distribution Date and any Class
of Subordinate Certificates, a fraction, expressed as a percentage, the
numerator of which is the Class Principal Amount of such Class on such date, and
the denominator of which is the aggregate Class Principal Amount of all Classes
of Subordinate Certificates on such date.

         Subordinate Net WAC: For any Distribution Date, the weighted average of
the Pool 1 Net WAC, the Pool 2 Net WAC and the Pool 3 Net WAC, weighted on the
basis of the Pool Subordinate Amounts for Pool 1, Pool 2 and Pool 3,
respectively, for such Distribution Date.

         Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Mortgage Pool for such Distribution Date.

         Subordinate Prepayment Percentage: With respect to any Distribution
Date and for any Mortgage Pool, the difference between 100% and the related
Senior Prepayment Percentage for such Mortgage Pool for that Distribution Date.

         Subordinate Principal Distribution Amount: With respect to any
Distribution Date and each Mortgage Pool, an amount equal to the sum of:

                  (1)      the related Subordinate Percentage of all amounts
         described in clause (a) of the definition of "Principal Distribution
         Amount" for that Distribution Date;

                  (2)      with respect to each Mortgage Loan in the related
         Mortgage Pool that became a Liquidated Mortgage Loan during the related
         Prepayment Period the amount of the Net Liquidation Proceeds allocated
         to principal received with respect thereto remaining after application
         thereof pursuant to clause (2) of the definition of "Senior Principal
         Distribution Amount" for that Distribution Date, up to the Subordinate
         Percentage of the Stated Principal Balance of such Mortgage Loan; and

                  (3)      the related Subordinate Prepayment Percentage of all
         amounts described in clauses (b), (c), (d), (f), (g) and (h) of the
         definition of "Principal Distribution Amount" for that Mortgage Pool
         and that Distribution Date;

                  minus the sum of:

                  (A) any Principal Transfer Amount paid from the Available
                      Distribution Amount of the Related Certificate Group
                      to an Undercollateralized Group; and

                  (B) the amount of principal distributions made to the
                      Senior Certificates pursuant to Section 5.02(h);

         Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Mortgage Loan with respect to which a Realized Loss has
been incurred after liquidation and disposition of such Mortgage Loan.

         Substitution Amount: As defined in the second paragraph of Section
2.04(b).

         Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class A-R Certificate.

                                       33
<PAGE>

         Telerate Page 3750: The display currently so designated as "Page 3750"
on the Bridge Telerate Service (or such other page selected by the Trustee as
may replace Page 3750 on that service for the purpose of displaying daily
comparable rates on prices).

         Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of (i) the Mortgage Loans, including the right to all payments of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than Scheduled Payments due on or before such
date), and all such payments due after such date but received prior to such date
and intended by the related Mortgagors to be applied after such date; (ii) all
of the Depositor's right, title and interest in and to all amounts from time to
time credited to and the proceeds of the Distribution Account, any Custodial
Accounts or any Escrow Accounts established with respect to the Mortgage Loans;
(iii) all of the Depositor's rights under the Mortgage Loan Purchase and Sale
Agreement and the Mortgage Loan Purchase Agreement; (iv) all of the Depositor's
right, title or interest in REO Property and the proceeds thereof; (v) all of
the Depositor's rights under any Insurance Policies relating to the Mortgage
Loans; (vi) all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing into cash or other liquid assets, including without limitation,
all Insurance Proceeds, Liquidation Proceeds and condemnation awards; and (vii)
the Depositor's security interest in any collateral pledged to secure the
Mortgage Loans, including the Mortgaged Properties including, but not limited
to, any pledge, control and guaranty agreements] and any proceeds of the
foregoing.

         Trustee: Wells Fargo Bank N.A. and any Person succeeding the Trustee
hereunder, or if any separate trustee or any co-trustee shall be appointed as
herein provided, then such separate trustee and such co-trustee, as the case may
be.

         Trustee Mortgage Files: With respect to each Mortgage Loan, the
Mortgage Documents to be retained in the custody and possession of the Trustee.

         Two Times Test: As to any Distribution Date, (i) the Aggregate
Subordinate Percentage is at least two times the Aggregate Subordinate
Percentage as of the Closing Date; (ii) the aggregate of the Stated Principal
Balances of all Mortgage Loans Delinquent 60 days or more (including Mortgage
Loans in bankruptcy, REO and foreclosure) (averaged over the preceding six-month
period), as a percentage of the aggregate of the Class Principal Amount of the
Subordinate Certificates on such Distribution Date, does not equal or exceed
50%; and (iii) cumulative Realized Losses with respect to the Mortgage Loans do
not exceed 20% of the Original Subordinate Principal Amount.

         UCC: The Uniform Commercial Code as enacted in the relevant
jurisdiction.

         Undercollateralized Group: With respect to any Distribution Date, and
any Certificate Group, the aggregate Class Principal Amount of such Certificate
Group is greater than the aggregate Stated Principal Balance of the Mortgage
Loans in the related Mortgage Pool immediately prior to such Distribution Date.

         Underwriter: Merrill Lynch, Pierce, Fenner & Smith Incorporated.

         Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-29
(Exemption Application No. D-8019, 55 Fed. Reg. 21459 (1990)) as amended, or any
substantially similar administrative exemption granted by the U.S. Department of
Labor to an Underwriter.

                                       34
<PAGE>

         Underwriting Agreement: The underwriting agreement, dated February 28,
2003 and the terms agreement, dated July 23, 2004, each between the Depositor
and the Underwriter.

         Underwriting Standards: As to each Mortgage Loan, the Seller's or
Originator's written underwriting guidelines in effect as of the origination
date of such Mortgage Loan.

         Uniform Commercial Code: The Uniform Commercial Code as in effect in
any applicable jurisdiction from time to time.

         Unpaid Basis Risk Shortfall: With respect to any Distribution Date and
any Class of LIBOR Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Certificate remaining unpaid from previous Distribution Dates,
plus interest accrued thereon at the applicable Certificate Interest Rate
determined without regard to clause (ii) of the definition therefor to the
extent not paid on prior Distribution Dates.

         Upper Tier REMIC: As described in the Preliminary Statement.

         Upper Tier REMIC Class A-1 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class A-1 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

         Upper Tier REMIC Class A-2 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class A-2 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

         Upper Tier REMIC Class B-1 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-1 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

         Upper Tier REMIC Class B-2 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-2 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

         Upper Tier REMIC Class B-3 Interest: An uncertificated interest in the
Upper Tier REMIC having the same characteristics as the Class B-3 Certificates,
but without the right to receive payments in respect of Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls.

         Upper Tier REMIC Regular Interest: Each of the REMIC Components, the
Upper Tier REMIC Class A-1 Interest, the Upper Tier REMIC Class A-2 Interest,
the Upper-Tier REMIC Class B-1 Interest, the Upper-Tier REMIC Class B-2
Interest, the Upper-Tier REMIC Class B-3 Interest, the Class A-3 Certificates,
the Class B-4 Certificates, the Class B-5 Certificates and the Class B-6
Certificates.

         USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 9.13.

         Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
98.00% of all Voting Interests shall be allocated to the Class A-1, Class A-2,
Class A-3, Class A-R, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and
Class B-6 Certificates. Voting Interests shall be allocated among such
Certificates (other than the Class A-

                                       35
<PAGE>

R Certificates) based on the product of (i) 98.00% and (ii) the fraction,
expressed as a percentage, the numerator of which is the aggregate Class
Principal Amounts for each Class then outstanding and the denominator of which
is the Aggregate Stated Principal Balance outstanding, and the remainder of such
percentage of Voting Interests shall be allocated to the Class A-R Certificates.
At all times during the term of this Agreement, 2.00% of all Voting Interests
shall be allocated among the Class X-A and Class X-B Certificates, while they
remain outstanding, in proportion to their relative Class Notional Amounts.
Voting Interests shall be allocated among the Certificates within each such
Class in proportion to their Certificate Principal Amounts or Percentage
Interests.

         X-A1 Component: An interest only Component represented by the Class X-A
Certificates which has a notional amount for any Distribution Date equal to the
Class Principal Amount of the Class A-1 Certificates immediately prior to such
Distribution Date and having an interest rate with respect to any Distribution
Date (and the related Accrual Period) equal to the excess, if any, of (i) the
Pool 1 Net WAC for such Distribution Date over (ii) the Certificate Interest
Rate of the Class A-1 Certificates for such Distribution Date. The X-A1
Component shall be related to the Group 1 Certificates.

         X-A2 Component: An interest-only Component represented by the Class X-A
Certificates which has a notional amount for any Distribution Date equal to the
Class Principal Amount of the Class A-2 Certificates immediately prior to such
Distribution Date and having an interest rate with respect to any Distribution
Date (and the related Accrual Period) equal to the excess, if any, of (i) the
Pool 2 Net WAC for such Distribution Date over (ii) the Certificate Interest
Rate of the Class A-2 Certificates for such Distribution Date. The X-A2
Component shall be related to the Group 2 Certificates.

         X-B1 Component: A regular interest in the Upper Tier REMIC having a
notional amount for any Distribution Date equal to the Class Principal Amount of
the Class B-1 Certificates immediately before such Distribution Date and having
an interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess, if any, of (x) the Subordinate Net WAC for such
Distribution Date over (y) the Certificate Interest Rate on the Class B-1
Certificates for such Distribution Date.

         X-B2 Component: A regular interest in the Upper Tier REMIC having a
notional amount for any Distribution Date equal to the Class Principal Amount of
the Class B-2 Certificates immediately before such Distribution Date and having
an interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess, if any, of (x) the Subordinate Net WAC for such
Distribution Date over (y) the Certificate Interest Rate on the Class B-2
Certificates for such Distribution Date.

         X-B3 Component: A regular interest in the Upper Tier REMIC having a
notional amount for any Distribution Date equal to the Class Principal Amount of
the Class B-3 Certificates immediately before such Distribution Date and having
an interest rate with respect to any Distribution Date (and the related Accrual
Period) equal to the excess, if any, of the Subordinate Net WAC for such
Distribution Date over (y) the Certificate Interest Rate on the Class B-3
Certificates for such Distribution Date.

         Section 1.02. Calculations Respecting Mortgage Loans.

         Calculations required to be made pursuant to this Agreement with
respect to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of

                                       36
<PAGE>

the Mortgage Loans and reports of payments received from the Mortgagor on such
Mortgage Loans and payments to be made to the Trustee as provided by the
Servicer. The Trustee shall not be required to recompute, verify or recalculate
the information supplied to it by the Servicer.

                                  ARTICLE II.

                              DECLARATION OF TRUST;
                            ISSUANCE OF CERTIFICATES

         Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.

                           (a)      Concurrently with the execution and delivery
of this Agreement, the Depositor does hereby establish the Trust Fund and
transfer, assign, set over, deposit with and otherwise convey to the Trustee,
without recourse, subject to Sections 2.02 and 2.04, in trust, all the right,
title and interest of the Depositor in and to the Trust Fund. Such conveyance
includes, without limitation, (i) the Mortgage Loans, including the right to all
payments of principal and interest received on or with respect to the Mortgage
Loans on and after the Cut-off Date (other than Scheduled Payments due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date; (ii) all of the Depositor's right, title and interest in and to all
amounts from time to time credited to and the proceeds of the Distribution
Account, any Custodial Accounts or any Escrow Account established with respect
to the Mortgage Loans; (iii) all of the Depositor's rights under the Mortgage
Loan Purchase and Sale Agreement; (iv) all of the Depositor's right, title or
interest in REO Property and the proceeds thereof; (v) all of the Depositor's
rights under any Insurance Policies relating to the Mortgage Loans; (vi) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including, without limitation, all Insurance
Proceeds, Liquidation Proceeds and condemnation awards; and (vii) the
Depositor's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties including, but not limited to, any
pledge, control and guaranty agreements and any proceeds of the foregoing, to
have and to hold, in trust; and the Trustee declares that, subject to the review
provided for in Section 2.02, it has received and shall hold the Trust Fund, as
trustee, in trust, for the benefit and use of the Holders of the Certificates
and for the purposes and subject to the terms and conditions set forth in this
Agreement, and, concurrently with such receipt, has caused to be executed,
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Trust Fund, Certificates in the authorized denominations evidencing the
entire ownership of the Trust Fund.

         The foregoing sale, transfer, assignment, set-over, deposit and
conveyance does not and is not intended to result in the creation or assumption
by the Trustee of any obligation of the Depositor, the Seller or any other
Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth therein.

         It is agreed and understood by the parties hereto that it is not
intended that any Mortgage Loan be included in the Trust Fund that is a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act, effective
November 27, 2003, and the New Mexico Home Loan Protection Act, effective
January 1, 2004.

         In connection with such transfer and assignment of the Mortgage Loans,
the Depositor shall deliver to, and deposit with, or cause to be delivered to
and deposited with, the Trustee, the documents or instruments described in
Section 2 of the Custodial Agreement with respect to each Mortgage Loan;
provided that in Section 2a thereof, a lost note affidavit (including a copy of
the

                                       37
<PAGE>

original Mortgage Note) may be delivered in lieu of the original Mortgage Note
(each a "Trustee Mortgage File") (the Custodial Agreement to be deemed modified
by the foregoing) so transferred and assigned.

                           (b)      The Depositor shall cause the Mortgage Notes
with respect to each Mortgage Loan to be completed either (A) in blank, without
recourse, or (B) endorsed to "Wells Fargo Bank N.A., as Trustee of the Merrill
Lynch Mortgage Investors Trust Series MLCC 2004-HB1, Mortgage Pass-Through
Certificates, without recourse" and the Depositor shall cause Assignments of
Mortgage with respect to each Mortgage Loan other than a Cooperative Mortgage
Loan to be completed either (A) in blank or (B) to "Wells Fargo Bank N.A., as
Trustee of the Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1,
Mortgage Pass-Through Certificates," within 30 days of the Closing Date for
purpose of their recording; provided, however, that such Assignments of Mortgage
need not be recorded unless required in writing by the Rating Agencies;
provided, further, that with respect to each MERS Mortgage Loan where MERS is
not the Mortgagee of record, the original Assignment of Mortgage showing MERS as
the assignee of the Mortgage, with the evidence of recording thereon or copies
thereof certified by an officer of the Depositor to have been submitted for
recordation, shall be delivered to the Trustee.

         If any Mortgage has been recorded in the name of MERS or its designee,
no Assignment of Mortgage in favor of the Trustee will be required to be
prepared or delivered and instead, the Servicer shall take all actions as are
necessary to cause the Trustee to be shown as the owner of the related Mortgage
Loan on the records of MERS for the purpose of the system of recording transfer
of beneficial ownership of mortgages maintained by MERS.

                           (c)      In instances where a title insurance policy
is required to be delivered to the Trustee and is not so delivered, the
Depositor will provide a copy of such title insurance policy to the Trustee, as
promptly as practicable after the execution and delivery hereof, but in any case
within 270 days of the Closing Date.

                           (d)      For Mortgage Loans (if any) that have been
prepaid in full after the Cut-off Date and prior to the Closing Date, the
Depositor, in lieu of delivering the above Trustee Mortgage File, shall deliver
to the Trustee an Officer's Certificate which shall include a statement to the
effect that all amounts received in connection with such prepayment that are
required to be deposited in the Distribution Account pursuant to Section 4.01
have been so deposited. All original documents that are not delivered to the
Trustee shall be held by the Servicer in trust for the benefit of the Trustee
and the Certificateholders.

         Section 2.02. Acceptance of Trust Fund by Trustee; Review of
Documentation for Trust Fund.

                           (a)      The Trustee, by execution and delivery
hereof, acknowledges receipt by it of the Trustee Mortgage Files pertaining to
the Mortgage Loans listed on the Mortgage Loan Schedule, subject to review
thereof as provided herein. Upon receipt by the Trustee of each Trustee Mortgage
File, the Trustee shall review each Trustee Mortgage File in accordance with the
review procedures set forth in Section 2 of Amendment No. 1 to the Custodial
Agreement.

         In making such verifications, the Trustee may rely conclusively on the
Mortgage Loan Schedule and the documents constituting the Trustee Mortgage File,
and the Trustee shall have no obligation to independently verify the validity,
enforceability, recordability, sufficiency, due

                                       38
<PAGE>

authorization or genuineness of any document in any Trustee Mortgage File or any
Mortgage Loan hereunder, nor the collectibility, insurability, effectiveness or
suitability of any Mortgage Loan hereunder. The Trustee shall prepare an initial
certification to be delivered to the Depositor, the Seller and the Servicer on
the Closing Date in the form annexed hereto as Exhibit K (the "Initial
Certification") with respect to the Mortgage Loans (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified on the Schedule of
Exceptions attached to the Initial Certification (the "Schedule of Exceptions")
as not covered by such Initial Certification) listed on the Mortgage Loan
Schedule. If the Trustee determines from such verification that any discrepancy
or deficiency exists with respect to a Trustee Mortgage File, the Trustee shall
note such omission, discrepancy or deficiency on the Schedule of Exceptions
attached to the Initial Certification, and shall deliver a copy (which shall be
electronic, if requested) of the Schedule of Exceptions to the Depositor on the
Closing Date. During the life of the Mortgage Loans (while subject to this
Agreement), in the event the Trustee discovers any defect with respect to any
Trustee Mortgage File, the Trustee shall give written specification of such
defect to the Depositor. Except as specifically provided above, the Trustee
shall be under no duty to review, inspect or examine such documents to determine
that any of them are enforceable or appropriate for their prescribed purpose.

                           (b)      If in the course of the review described in
paragraph (a) of this Section 2.02 the Trustee discovers any document or
documents constituting a part of a Trustee Mortgage File that is missing, does
not appear regular on its face (i.e., is mutilated, damaged, defaced, torn or
otherwise physically altered) or appears to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule (each, a "Material Defect"), the
Trustee, upon discovering such Material Defect shall promptly identify the
Mortgage Loan to which such Material Defect relates to the Depositor, the Seller
and the Servicer. Within 90 days of its receipt of such notice (but in no case
prior to the 270th day following the Closing Date), the Depositor shall be
required to cure such Material Defect (and, in such event, the Depositor shall
provide the Trustee with an Officer's Certificate confirming that such cure has
been effected). If the Servicer notifies the Depositor and the Trustee in
writing that (i) a loss has occurred and (ii) such loss relates to a Mortgage
Loan for which the Trustee previously identified a Material Defect or for which
the Servicer has identified a Material Defect and the Depositor has not cured
such Material Defect, then the Depositor shall repurchase such Mortgage Loan at
the Purchase Price therefore in the event that such loss would, if such Mortgage
Loan is not repurchased by the Depositor, constitute a Realized Loss and such
loss is attributable to the failure of the Depositor to have cured such Material
Defect. A loss shall be deemed to be attributable to the failure of the
Depositor to cure a Material Defect if, as determined by the Depositor, upon
mutual agreement with the Trustee each acting in good faith, absent such
Material Defect, such loss would not have been incurred. Within the two-year
period following the Closing Date, the Depositor may, in lieu of repurchasing a
Mortgage Loan pursuant to this Section 2.02(b), substitute for such Mortgage
Loan a Replacement Mortgage Loan subject to the provisions of Section 2.04.

                           (c)      Within 270 days following the Closing Date,
the Trustee shall deliver to the Depositor, the Seller and the Servicer, a final
certification substantially in the form attached as Exhibit L (the "Final
Certification") evidencing the completeness of the Trustee Mortgage Files in its
possession or control, with any exceptions noted on the Schedule of Exceptions
attached to the Final Certification.

                           (d)      Nothing in this Agreement shall be construed
to constitute an assumption by the Trust Fund, the Trustee or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Mortgage Loan or to any Mortgagor.

                                       39
<PAGE>

                           (e)      Upon execution of this Agreement, the
Depositor hereby delivers to the Trustee and the Trustee acknowledges receipt of
the Mortgage Loan Purchase and Sale Agreement.

         Section 2.03. Representations and Warranties of the Depositor and the
Servicer.

A.       The Depositor hereby represents and warrants to the Servicer and to the
Trustee , for the benefit of the Certificateholders as of the Closing Date or
such other date as is specified, that:

                           (i)      the Depositor is a corporation duly
                  organized, validly existing and in good standing under the
                  laws governing its creation and existence and has full
                  corporate power and authority to own its property, to carry on
                  its business as presently conducted, to enter into and perform
                  its obligations under this Agreement, and to create the trust
                  pursuant hereto;

                           (ii)     the execution and delivery by the Depositor
                  of this Agreement have been duly authorized by all necessary
                  corporate action on the part of the Depositor; neither the
                  execution and delivery of this Agreement, nor the consummation
                  of the transactions herein contemplated, nor compliance with
                  the provisions hereof, will conflict with or result in a
                  breach of, or constitute a default under, any of the
                  provisions of any law, governmental rule, regulation,
                  judgment, decree or order binding on the Depositor or its
                  properties or the certificate of incorporation or bylaws of
                  the Depositor;

                           (iii)    the execution, delivery and performance by
                  the Depositor of this Agreement and the consummation of the
                  transactions contemplated hereby do not require the consent or
                  approval of, the giving of notice to, the registration with,
                  or the taking of any other action in respect of, any state,
                  federal or other governmental authority or agency, except such
                  as has been obtained, given, effected or taken prior to the
                  date hereof;

                           (iv)     this Agreement has been duly executed and
                  delivered by the Depositor and, assuming due authorization,
                  execution and delivery by the Trustee, constitutes a valid and
                  binding obligation of the Depositor enforceable against it in
                  accordance with its terms except as such enforceability may be
                  subject to (A) applicable bankruptcy and insolvency laws and
                  other similar laws affecting the enforcement of the rights of
                  creditors generally and (B) general principles of equity
                  regardless of whether such enforcement is considered in a
                  proceeding in equity or at law;

                           (v)      there are no actions, suits or proceedings
                  pending or, to the knowledge of the Depositor, threatened or
                  likely to be asserted against or affecting the Depositor,
                  before or by any court, administrative agency, arbitrator or
                  governmental body (A) with respect to any of the transactions
                  contemplated by this Agreement or (B) with respect to any
                  other matter which in the judgment of the Depositor will be
                  determined adversely to the Depositor and will if determined
                  adversely to the Depositor materially and adversely affect it
                  or its business, assets, operations or condition, financial or
                  otherwise, or adversely affect its ability to perform its
                  obligations under this Agreement;

                                       40
<PAGE>

                           (vi)     immediately prior to the transfer and
                  assignment of the Mortgage Loans to the Trustee, the Depositor
                  was the sole owner of record and holder of each Mortgage Loan,
                  and the Depositor had good and marketable title thereto, and
                  had full right to transfer and sell each Mortgage Loan to the
                  Trustee free and clear, subject only to (1) liens of current
                  real property taxes and assessments not yet due and payable
                  and, if the related Mortgaged Property is a condominium unit,
                  any lien for common charges permitted by statute, (2)
                  covenants, conditions and restrictions, rights of way,
                  easements and other matters of public record as of the date of
                  recording of such Mortgage acceptable to mortgage lending
                  institutions in the area in which the related Mortgaged
                  Property is located and specifically referred to in the
                  lender's title insurance policy or attorney's opinion of title
                  and abstract of title delivered to the Originator of such
                  Mortgage Loan, and (3) such other matters to which like
                  properties are commonly subject which do not, individually or
                  in the aggregate, materially interfere with the benefits of
                  the security intended to be provided by the Mortgage, of any
                  encumbrance, equity, participation interest, lien, pledge,
                  charge, claim or security interest, and had full right and
                  authority, subject to no interest or participation of, or
                  agreement with, any other party, to sell and assign each
                  Mortgage Loan pursuant to this Agreement;

                           (vii)    This Agreement creates a valid and
                  continuing security interest (as defined in the applicable
                  Uniform Commercial Code (the "UCC"), in the Mortgage Loans in
                  favor of the Trustee, which security interest is prior to all
                  other liens, and is enforceable as such against creditors of
                  and purchasers from the Depositor;

                           (viii)   The Mortgage Loans constitute "instruments"
                  within the meaning of the applicable UCC;

                           (ix)     Other than the security interest granted to
                  the Trustee pursuant to this Agreement, the Depositor has not
                  pledged, assigned, sold, granted a security interest in, or
                  otherwise conveyed any of the Mortgage Loans. The Depositor
                  has not authorized the filing of and is not aware of any
                  financing statement against the Depositor that includes a
                  description of the collateral covering the Mortgage Loans
                  other than a financing statement relating to the security
                  interest granted to the Trustee hereunder or that has been
                  terminated. The Depositor is not aware of any judgment or tax
                  lien filings against the Depositor;

                           (x)      None of the Mortgage Loans have any marks or
                  notations indicating that such Mortgage Loans have been
                  pledged, assigned or otherwise conveyed to any Person other
                  than the Trustee; and

                           (xi)     The Depositor has received all consents and
                  approvals required by the terms of the Mortgage Loans to
                  convey the Mortgage Loans hereunder to the Trustee;

                           (xii)    As of the Closing Date, each Mortgage Loan
                  is a "qualified mortgage" within the meaning of Section
                  860G(a)(3) of the Code (without regard to Treasury Regulations
                  Section 1.860G-2(f)) or any similar rule that provides that a
                  defective obligation is a qualified mortgage for a temporary
                  period);

                                       41
<PAGE>

                           (xiii)   As of the Closing Date, no Mortgage Loan
                  provides for interest other than at either (x) a single fixed
                  rate in effect throughout the term of the Mortgage Loan or (y)
                  a single "variable rate" (within the meaning of Treasury
                  Regulations Section 1.860G-1(a)(3)) in effect throughout the
                  term of the Mortgage Loan;

                           (xiv)    As of the Closing Date, no Mortgage is the
                  subject of pending or final foreclosure proceedings; and

                           (xv)     As of the Closing Date, the Depositor would
                  not initiate foreclosure proceedings with respect to any
                  Mortgage Loan based on such Mortgage Loan's delinquency status
                  prior to the next scheduled payment date for such Mortgage
                  Loan.

         The foregoing representations made in this Section 2.03 by the
Depositor shall survive the termination of this Agreement and shall not be
waived by any party hereto

B.       The Servicer hereby represents and warrants to the Depositor and to the
Trustee, for the benefit of the Certificateholders as of the Closing Date that:

                           (i)      The Servicer is a corporation duly
                  organized, validly existing and in good standing under the
                  laws of the State of New Jersey. The Servicer has in full
                  force and effect (without notice of possible suspension,
                  revocation or impairment) all required qualifications,
                  permits, approvals, licenses, and registrations, or exemption
                  therefrom, to conduct all activities in all jurisdictions in
                  which its activities with respect to the Mortgage Loans
                  require it to be qualified or licensed;

                           (ii)     The Servicer has all requisite corporate
                  power, authority and capacity to carry on its business as it
                  is now being conducted, to execute and deliver this Agreement,
                  and to perform all of its obligations hereunder. The Servicer
                  does not believe, nor does it have any cause or reason to
                  believe, that it cannot perform each and every covenant
                  contained in this Agreement;

                           (iii)    The execution, delivery and performance of
                  this Agreement by the Servicer and consummation of the
                  transactions contemplated hereby have been duly and validly
                  authorized by all necessary corporate, shareholder or other
                  action by the Servicer; this Agreement has been duly and
                  validly executed and delivered by the Servicer; and this
                  Agreement is a valid and legally binding agreement of the
                  Servicer, enforceable against the Servicer in accordance with
                  its respective terms, subject to bankruptcy, insolvency and
                  similar laws affecting generally the enforcement of creditors'
                  rights and the discretion of a court to grant specific
                  performance of contracts;

                           (iv)     Neither the execution and delivery of this
                  Agreement, nor the consummation of the transactions
                  contemplated hereby, nor compliance with their respective
                  terms and conditions shall (a) violate, conflict with, result
                  in the breach of, constitute a default under, be prohibited by
                  or require any additional approval under any terms, conditions
                  or provisions of the Servicer's articles of incorporation or
                  by-laws or any other similar corporate or organizational

                                       42
<PAGE>

                  document of the Servicer; any mortgage, indenture, deed of
                  trust, loan or credit agreement or other agreement or
                  instrument to which the Servicer is now a party or by which it
                  is bound; or any law, ordinance, rule, regulation, order,
                  judgment or decree of any governmental authority applicable to
                  the Servicer; or (b) result in the creation or imposition of
                  any lien, charge or encumbrance of any material nature upon
                  any of the properties or assets of the Servicer;

                           (v)      The Servicer holds all licenses, approvals,
                  permits and other authorizations, or exemptions therefrom,
                  required under applicable law to assume responsibility for
                  servicing the Mortgage Loans;

                           (vi)     There is no litigation, claim, demand,
                  proceeding or governmental investigation existing or pending,
                  or to the knowledge of the Servicer, threatened, nor is there
                  any order, injunction or decree outstanding against or
                  relating to the Servicer that could (i) have a material
                  adverse effect upon the performance by the Servicer of its
                  obligations under this Agreement or (ii) to the Servicer's
                  knowledge, result in any material loss or liability to
                  Depositor, the Trustee, the Trust Fund or the Seller. Further,
                  to the Servicer's knowledge, there is no meritorious basis for
                  any such litigation, claim, demand, proceeding, or
                  governmental investigation;

                           (vii)    The Servicer has been approved by GNMA,
                  Fannie Mae and FHLMC and will remain approved as an "eligible
                  seller/servicer" of residential mortgage loans as provided in
                  GNMA, Fannie Mae, or FHLMC guidelines and in good standing.
                  The Servicer has not received any notification from GNMA,
                  Fannie Mae or FHLMC that the Servicer is not in compliance
                  with the requirements of the approved "seller/servicer"
                  status. The Servicer is a mortgagee approved by the Secretary
                  of HUD pursuant to Section 203 and 211 of the National Housing
                  Act. The Servicer has not received any notification from HUD
                  that the Servicer is not in compliance with the requirements
                  of the approved mortgagee status;

                           (viii)   The servicing practices to be used by the
                  Servicer under this Agreement are, and shall remain, in all
                  material respects in compliance with Accepted Servicing
                  Practices, including without limitation, all federal, state
                  and local laws, rules, all regulations and requirements in
                  connection therewith, and Fannie Mae guidelines, as
                  applicable;

                           (ix)     The Servicer has not received written notice
                  from or on behalf of FHA, HUD, FDIC, Fannie Mae, FHLMC or
                  GNMA, advising the Servicer of its failure to comply with
                  applicable servicing or claims procedures, or resulted in a
                  request for repurchase of mortgage loans or indemnification in
                  connection with any mortgage loans;

                           (x)      The Servicer has in place a contingency plan
                  that will enable it to perform its obligations under this
                  Agreement in all material respects, at another location within
                  five (5) Business Days in the event its primary location is
                  rendered inoperative as a result of a natural or other
                  disaster or emergency;

                           (xi)     The Servicer maintains and shall maintain,
                  in good standing, all licenses and approvals necessary to
                  service the Mortgage Loans and maintains

                                       43
<PAGE>

                  and shall at all times maintain the capital requirements
                  imposed by the licensing or approving entities having
                  jurisdiction over the Servicer. The Servicer has filed
                  applications for all applicable licenses and qualifications to
                  do business and to service the Mortgage Loans in the U.S.
                  Virgin Islands;

                           (xii)    The Servicer maintains and shall at all
                  times maintain error and omissions and fidelity insurance
                  coverage of the type and in the amounts required by Fannie
                  Mae;

                           (xiii)   The Servicer has, and shall at all times
                  maintain during the term of this Agreement, sufficient
                  systems, including but not limited to the Servicer's EDP, and
                  trained and experienced personnel in place to perform its
                  obligations under this Agreement;

                           (xiv)    For so long as, and to the extent that, the
                  Servicer services the Mortgage Loans, the Servicer will
                  continue to comply with each applicable federal, state, or
                  local, law, statute, and ordinance, and any rule, regulation,
                  or order issued thereunder, pertaining to the subject matter
                  of this Agreement, including, but not limited to, usury,
                  RESPA, Consumer Credit Reporting Act, Equal Credit Opportunity
                  Act, Federal Deposit Insurance Corporation Improvement Act,
                  Regulation B, Fair Credit Reporting Act, Fair Debt Collection
                  Practices Act, Fair Housing Act, Truth in Lending Act and
                  Regulation Z, Flood Disaster Protection Act of 1973, and any
                  applicable regulations related thereto, and such other fair
                  housing, anti-redlining, equal credit opportunity,
                  truth-in-lending, real estate settlement procedures, fair
                  credit reporting, and every other prohibition against unlawful
                  discrimination in residential mortgage lending or governing
                  consumer credit, and all state consumer credit statutes and
                  regulations, as amended. In the event the Depositor or the
                  Trustee has a reasonable good faith belief in the Servicer's
                  non-compliance with this representation and warranty and upon
                  the Depositor's or the Trustee's written request, the Servicer
                  shall deliver to the Depositor or the Trustee reasonable
                  evidence of compliance with any of the requirements of this
                  representation and warranty; and

                           (xv)     Neither the Servicer, its parent, nor any of
                  its subsidiaries is in bankruptcy, receivership or
                  conservatorship. The Servicer has the requisite financial
                  resources and ability to meet its obligations under this
                  Agreement, including, but not limited to, any and all
                  indemnification obligations,

         Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in this Section
2.03(B) which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property, the Servicer
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Servicer shall, at the Trustee's
option, assign the Servicer's rights and obligations under this Agreement (or
respecting the affected Mortgage Loans) to a successor servicer selected by the
Depositor with the prior consent and approval of the Trustee. Such assignment
shall be made in accordance with this Agreement.

                                       44
<PAGE>

         Section 2.04. Discovery of Breach; Repurchase or Substitution of
Mortgage Loans.

                           (a)      Pursuant to Sections 3(a) and 3(b) of the
Mortgage Loan Purchase and Sale Agreement, the Seller has made certain
representations and warranties as to the characteristics of the Mortgage Loans
(such representations and warranties are set out in full in Schedule B of this
Agreement) as of the Closing Date and the conveyance thereof from the Seller to
the Depositor, for the benefit of the Trustee and the Certificateholders, and
the Seller has agreed to comply with the provisions of this Section 2.04 in
respect of a breach of any of such representations and warranties.

         It is understood and agreed that (i) the representations and warranties
of the Depositor and the Servicer set forth in Section 2.03 and (ii) the
representations and warranties of the Seller set forth in Sections 3(a) and 3(b)
of the Mortgage Loan Purchase and Sale Agreement shall survive delivery of the
Trustee Mortgage Files and the Assignment of Mortgage of each Mortgage Loan to
the Trustee and shall continue throughout the term of this Agreement. Upon
discovery (i) by the Depositor, the Seller, the Servicer or the Trustee of a
breach of any representation or warranty made by the Depositor under Section
2.03 which materially adversely affects the value of a Mortgage Loan or the
interest therein of the Certificateholder (a "Defective Mortgage Loan"), or (ii)
by the Depositor or the Seller of the breach by the Seller of any representation
or warranty under the Mortgage Loan Purchase and Sale Agreement in respect of
any Mortgage Loan, which breach results in the Mortgage Loan being a "Defective
Mortgage Loan" (each of such parties hereby agreeing to give written notice of
such breach to the Trustee and the other of such parties), the Trustee, or its
designee, shall promptly notify the Depositor in writing of such breach and
request that the Depositor cure or cause the cure of such breach within 90 days
from the date that the Depositor discovered or was notified of such breach, and
if the Depositor does not cure such breach in all material respects during such
period, the Trustee shall (i) in the case of an uncured breach under Section
2.03, cause the Depositor to repurchase such Defective Mortgage Loan at the
Purchase Price and (ii) in the case of an uncured breach by the Seller under the
Mortgage Loan Purchase and Sale Agreement, cause the Depositor to enforce the
Seller's obligation under the Mortgage Loan Purchase and Sale Agreement to
repurchase that Defective Mortgage Loan from the Trust Fund at the Purchase
Price, in each case on or prior to the Determination Date following the
expiration of such 90-day period (subject to Section 2.04(b) below); provided,
however, that, in connection with any such breach under clause (ii) above that
could not reasonably have been cured within such 90-day period, if the Seller
shall have commenced to cure such breach within such 90-day period and, if the
defective Mortgage Loan qualifies as a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code following such 90-day period, the Seller shall
be permitted to proceed thereafter diligently and expeditiously to cure the same
within an additional 90-day period. The Purchase Price for the repurchased
Defective Mortgage Loan shall be deposited in the related Distribution Account,
and the Trustee, or its designee, upon receipt of such deposit and two copies of
a Request for Release with respect to such Defective Mortgage Loan, shall
release to the Seller or the Depositor, as applicable, the related Trustee
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranties, as
either party shall furnish to it and as shall be necessary to vest in such party
any Defective Mortgage Loan released pursuant hereto and the Trustee, or its
designee, shall have no further responsibility with regard to such Trustee
Mortgage File (it being understood that the Trustee shall have no responsibility
for determining the sufficiency of such assignment for its intended purpose). In
lieu of repurchasing any such Defective Mortgage Loan as provided above, the
Seller may cause such Defective Mortgage Loan to be removed from the Trust Fund
(in which case it shall become a Deleted Mortgage Loan) and substitute one or
more Replacement Mortgage Loans in the manner and subject to the limitations set
forth in Section 2.04(b) below. It is understood and

                                       45
<PAGE>

agreed that the obligation of the Seller (or the Depositor, if applicable) to
cure or to repurchase (or to substitute for) any Mortgage Loan as to which a
breach has occurred and is continuing shall constitute the sole remedy against
the Seller (or the Depositor, if applicable) respecting such breach available to
the Trustee on behalf of the Certificateholders. With respect to the
representations and warranties described in Schedule B which are made to the
best of the Seller's knowledge, if it is discovered by any of the Depositor, the
Seller or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, then notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.

                           (b)      Any substitution of Replacement Mortgage
Loans for Deleted Mortgage Loans made pursuant to Section 2.04(a) above must be
effected prior to the last Business Day that is within two years after the
Closing Date. As to any Deleted Mortgage Loan for which the Seller substitutes a
Replacement Mortgage Loan or Loans, such substitution shall be effected by
delivering to the Trustee for such Replacement Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, together with
an Officers' Certificate stating that each such Replacement Mortgage Loan
satisfies the definition thereof and specifying the Substitution Amount (as
described below), if any, in connection with such substitution. The Trustee
shall acknowledge receipt for such Replacement Mortgage Loan and, within 45 days
thereafter, shall review such Mortgage Documents as specified in this Agreement
under Section 2.02(a) and deliver to the Depositor, with respect to such
Replacement Mortgage Loans, a certification substantially in the form of a
revised Initial Certification, with any exceptions noted thereon. Within one
year of the date of substitution, the Trustee shall deliver to the Depositor a
certification substantially in the form of a revised Final Certification, with
respect to such Replacement Mortgage Loans, with any exceptions noted thereon.
Monthly Payments due with respect to Replacement Mortgage Loans in the month of
substitution shall not be included as part of the Trust Fund and shall be
retained by the Seller. For the month of substitution, distributions to
Certificateholders shall reflect the collections and recoveries in respect of
such Deleted Mortgage in the Due Period preceding the month of substitution and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. Upon such substitution, such
Replacement Mortgage Loan shall constitute part of the Trust Fund and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase and Sale Agreement, including all representations and warranties
thereof included in the Mortgage Loan Purchase and Sale Agreement, in each case
as of the date of substitution.

         For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee, based upon
information provided by the Servicer, shall determine the excess (each, a
"Substitution Amount"), if any, by which the aggregate Purchase Price of all
such Deleted Mortgage Loans exceeds the aggregate Stated Principal Balance of
the Replacement Mortgage Loans replacing such Deleted Mortgage Loans, together
with one month's interest on such excess amount at the applicable Net Mortgage
Rate. On the date of such substitution, the Seller shall deliver or cause to be
delivered to the Servicer for deposit in the Custodial Account an amount equal
to the related Substitution Amount, if any, and the Trustee, upon receipt of the
related Replacement Mortgage Loan or Loans and two copies of a Request for
Release with respect to the Deleted Mortgage Loan or Loans, shall release to the
Seller the related Trustee Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Seller shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.

                                       46
<PAGE>

         In addition, the Seller shall obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to the effect that such substitution (either
specifically or as a class of transactions) shall not cause (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of the Code or on
"contributions after the startup date" under Section 860G(d)(l) of the Code, or
(b) any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Certificate is outstanding. If such Opinion of Counsel can not be delivered,
then such substitution may only be effected at such time as the required Opinion
of Counsel can be given.

                           (c)      Upon discovery by the Seller, the Depositor,
the Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall within two Business Days give written notice
thereof to the other parties. In connection therewith, the Seller or Depositor,
as applicable, shall repurchase, or the Seller, subject to the limitations set
forth in Section 2.04(b), shall substitute one or more Replacement Mortgage
Loans for the affected Mortgage Loan within 90 days of the earlier of discovery
or receipt of such notice with respect to such affected Mortgage Loan. Any such
repurchase or substitution shall be made in the same manner as set forth in
Sections 2.04(a) and 2.04(b) above. The Trustee shall re-convey to the Seller
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty.

         The Seller indemnifies and holds the Trust Fund, the Trustee, the
Depositor, the Servicer and each Certificateholder harmless against any and all
taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the Trust
Fund, the Trustee, the Depositor, the Servicer and any Certificateholder may
sustain in connection with any actions of such party relating to a repurchase of
a Mortgage Loan other than in compliance with the terms of this Section 2.04 and
the Mortgage Loan Purchase and Sale Agreement, to the extent that any such
action causes (i) any federal or state tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (ii) any REMIC formed
hereby to fail to qualify as a REMIC at any time that any Certificate is
outstanding.

         Section 2.05. Grant Clause.

                           (a)      It is intended that the conveyance of the
Depositor's right, title and interest in and to property constituting the Trust
Fund pursuant to this Agreement shall constitute, and shall be construed as, a
sale of such property and not a grant of a security interest to secure a loan.
However, if such conveyance is deemed to be in respect of a loan, it is intended
that: (1) the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement; (2) the Depositor hereby grants to the
Trustee for the benefit of the Holders of the Certificates a first priority
security interest in all of the Depositor's right, title and interest in, to and
under, whether now owned or hereafter acquired, the Trust Fund and all proceeds
of any and all property constituting the Trust Fund to secure payment of the
Certificates; and (3) this Agreement shall constitute a security agreement under
applicable law. If such conveyance is deemed to be in respect of a loan and the
trust created by this Agreement terminates prior to the satisfaction of the
claims of any Person holding any Certificate, the security interest created
hereby shall continue in full force and effect and the Trustee shall be deemed
to be the collateral agent for the benefit of such Person, and all proceeds
shall be distributed as herein provided.

                                       47
<PAGE>

                           (b)      The Depositor shall, to the extent
consistent with this Agreement, take such reasonable actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans and the other property described above, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement. The Depositor will, at its own expense, make all initial filings on
or about the Closing Date and shall forward a copy of such filing or filings to
the Trustee. Without limiting the generality of the foregoing, the Depositor
shall prepare and forward for filing, or shall cause to be forwarded for filing,
at the expense of the Depositor, all filings necessary to maintain the
effectiveness of any original filings necessary under the relevant UCC to
perfect the Trustee's security interest in or lien on the Mortgage Loans and the
other property described above, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of Seller, the Depositor or the Trustee, (2) any change of location of
the place of business or the chief executive office of the Seller or the
Depositor, (3) any transfer of any interest of the Depositor in any Mortgage
Loan or (4) any change under the relevant UCC or other applicable laws. The
Depositor shall not organize under the law of any jurisdiction other than the
State under which each is organized as of the Closing Date (whether changing its
jurisdiction of organization or organizing under an additional jurisdiction)
without giving 30 days prior written notice of such action to its immediate and
intermediate transferee, including the Trustee. Before effecting such change,
the Depositor proposing to change its jurisdiction of organization shall prepare
and file in the appropriate filing office any financing statements or other
statements necessary to continue the perfection of the interests of its
immediate and mediate transferees, including the Trustee, in the Mortgage Loans
and the other property described above. In connection with the transactions
contemplated by this Agreement, the Depositor authorizes its immediate or
mediate transferee to file in any filing office any initial financing
statements, any amendments to financing statements, any continuation statements,
or any other statements or filings described in this paragraph (b).

                                  ARTICLE III.

                                THE CERTIFICATES

         Section 3.01. The Certificates.

                           (a)      The Certificates shall be issuable in
registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount, or Class Notional Amount,
as applicable, or in the Percentage Interests, specified herein. Each Class of
Book-Entry Certificates will be issued in the minimum denominations in
Certificate Principal Amount (or Class Notional Amount) specified in the
Preliminary Statement hereto and in integral multiples of $1 in excess thereof.
Each Class of Non-Book-Entry Certificates other than the Residual Certificates
shall be issued in definitive, fully registered form in the minimum
denominations in Certificate Principal Amount specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. The Residual
Certificates shall be issued as single Certificates and maintained in
definitive, fully registered form in a denomination equal to 100% of the
Percentage Interest of each such Class. The Class X-A and Class X-B Certificates
shall each be issued as single Certificates in a denomination equal to 100% of
the Percentage Interest of each such Class.

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<PAGE>

                           (b)      The Certificates shall be executed by manual
or facsimile signature on behalf of the Trustee by an authorized officer. Each
Certificate shall, on original issue, be authenticated by the Trustee or an
Authenticating Agent upon the order of the Depositor upon receipt by the Trustee
of the Trustee Mortgage Files described in Section 2.01. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein, executed by an authorized officer
of the Trustee or of an Authenticating Agent, by manual signature, and such
certification 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. At
any time and from time to time after the execution and delivery of this
Agreement, the Depositor may deliver Certificates executed by the Trustee to the
Trustee or the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in this
Agreement provided and not otherwise.

                           (c)      The Class B-4, Class B-5 and Class B-6
certificates offered and sold in reliance on the exemption from registration
under Rule 144A under the Act shall be issued initially in the form of one or
more permanent global Certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibit A added to the
forms of such Certificates (each, a "Restricted Global Security").

         Section 3.02. Registration.

         The Trustee is hereby appointed, and the Trustee hereby accepts its
appointment as, initial Certificate Registrar in respect of the Certificates and
shall maintain books for the registration and for the transfer of Certificates
(the "Certificate Register"). The Trustee may appoint a bank or trust company to
act as successor Certificate Registrar. A registration book shall be maintained
for the Certificates collectively. The Certificate Registrar may resign or be
discharged or removed and a new successor may be appointed in accordance with
the procedures and requirements set forth in Sections 6.06 and 6.07 hereof with
respect to the resignation, discharge or removal of the Trustee and the
appointment of a successor Trustee. The Certificate Registrar may appoint, by a
written instrument delivered to the Holders, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.

         Section 3.03. Transfer and Exchange of Certificates.

                           (a)      A Certificate (other than Book-Entry
Certificates which shall be subject to Section 3.09 hereof) may be transferred
by the Holder thereof only upon presentation and surrender of such Certificate
at the office of the Certificate Registrar duly endorsed or accompanied by an
assignment duly executed by such Holder or his duly authorized attorney in such
form as shall be satisfactory to the Certificate Registrar. Upon the transfer of
any Certificate in accordance with the preceding sentence, the Trustee shall
execute, and the Authenticating Agent shall authenticate and deliver to the
transferee, one or more new Certificates of the same Class and evidencing, in
the aggregate, the same aggregate Certificate Principal Amount (or Notional
Amount) as the Certificate being transferred. No service charge shall be made to
a Certificateholder for any registration of transfer of Certificates, but the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer of Certificates.

                                       49
<PAGE>

                           (b)      A Certificate may be exchanged by the Holder
thereof for any number of new Certificates of the same Class, in authorized
denominations, representing in the aggregate the same Certificate Principal
Amount (or Notional Amount) as the Certificate surrendered, upon surrender of
the Certificate to be exchanged at the office of the Certificate Registrar duly
endorsed or accompanied by a written instrument of transfer duly executed by
such Holder or his duly authorized attorney in such form as is satisfactory to
the Certificate Registrar. Certificates delivered upon any such exchange will
evidence the same obligations, and will be entitled to the same rights and
privileges, as the Certificates surrendered. No service charge shall be made to
a Certificateholder for any exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any exchange of
Certificates. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, and the Authenticating Agent shall authenticate, date and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive.

                           (c)      By acceptance of a Restricted Certificate,
whether upon original issuance or subsequent transfer, each Holder of such a
Certificate acknowledges the restrictions on the transfer of such Certificate
set forth thereon and agrees that it will transfer such a Certificate only as
provided herein.

         The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:

                           (i)      The Certificate Registrar shall register the
                  transfer of a Restricted Certificate if the requested transfer
                  is (x) to the Depositor or an affiliate (as defined in Rule
                  405 under the 1933 Act) of the Depositor or (y) being made to
                  a "qualified institutional buyer" (a "QIB") as defined in Rule
                  144A under the Securities Act of 1933, as amended (the "Act")
                  by a transferor that has provided the Certificate Registrar
                  with a certificate in the form of Exhibit G hereto; and

                           (ii)     The Certificate Registrar shall register the
                  transfer of a Restricted Certificate if the requested transfer
                  is being made to an "accredited investor" under Rule
                  501(a)(1), (2), (3) or (7) under the Act, or to any Person all
                  of the equity owners in which are such accredited investors,
                  by a transferor who furnishes to the Certificate Registrar a
                  letter of the transferee substantially in the form of Exhibit
                  H hereto.

                           (d)(i)   No transfer of an ERISA-Restricted
Certificate that is a Class A-R Certificate may be made to any Person that is an
employee benefit plan subject to Title I of ERISA, a plan subject to Section
4975 of the Code or a plan or arrangement subject to any state, local or other
federal law substantively similar to the foregoing provisions of ERISA or the
Code ("Similar Law") (collectively, a "Plan"), or to any Person directly or
indirectly acquiring a Class A-R Certificate for, on behalf of or with any
assets of any such Plan. Each Person to whom a Class A-R Certificate is to be
transferred shall be required or deemed to represent that it is not a Plan, as
set forth in Exhibit B.

                           (ii)     No transfer of an ERISA-Restricted
Certificate that is a Class B-4, Class B-5 or Class B-6 Certificate shall be
made unless the prospective transferee provides the Trustee and the Depositor
with (A) a representation as set forth in Exhibit I to the effect that such
transferee is not a Plan and is not directly or indirectly acquiring the
Certificate for, on behalf of

                                       50
<PAGE>

or with any assets of any such Plan, (B) if the Certificate has been the subject
of an ERISA-qualifying underwriting, a representation that such transferee is an
insurance company that is acquiring the Certificate with funds contained in an
"insurance company general account," as defined in Section V(E) of Prohibited
Transaction Class Exemption ("PTCE") 95-60, and the acquisition and holding of
the Certificate are covered and exempt under Sections I and III of PTCE 95-60,
or (C) solely in the case of a Definitive Certificate, an Opinion of Counsel
satisfactory to the Trustee and the Depositor to the effect that the acquisition
and holding of such Certificate will not constitute or result in a nonexempt
prohibited transaction under ERISA or the Code, or a violation of Similar Law,
and will not subject the Trustee, the Certificate Registrar, the Servicer or the
Depositor to any obligation in addition to those expressly undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee, the
Certificate Registrar, the Servicer or the Depositor.

                           (iii)    For purposes of paragraphs (i) and (ii) of
this Subsection 3.03(d), other than subparagraph (ii)(B), the representation as
set forth in Exhibit B or Exhibit I, as applicable, shall be deemed to have been
made to the Trustee or the Depositor by the transferee's acceptance of an ERISA
Restricted Certificate (or the acceptance by a Certificate Owner of the
beneficial interest in any Class of ERISA Restricted Certificates).
Notwithstanding any other provision herein to the contrary, any purported
transfer of an ERISA Restricted Certificate to or on behalf of a Plan without
the delivery to the Trustee or the Depositor of a representation or an Opinion
of Counsel satisfactory to the Trustee or the Depositor as described above shall
be void and of no effect. None of the Certificate Registrar, the Depositor, the
Servicer or the Trustee shall be under any liability to any Person for any
registration or transfer of any ERISA Restricted Certificate that is in fact not
permitted by this Section 3.03(d) nor shall the Paying Agent be under any
liability 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 Certificate
Registrar in accordance with the foregoing requirements. The Certificate
Registrar, Depositor, Servicer, Paying Agent and/or Trustee shall be entitled,
but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact a Plan and that held such Certificate in violation
of this Section 3.03(d) all payments made on such ERISA Restricted Certificate
at and after at the time it commenced such holding. Any such payments so
recovered shall be paid and delivered to the last preceding Holder of such
Certificate that is not a Plan.

                           (iv)     Notwithstanding the foregoing, no
representation or Opinion of Counsel shall be required for the initial issuance
of ERISA-Restricted Certificates that are Class B-4, Class B-5 or Class B-6
Certificates.

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

                           (f)      Notwithstanding anything to the contrary
contained herein, no Residual Certificate or beneficial interest therein may be
owned, pledged or transferred, directly or indirectly, by or to (i) a
Disqualified Organization or (ii) an individual, corporation or partnership or
other person unless, in the case of clause (ii), such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in
connection with the

                                       51
<PAGE>

conduct of a trade or business within the United States and has furnished the
transferor and the Certificate Registrar with an effective Internal Revenue
Service Form W-8ECI or successor form at the time and in the manner required by
the Code (any such person who is not covered by clause (A) or (B) above is
referred to herein as a "Non-permitted Foreign Holder").

         Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Residual Certificate or a beneficial interest therein,
the proposed transferee shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit B
representing and warranting, among other things, that such transferee is neither
a Disqualified Organization, an agent or nominee acting on behalf of a
Disqualified Organization, nor a Non-permitted Foreign Holder (any such
transferee, a "Permitted Transferee"), and the proposed transferor shall deliver
to the Trustee and the Certificate Registrar an affidavit in substantially the
form attached hereto as Exhibit C. In addition, the Trustee or the Certificate
Registrar may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Trustee and the Certificate Registrar, that
such proposed transferee or, if the proposed transferee is an agent or nominee,
the proposed beneficial owner, is not a Disqualified Organization, agent or
nominee thereof, or a Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall be
deemed to be of no legal force or effect whatsoever and such Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder shall
not be deemed to be a Certificateholder for any purpose hereunder, including,
but not limited to, the receipt of distributions on such Residual Certificate.
The Depositor, the Certificate Registrar and the Trustee shall be under no
liability to any Person for any registration or transfer of a Residual
Certificate to a Disqualified Organization, agent or nominee thereof or
Non-permitted Foreign Holder or for the Paying Agent making any payments due on
such Residual Certificate to the Holder thereof or for taking any other action
with respect to such Holder under the provisions of the Agreement, so long as
the transfer was effected in accordance with this Section 3.03(f), unless the
Certificate Registrar shall have actual knowledge at the time of such transfer
or the time of such payment or other action that the transferee is a
Disqualified Organization, or an agent or nominee thereof, or Non-permitted
Foreign Holder. The Certificate Registrar shall be entitled to recover from any
Holder of a Residual Certificate that was a Disqualified Organization, agent or
nominee thereof, or Non-permitted Foreign Holder at the time it became a Holder
or at any subsequent time became a Disqualified Organization, agent or nominee
thereof, or Non-permitted Foreign Holder, all payments made on such Residual
Certificate at and after either of such times (and all costs and expenses,
including but not limited to attorneys' fees, incurred in connection therewith).
Any payment (not including any such costs and expenses) so recovered by the
Certificate Registrar shall be paid and delivered to the last preceding Holder
of such Residual Certificate.

         If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 3.03(f),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this Section
3.03(f), such transfer shall be absolutely null and void and shall vest no
rights in the purported transferee and the last preceding Permitted Transferee
shall be restored to all rights as Holder thereof retroactive to the date of
such registration of transfer of such Residual Certificate. The Depositor, the
Certificate Registrar and the Trustee shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.03(f), or for the Paying Agent making any payment
due on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the

                                       52
<PAGE>

provisions of this Agreement so long as the transfer was registered upon receipt
of the affidavit described in the preceding paragraph of this Section 3.03(f).

                           (g)      Each Holder or Certificate Owner of a
Restricted Certificate, ERISA-Restricted Certificate or Residual Certificate, or
an interest therein, by such Holder's or Owner's acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of this section.

         Section 3.04. Cancellation of Certificates.

         Any Certificate surrendered for registration of transfer or exchange
shall be cancelled and retained in accordance with normal retention policies
with respect to cancelled certificates maintained by the Trustee or the
Certificate Registrar.

         Section 3.05. Replacement of Certificates.

         If (i) any Certificate is mutilated and is surrendered to the Trustee
or the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Depositor, the Trustee or the
Certificate Registrar that such destroyed, lost or stolen Certificate has been
acquired by a protected purchaser, the Trustee shall execute and the
Authenticating Agent shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor and Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee, the Depositor or the
Certificate Registrar 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, the Depositor or
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

         If after the delivery of such new Certificate, a protected purchaser of
the original Certificate in lieu of which such new Certificate was issued
presents for payment such original Certificate, the Depositor, the Certificate
Registrar and the Trustee or any agent shall be entitled to recover such new
Certificate from the Person to whom it was delivered or any Person taking
therefrom, except a protected purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Depositor, the Certificate Registrar, the
Trustee or any agent in connection therewith.

         Section 3.06. Persons Deemed Owners.

         Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Trustee, the Certificate Registrar, the Paying
Agent and any agent of any of them shall treat the Person in whose name any
Certificate is registered upon the books of the Certificate Registrar as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Sections 5.01 and 5.02 and for all other purposes whatsoever, and neither the
Depositor, the Trustee, the Certificate Registrar, the Paying Agent nor any
agent of any of them shall be affected by notice to the contrary.

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<PAGE>

         Section 3.07. Temporary Certificates.

                           (a)      Pending the preparation of definitive
Certificates, upon the order of the Depositor, the Trustee shall execute and the
Authenticating Agent shall authenticate and deliver temporary Certificates that
are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.

                           (b)      If temporary Certificates are issued, the
Depositor will cause definitive Certificates to be prepared without unreasonable
delay. After the preparation of definitive Certificates, the temporary
Certificates shall be exchangeable for definitive Certificates upon surrender of
the temporary Certificates at the office or agency of the Certificate Registrar
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Trustee shall execute and the Authenticating Agent
shall authenticate and deliver in exchange therefor a like aggregate Certificate
Principal Amount (or Notional Amount) of definitive Certificates of the same
Class in the authorized denominations. Until so exchanged, the temporary
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Certificates of the same Class.

         Section 3.08. Appointment of Paying Agent.

         The Trustee may appoint a Paying Agent (which may be the Trustee) for
the purpose of making distributions to Certificateholders hereunder. The Trustee
shall cause any Paying Agent to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee that such Paying Agent
will hold all sums held by it for the payment to Certificateholders in an
Eligible Account (which shall be the Distribution Account) in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.

         Section 3.09. Book-Entry Certificates.

                           (a)      Each Class of Book-Entry Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates. The Book-Entry
Certificates shall initially be registered on the Certificate Register in the
name of the nominee of the Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Book-Entry Certificates, except as provided in Section 3.09(c). Unless
Definitive Certificates have been issued to Certificate Owners of Book-Entry
Certificates pursuant to Section 3.09(c):

                           (i)      the provisions of this Section 3.09 shall be
                  in full force and effect;

                           (ii)     the Certificate Registrar, the Paying Agent
                  and the Trustee shall deal with the Clearing Agency for all
                  purposes (including the making of

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<PAGE>

                  distributions on the Book-Entry Certificates) as the
                  authorized representatives of the Certificate Owners and the
                  Clearing Agency and shall be responsible for crediting the
                  amount of such distributions to the accounts of such Persons
                  entitled thereto, in accordance with the Clearing Agency's
                  normal procedures;

                           (iii)    to the extent that the provisions of this
                  Section 3.09 conflict with any other provisions of this
                  Agreement, the provisions of this Section 3.09 shall control;
                  and

                           (iv)     the rights of Certificate Owners shall be
                  exercised only through the Clearing Agency and the Clearing
                  Agency Participants and shall be limited to those established
                  by law and agreements between such Certificate Owners and the
                  Clearing Agency and/or the Clearing Agency Participants.
                  Unless and until Definitive Certificates are issued pursuant
                  to Section 3.09(c), the initial Clearing Agency will make
                  book-entry transfers among the Clearing Agency Participants
                  and receive and transmit distributions of principal of and
                  interest on the Book-Entry Certificates to such Clearing
                  Agency Participants.

                           (b)      Whenever notice or other communication to
the Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
Section 3.09(c), the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Book-Entry Certificates to the
Clearing Agency.

                           (c)      If (i) (A) the Clearing Agency or the
Depositor advises the Paying Agent in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities with respect
to the Book-Entry Certificates, and (B) the Depositor is unable to locate a
qualified successor satisfactory to the Depositor and the Paying Agent, (ii) the
Depositor, at its option, advises the Paying Agent in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Principal Amount (or Class
Notional Amount) of a Class of Book-Entry Certificates advise the Paying Agent
and the Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Certificate Registrar shall notify the Clearing Agency to
effect notification to all Certificate Owners, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Certificate Registrar shall issue the Definitive Certificates.
Neither the Depositor, the Certificate Registrar nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Certificate Registrar, to the extent applicable, with respect
to such Definitive Certificates and the Certificate Registrar shall recognize
the holders of the Definitive Certificates as Certificateholders hereunder.
Notwithstanding the foregoing, the Certificate Registrar, upon the instruction
of the Depositor, shall have the right to issue Definitive Certificates on the
Closing Date in connection with credit enhancement programs.

                                       55
<PAGE>

                                  ARTICLE IV.

                        ADMINISTRATION OF THE TRUST FUND

         Section 4.01. Custodial Accounts; Distribution Account.

                           (a)      On or prior to the Closing Date, the
Servicer shall establish and maintain one or more Custodial Accounts, as
provided herein, into which all Scheduled Payments and unscheduled payments with
respect to the Mortgage Loans, net of any deductions or reimbursements permitted
under this Agreement, shall be deposited. Prior to 1:00 p.m. New York City time
on each Distribution Account Deposit Date, the Servicer shall remit to the
Trustee for deposit into the Distribution Account, all amounts so required to be
deposited into such account in accordance with the terms of this Agreement.

                           (b)      The Trustee, shall establish and maintain an
Eligible Account entitled "Distribution Account of Wells Fargo Bank N.A., as
Trustee, for the benefit of Merrill Lynch Mortgage Investors Trust Series MLCC
2004-HB1 Holders of Mortgage Pass-Through Certificates." The Trustee shall,
promptly upon receipt from the Servicer on each Distribution Account Deposit
Date, deposit into the Distribution Account and retain on deposit until the
related Distribution Date the following amounts:

                           (i)      the aggregate of collections with respect to
                  the Mortgage Loans remitted by the Servicer from the Custodial
                  Accounts in accordance with this Agreement, including the
                  amount of any Advances or Compensating Interest Payments with
                  respect to the Mortgage Loans required to be paid by the
                  Servicer; and

                           (ii)     any other amounts so required to be
                  deposited in the Distribution Account in the related Due
                  Period pursuant to this Agreement.

                           (c)      In the event Servicer has remitted in error
to the Distribution Account any amount not required to be remitted in accordance
with the definition of Available Distribution Amount, it may at any time direct
the Trustee to withdraw such amount from the Distribution Account for repayment
to the Servicer, as applicable, by delivery of an Officer's Certificate of the
Servicer to the Trustee which describes the amount deposited in error.

                           (d)      On each Distribution Date and Purchase Date,
the Trustee shall distribute the Available Distribution Amount to the
Certificateholders and any other parties entitled thereto in the amounts and
priorities set forth in Section 5.02. The Trustee may from time to time withdraw
from the Distribution Account and pay itself or the Servicer any amounts
permitted to be paid or reimbursed to such Person from funds in the Distribution
Account pursuant to the clauses (A) through (D) of the definition of Available
Distribution Amount.

                           (e)      Funds in the Distribution Account may be
invested in Permitted Investments selected by the Trustee, which shall mature
not later than one Business Day prior to the Distribution Date (except that if
such Permitted Investment is an obligation of the Trustee or is managed or
advised by the Trustee or its affiliates, then such Permitted Investment shall
mature not later than such applicable Distribution Date) and any such Permitted
Investment shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Trustee (in its capacity
as such) or its nominee. All income and gain realized from any Permitted
Investment shall be for the benefit of the Trustee and shall be subject to its

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<PAGE>

withdrawal or order from time to time, and shall not be part of the Trust Fund.
The amount of any losses incurred in respect of any such investments shall be
deposited in such Distribution Account by the Trustee out of its own funds,
without any right of reimbursement therefor, immediately as realized. Any such
funds that are not invested in Permitted Investments may be held uninvested.

         Section 4.02. Reports to Trustee and Certificateholders.

         On each Distribution Date, the Trustee shall have prepared and shall
make available to each Certificateholder and other interested parties a written
report setting forth the following information (based solely on the report
provided to the Trustee by the Servicer pursuant to Section 9.18).

                           (i)      the amount of the distributions, separately
                  identified, with respect to each Class of Certificates;

                           (ii)     the amount of the distributions set forth in
                  the clause (i) allocable to principal, separately identifying
                  the aggregate amount of any Principal Prepayments or other
                  unscheduled recoveries of principal included in that amount;

                           (iii)    the amount of the distributions set forth in
                  the clause (i) allocable to interest and how it was
                  calculated;

                           (iv)     the amount of any unpaid Interest Shortfall,
                  Basis Risk Shortfall or Unpaid Basis Risk Shortfall (if
                  applicable) and the related accrued interest thereon, with
                  respect to each Class of Certificates;

                           (v)      the Class Principal Amount of each Class of
                  Certificates after giving effect to the distribution of
                  principal on that Distribution Date;

                           (vi)     the Aggregated Stated Principal Balance of
                  the Mortgage Loans in each Mortgage Pool and the applicable
                  Net WAC of the Mortgage Loans at the end of the related
                  Prepayment Period;

                           (vii)    the Stated Principal Balance of the Mortgage
                  Loans in each Mortgage Pool whose Mortgage Rates adjust on the
                  basis of the One-Month LIBOR index and the Six-Month LIBOR
                  index at the end of the related Prepayment Period;

                           (viii)   the Pro Rata Senior Percentage, Senior
                  Percentage and the Subordinate Percentage for each Mortgage
                  Pool for the following Distribution Date;

                           (ix)     the Senior Prepayment Percentage and
                  Subordinate Prepayment Percentage for each Mortgage Pool the
                  following Distribution Date;

                           (x)      in the aggregate and with respect to each
                  Mortgage Pool, the amount of Servicing Fee paid to or retained
                  by the Servicer;

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<PAGE>

                           (xi)     in the aggregate and with respect to each
                  Mortgage Pool, the amount of Advances for the related Due
                  Period;

                           (xii)    in the aggregate and with respect to each
                  Mortgage Pool, the number and Stated Principal Balance of the
                  Mortgage Loans that were (A) Delinquent (exclusive of Mortgage
                  Loans in foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and
                  (3) 90 or more days, (B) in foreclosure and Delinquent (1) 30
                  to 59 days, (2) 60 to 89 days and (3) 90 or more days and (C)
                  in bankruptcy as of the close of business on the last day of
                  the calendar month preceding that Distribution Date;

                           (xiii)   in the aggregate and with respect to each
                  Mortgage Pool, for any Mortgage Loan as to which the related
                  Mortgaged Property was an REO property during the preceding
                  calendar month, the principal balance of that Mortgage Loan as
                  of the close of business on the last day of the related Due
                  Period;

                           (xiv)    in the aggregate and with respect to each
                  Mortgage Pool, the total number and principal balance of any
                  REO properties as of the close of business on the last day of
                  the preceding Due Period;

                           (xv)     in the aggregate and with respect to each
                  Mortgage Pool, the amount of Realized Losses incurred during
                  the preceding calendar month;

                           (xvi)    in the aggregate and with respect to each
                  Mortgage Pool, the cumulative amount of Realized Losses
                  incurred since the Closing Date;

                           (xvii)   the Realized Losses, if any, allocated to
                  each Class of Certificates on that Distribution Date;

                           (xviii)  the Certificate Interest Rate for each Class
                  of Certificates for that Distribution Date;

                           (xix)    the amount of any Principal Transfer Amounts
                  or Interest Transfer Amounts paid to an Undercollateralized
                  Group or Principal Transfer Amounts between Groups in the
                  event of Rapid Prepayment Conditions; and

                           (xx)     for each Class of Certificates, the amounts
                  accrued or paid in respect of each deemed interest rate cap
                  agreement under which such Class of Certificates is deemed
                  entitled to receive or deemed obligated to make payments as
                  provided for in Section 10.01 hereof.

         The Trustee shall make such reports available each month via its
website at http://www.ctslink.com. Assistance in using the website may be
obtained by calling the Trustee's customer service desk at (301) 815-6600.
Certificateholders and other parties that are unable to use the website are
entitled to have a paper copy mailed to them via first class mail by contacting
the Trustee and indicating such. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Trustee by the Servicer, and the
Trustee shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.

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<PAGE>

         Upon receipt by the Trustee of the reasonable advance written request
of any Certificateholder that is a savings and loan, bank or insurance company,
the Trustee shall provide, or cause to be provided (or, to the extent that such
information or documentation is not required to be provided by a Servicer under
this Agreement, shall use reasonable efforts to obtain such information and
documentation from the Servicer, and provide) to such Certificateholders such
reports and access to information and documentation regarding the Mortgage Loans
as such Certificateholders may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its successor or
other regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Trustee shall be entitled to be reimbursed by such
Certificateholders for the Trustee's actual expenses incurred in providing such
reports and access.

         The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of the Trust Fund, an application for an employer
identification number on IRS Form SS-4 or by any other acceptable method. The
Trustee shall also file a Form 8811 as required. The Trustee, upon receipt from
the IRS of the Notice of Taxpayer Identification Number Assigned, shall upon
request promptly forward a copy of such notice to the Depositor. The Trustee
shall furnish any other information that is required by the Code and regulations
thereunder to be made available to Certificateholders. The Depositor shall cause
the Servicer to provide the Trustee with such information as is necessary for
the Trustee to prepare such reports.

                                   ARTICLE V.

                    DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

         Section 5.01. Distributions Generally.

                           (a)      Subject to Section 7.01 respecting the final
distribution on the Certificates, on each Distribution Date the Trustee or the
Paying Agent shall make distributions in accordance with this Article V. Such
distributions shall be made by check mailed to each Certificateholder's address
as it appears on the Certificate Register of the Certificate Registrar or, upon
written request made to the Trustee at least five Business Days prior to the
related Record Date by any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $1,000,000, or in the case of a Class
of Interest-Only Certificates or Residual Certificate, a Percentage Interest of
not less than 100%, by wire transfer in immediately available funds to an
account specified in the request and at the expense of such Certificateholder;
provided, however, that the final distribution in respect of any Certificate
shall be made only upon presentation and surrender of such Certificate at the
Certificate Registrar's Corporate Trust Office; provided, further, that the
foregoing provisions shall not apply to any Class of Certificates as long as
such Certificate remains a Book-Entry Certificate in which case all payments
made shall be made through the Clearing Agency and its Clearing Agency
Participants. Wire transfers will be made at the expense of the Holder
requesting such wire transfer by deducting a wire transfer fee from the related
distribution. Notwithstanding such final payment of principal of any of the
Certificates, each Residual Certificate will remain outstanding until the
termination of each REMIC and the payment in full of all other amounts due with
respect to the Residual Certificates and at such time such final payment in
retirement of any Residual Certificate will be made only upon presentation and
surrender of such Certificate at the Certificate Registrar's Corporate Trust
Office. If any payment required to be made on the Certificates is to be made on
a day that is not a Business Day, then such payment will be made on the next
succeeding Business Day.

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<PAGE>

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

         Section 5.02. Distributions from the Distribution Account.

                           (a)      Subject to Sections 5.02(g) and 5.02(h), on
each Distribution Date, the Available Distribution Amount for the related
Mortgage Pool (in the case of the Components of the Class X-A Certificates and
the Senior Certificates other than the Class X-B Certificates) and the Mortgage
Pools in the aggregate (in the case of the Subordinate Certificates and the
Class X-B Certificates) shall be withdrawn by the Trustee from the Distribution
Account and allocated among the classes of Senior Certificates and Subordinate
Certificates in the following order of priority:

                           (i)      Concurrently, to the payment of the Interest
                  Distribution Amount and any accrued but unpaid Interest
                  Shortfalls with respect to each class of Senior Certificates
                  (other than the Class X Certificates) and the Components,
                  with, subject to the proviso set forth below, (x) all amounts
                  payable in respect of X-B1 Component, X-B2 Component and X-B3
                  Component being payable to the Class X-B Certificates and (y)
                  all amounts payable in respect of the X-A1 and X-A2 Component
                  being payable to the Class X-A Certificates; provided,
                  however, that on each Distribution Date, amounts that would
                  otherwise be payable to the Class X-A or Class X-B
                  Certificates under this clause (a)(i) will (A) in the case of
                  amounts otherwise payable to the Class X-A Certificates in
                  respect of the X-A1 Component, be paid to the Class A-1
                  Certificates to the extent of any Basis Risk Shortfalls and
                  Unpaid Basis Risk Shortfalls for the Class A-1 Certificates as
                  of such Distribution Date, (B) in the case of amounts
                  otherwise payable to the Class X-A Certificates in respect of
                  the X-A2 Component, be paid to the Class A-2 Certificates to
                  the extent of any Basis Risk Shortfalls and Unpaid Basis Risk
                  Shortfalls for the Class A-2 Certificates as of such
                  Distribution Date, and (C) in the case of amounts otherwise
                  payable to the Class X-B Certificates, be paid to the Class
                  B-1, Class B-2 and Class B-3 Certificates to the extent of any
                  Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls for the
                  Class B-1, Class B-2 and Class B-3 Certificates, respectively,
                  as of such Distribution Date;

                           (ii)     Concurrently, to the Senior Certificates
                  from the Available Distribution Amount remaining in the
                  related Mortgage Pool after application of amounts pursuant to
                  clause (i) above, as follows:

                                    (A)      sequentially to the Class A-R and
                           Class A-1 Certificates, in that order, the Senior
                           Principal Distribution Amount for Pool 1, until their
                           respective Class Principal Amounts have been reduced
                           to zero;

                                    (B)      to the Class A-2 Certificates, the
                           Senior Principal Distribution Amount for Pool 2 until
                           its Class Principal Amount has been reduced to zero;
                           and

                                    (C)      to the Class A-3 Certificates, the
                           Senior Principal Distribution Amount for Pool 3,
                           until its Class Principal Amount has been reduced to
                           zero.

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<PAGE>

                           (iii)    From the Available Distribution Amount from
                  the Mortgage Pools in the aggregate remaining after the
                  application of amounts pursuant to clauses (i) and (ii) above,
                  to the Class B-1, Class B-2 and Class B-3 Certificates,
                  sequentially, in that order, the Interest Distribution Amount
                  and any Interest Shortfalls, in each case, for such Class on
                  such date;

                           (iv)     From the Available Distribution Amount from
                  the Mortgage Pools in the aggregate remaining after
                  application of amounts pursuant to clauses (i) through (iii)
                  above, to the Class B-1, Class B-2 and Class B-3 Certificates,
                  sequentially, in that order, such Class' Subordinate Class
                  Percentage of the Subordinate Principal Distribution Amount
                  for each Mortgage Pool, until its Class Principal Amount has
                  been reduced to zero;

                           (v)      From the remaining Available Distribution
                  Amount from the Mortgage Pools in the aggregate remaining
                  after application of amounts pursuant to clauses (i) through
                  (iv) in the following order of priority:

                                    (A)      to the Class B-4 Certificates, the
                           payment of its Interest Distribution Amount and any
                           outstanding Interest Shortfalls;

                                    (B)      to the Class B-4 Certificates, such
                           Class' Subordinate Class Percentage of the
                           Subordinate Principal Distribution Amount for each
                           Mortgage Pool, until its Class Principal Amount has
                           been reduced to zero;

                                    (C)      to the Class B-5 Certificates, the
                           payment of its Interest Distribution Amount and any
                           outstanding Interest Shortfalls;

                                    (D)      to the Class B-5 Certificates, such
                           Class' Subordinate Class Percentage of the
                           Subordinate Principal Distribution Amount for each
                           Mortgage Pool, until its Class Principal Amount has
                           been reduced to zero;

                                    (E)      to the Class B-6 Certificates, the
                           payment of its Interest Distribution Amount and any
                           outstanding Interest Shortfalls; and

                                    (F)      to the Class B-6 Certificates, such
                           Class' Subordinate Class Percentage of the
                           Subordinate Principal Distribution Amount for each
                           Mortgage Pool, until its Class Principal Amount has
                           been reduced to zero;

                           (vi)     To the Class A-R Certificate, any remaining
                  amount of the Available Distribution Amount from the Mortgage
                  Pools in the aggregate allocated as provided in Section
                  5.02(d).

         Amounts that would have been distributed in respect of the Class X-A
and Class X-B Certificates, but for the proviso set forth in clause (a)(i) above
shall be treated as having been distributed to the Class X-A Certificates (in
respect of the X-A1 Component, in the case of payments to the Class A-1
Certificate and the X-A2 Component, in the case of payments to the Class A-2
Certificates and the Class X-B Certificates, as the case may be, for purposes of

                                       61
<PAGE>

determining subsequent Interest Shortfalls with respect to the Class X-B
Certificates and the Components of the Class X-A Certificates.

                           (b)      On each Distribution Date on and after the
Credit Support Depletion Date, the Available Distribution Amount for each
Mortgage Pool shall be distributed to the remaining Classes of Certificates of
the related Certificate Group (and to the related Components of the Class X-A
Certificates) on a pro rata basis, first, to pay the Interest Distribution
Amount and any accrued but unpaid Interest Shortfalls; provided, however, that
on each Distribution Date with respect to the Class A-1 or Class A-2
Certificates (as applicable) (x) the amount of the Interest Distribution Amount
that would otherwise be payable to the X-A1 Component will be paid to the Class
A-1 Certificates to the extent of any Basis Risk Shortfalls or Unpaid Basis Risk
Shortfalls for the Class A-1 Certificates, and (y) the amount of the Interest
Distribution Amount that would otherwise be payable to the X-A2 Component will
be paid to the Class A-2 Certificates to the extent of any Basis Risk Shortfalls
or Unpaid Basis Risk Shortfalls for the Class A-2 Certificates; second, to pay
the Senior Principal Distribution Amount for such Mortgage Pool; and third, to
the Class A-R Certificate, any remaining Available Distribution Amount from such
Mortgage Pool.

         Amounts that would have been distributed in respect of the X-A1
Component or X-A2 Component but for the proviso set forth in this Section
5.02(b) shall be treated as having been distributed to such Components for
purposes of determining subsequent Interest Shortfalls with respect to such
Components.

                           (c)      Notwithstanding the priority and allocation
set forth in Section 5.02(a)(iv) and Section 5.02(a)(v) above, if with respect
to any Class of Subordinate Certificates on any Distribution Date the sum of the
related Class Subordination Percentages of such Class and of all other Classes
of Subordinate Certificates which have a higher numerical Class designation than
such Class is less than the Original Applicable Credit Support Percentage for
such Class, no distribution of Principal Prepayments shall be made to any such
Classes and the amount of such Principal Prepayment otherwise distributable to
such Classes shall be distributed to any Classes of Subordinate Certificates
having lower numerical Class designations than such Class, pro rata, based on
the Class Principal Amounts of the respective Classes immediately prior to such
Distribution Date and shall be distributed in the sequential order provided in
Section 5.02(a)(iv) and Section 5.02(a)(v) above.

                           (d)      Amounts distributed to the Residual
Certificates pursuant to subparagraph (a)(vi) of this Section 5.02 on any
Distribution Date shall be allocated among the REMIC residual interests
represented thereby such that each such interest is allocated the excess of
funds available to the related REMIC over required distributions to the regular
interests in such REMIC on such Distribution Date.

                           (e)      For purposes of distributions provided in
this Section 5.02, each Mortgage Pool shall "relate" to the Senior Class or
Classes of the applicable Related Certificate Group, the X-A1 Component shall be
related to Pool 1 and the X-A2 Component shall be related to Pool 2.

                           (f)      For purposes of distributions of interest in
paragraph (a) of this Section 5.02 such distributions to a Class of Certificates
on any Distribution Date shall be made first, in respect of Current Interest;
and second, in respect of Interest Shortfalls.

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<PAGE>

                           (g)      Notwithstanding the priority of
distributions set forth in paragraph (a) of this Section 5.02, if on any
Distribution Date prior to the Credit Support Depletion (1) either one of the
Rapid Prepayment Conditions is satisfied on such date and (2) the Certificate
Principal Amount of the Senior Certificates relating to one of the Mortgage
Pools has been reduced to zero, then that portion of the Available Distribution
Amount for such Mortgage Pool described in Section 5.02(a)(ii) that represents
principal collections on the Mortgage Loans shall be applied as an additional
distribution to the remaining Classes of Senior Certificates on a pro rata basis
in reduction of, and in proportion to, the Class Principal Amounts thereof;
provided, however, that any such amounts distributable to the Class A-R and
Class A-1 Certificates shall be distributed sequentially thereto in such order.

                           (h)      If, on any Distribution Date, any
Certificate Group or Groups would constitute an Undercollateralized Group and
the other Certificate Group or Groups constitute an Overcollateralized Group,
then notwithstanding Section 5.02(a)(ii), the Available Distribution Amount for
the Overcollateralized Group or Groups, to the extent remaining following
distributions of interest and principal to the related Senior Certificates of
that Certificate Group or Groups and to the Components of the Class X-A
Certificates, if any, related to the Overcollateralized Group or Groups, shall
be distributed up to the sum of the Interest Transfer Amount and the Principal
Transfer Amount for the Undercollateralized Group or Groups to the Senior
Certificates related to the Undercollateralized Group or Groups and to the
Components of the Class X-A Certificates related to the Undercollateralized
Group or Groups in payment of accrued but unpaid interest, if any, and then to
such Senior Certificates as principal, in the same order and priority as such
Certificates would receive other distributions of principal.

         Section 5.03. Allocation of Losses.

                           (a)      On or prior to each Distribution Date, the
Trustee shall aggregate the information provided by the Servicer with respect to
the total amount of Realized Losses, with respect to the Mortgage Loans for the
related Distribution Date.

                           (b)      On each Distribution Date, the principal
portion of Realized Losses with respect to such Distribution Date shall be
allocated as follows:

                           (i)      Realized Losses shall be allocated in the
                  following order:

                  first, to the Classes of Subordinate Certificates in reverse
         order of their respective numerical Class designations (beginning with
         the Class of Subordinate Certificates with the highest numerical Class
         designation) until the Class Principal Amount of each such Class is
         reduced to zero; and

                  second, to each Class of Senior Certificates relating to the
         Mortgage Pool which sustained such loss (allocated among the related
         Senior Classes on a pro rata basis), in each case, until the Class
         Principal Amount of each Class of Senior Certificates is reduced to
         zero.

                           (ii)     Reserved.

                           (iii)    The Class Principal Amount of the Class of
                  Subordinate Certificates then outstanding with the highest
                  numerical Class designation shall be reduced on each
                  Distribution Date by the amount, if any, by which the
                  aggregate of the Class Principal Amounts of all outstanding
                  Classes of

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                  Certificates (after giving effect to the distribution of
                  principal and the allocation of Realized Losses, on such
                  Distribution Date) exceeds the Aggregate Stated Principal
                  Balance for the following Distribution Date.

                           (iv)     Any allocation of a loss pursuant to this
                  section to a Class of Certificates shall be achieved by
                  reducing the Class Principal Amount thereof by the amount of
                  such loss.

                           (c)      Notwithstanding the other provisions of
Section 5.03, the first $0.19 of Realized Losses shall not be allocated to any
Class of Certificates.

         Section 5.04. Advances.

         If the Servicer fails to remit any Advance required to be made under
this Agreement, the Trustee solely in its capacity as successor Servicer shall
itself make, or shall cause the successor Servicer to make, such Advance. If the
Trustee solely in its capacity as successor Servicer determines that an Advance
is required, it shall on the Business Day preceding the related Distribution
Date immediately following such Determination Date remit from its own funds (or
funds advanced by the successor Servicer) for deposit in the Distribution
Account immediately available funds in an amount equal to such Advance. Each of
the Trustee and the Servicer shall be entitled to be reimbursed for all Advances
made by it, respectively. Notwithstanding anything to the contrary herein, in
the event the Trustee (or successor servicer) determines in its reasonable
judgment that an Advance is Nonrecoverable, the Trustee (or successor servicer)
shall be under no obligation to make such Advance.

                                  ARTICLE VI.

                    CONCERNING THE TRUSTEE; EVENTS OF DEFAULT

         Section 6.01. Duties of Trustee.

                           (a)      The Trustee, except during the continuance
of an Event of Default, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. Any permissive right of the
Trustee provided for in this Agreement shall not be construed as a duty of the
Trustee. If an Event of Default has occurred and has not otherwise been cured or
waived, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.

                           (b)      The Trustee, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they are in the form required by this Agreement; provided,
however, that the Trustee shall not be responsible for the accuracy or content
of any such resolution, certificate, statement, opinion, report, document, order
or other instrument furnished by the Servicer to the Trustee pursuant to this
Agreement, and shall not be required to recalculate or verify any numerical
information furnished to the Trustee pursuant to this Agreement. Subject to the
immediately preceding sentence, if any such resolution, certificate, statement,
opinion, report, document, order or other instrument is found not to conform to
the form required by this Agreement in a material manner the Trustee shall take
such action as it deems appropriate to cause the instrument to be corrected, and
if the instrument is not corrected to the Trustee's

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satisfaction, the Trustee will provide notice thereof to the Certificateholders
and will, at the expense of the Trust Fund, which expense shall be reasonable
given the scope and nature of the required action, take such further action as
directed by the Certificateholders.

                           (c)      The Trustee shall not have any liability
arising out of or in connection with this Agreement, except for its negligence
or willful misconduct. Notwithstanding anything in this Agreement to the
contrary, the Trustee shall not be liable for special, indirect or consequential
losses or damages of any kind whatsoever (including, but not limited to, lost
profits). No provision of this Agreement shall be construed to relieve the
Trustee of liability for its own negligent action, its own negligent failure to
act or its own willful misconduct; provided, however, that:

                           (i)      The Trustee shall not be liable with respect
                  to any action taken, suffered or omitted to be taken by it in
                  good faith in accordance with the direction of Holders of
                  Certificates as provided in Section 6.18 hereof;

                           (ii)     For all purposes under this Agreement, the
                  Trustee shall not be deemed to have notice of any Event of
                  Default (other than resulting from a failure by the Servicer
                  (i) to remit funds (or to make Advances) or (ii) to furnish
                  information to the Trustee when required to do so) unless a
                  Responsible Officer of the Trustee has actual knowledge
                  thereof or unless written notice of any event which is in fact
                  such a default is received by the Trustee at the Corporate
                  Trust Office of the Trustee, and such notice references the
                  Holders of the Certificates and this Agreement;

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

                           (iv)     The Trustee shall not be responsible for any
                  act or omission of the Servicer, the Depositor or the Seller.

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

                           (e)      The Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Certificateholders of any Class
holding Certificates which evidence, as to such Class, Percentage Interests
aggregating not less than 25% as to the time, method and place of conducting

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any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred upon the Trustee under this Agreement.

                           (f)      The Trustee shall not be required to perform
services under this Agreement, or to expend or risk its own funds or otherwise
incur financial liability for the performance of any of its duties hereunder or
the exercise of any of its rights or powers if there is reasonable ground for
believing that the timely payment of its fees and expenses or 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.

                           (g)      The Trustee shall not be held liable by
reason of any insufficiency in the Distribution Account resulting from any
investment loss on any Permitted Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).

                           (h)      Except as otherwise provided herein, the
Trustee shall not have any duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any re-recording, refiling or redepositing of any thereof, (B) to see to the
provision of any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Distribution Account, or (D) to confirm
or verify the contents of any reports or certificates of the Servicer delivered
to the Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.

                           (i)      The Trustee shall not be liable in its
individual capacity for an error of judgment made in good faith by a Responsible
Officer or other officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts.

                           (j)      Notwithstanding anything in this Agreement
to the contrary, Trustee shall not be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including, but not
limited to, lost profits), even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

         Section 6.02. Certain Matters Affecting the Trustee.

Except as otherwise provided in Section 6.01:

                           (i)      The Trustee may request, and 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, approval, bond or
                  other paper or document believed by it to be genuine and to
                  have been signed or presented by the proper party or parties;

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<PAGE>

                           (ii)     The Trustee may consult with counsel and any
                  advice of its 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;

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

                           (iv)     Unless an Event of Default shall have
                  occurred and be continuing, the Trustee shall not be bound to
                  make any investigation into the facts or matters stated in any
                  resolution, certificate, statement, instrument, opinion,
                  report, notice, request, consent, order, approval, bond or
                  other paper or document (provided the same appears regular on
                  its face), unless requested in writing to do so by the Holders
                  of at least a majority in Class Principal Amount (or
                  Percentage Interest) of each Class of Certificates; provided,
                  however, that, if the payment within a reasonable time to the
                  Trustee of the costs, expenses or liabilities likely to be
                  incurred by it in the making of such investigation is, in the
                  opinion of the Trustee, not reasonably assured to the Trustee
                  by the security afforded to it by the terms of this Agreement,
                  the Trustee may require reasonable indemnity against such
                  expense or liability or payment of such estimated expenses
                  from the Certificateholders as a condition to proceeding. The
                  reasonable expense thereof shall be paid by the party
                  requesting such investigation and if not reimbursed by the
                  requesting party shall be reimbursed to the Trustee by the
                  Trust Fund;

                           (v)      The Trustee may execute any of the trusts or
                  powers hereunder or perform any duties hereunder either
                  directly or by or through agents, custodians or attorneys,
                  which agents, custodians or attorneys shall have any and all
                  of the rights, powers, duties and obligations of the Trustee
                  conferred on it by such appointment, provided that the Trustee
                  shall continue to be responsible for its duties and
                  obligations hereunder to the extent provided herein, and
                  provided further that the Trustee shall not be responsible for
                  any misconduct or negligence on the part of any such agent or
                  attorney appointed with due care by the Trustee;

                           (vi)     The Trustee shall not be under any
                  obligation to exercise any of the trusts or powers vested in
                  it by this Agreement or to institute, conduct or defend any
                  litigation hereunder or in relation hereto, in each case at
                  the request, order or direction of any of the
                  Certificateholders pursuant to the provisions of this
                  Agreement, unless such Certificateholders shall have offered
                  to the Trustee reasonable security or indemnity against the
                  costs, expenses and liabilities which may be incurred therein
                  or thereby;

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

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<PAGE>

                           (viii)   The Trustee shall not be required to give
                  any bond or surety in respect of the execution of the Trust
                  Fund created hereby or the powers granted hereunder.

         Section 6.03. Trustee Not Liable for Certificates.

         The Trustee make no representations as to the validity or sufficiency
of this Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Mortgage Loan, or related document
save that the Trustee represents that, assuming due execution and delivery by
the other parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms except as such enforceability may be
subject to (A) applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally, and (B) general
principles of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law. The Trustee shall not be accountable for the use
or application by the Depositor of funds paid to the Depositor in consideration
of the assignment of the Mortgage Loans to the Trust Fund by the Depositor or
for the use or application of any funds deposited into the Distribution Account
or any other fund or account maintained with respect to the Certificates. The
Trustee shall not be responsible for the legality or validity of this Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder. Except as otherwise
provided herein, the Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement.

         Section 6.04. Trustee May Own Certificates.

         The Trustee and any Affiliate or agent of the Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates and may
transact banking and trust business with the other parties hereto and their
Affiliates with the same rights it would have if it were not Trustee or such
agent.

         Section 6.05. Eligibility Requirements for Trustee.

         The Trustee hereunder shall at all times (i) be an institution insured
by the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority and (iii) not be an
Affiliate of the Servicer. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for the
purposes of this Section, the combined capital and surplus of such corporation
or national banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.06.

         Section 6.06. Resignation and Removal of Trustee.

                           (a)      The Trustee may at any time resign and be
discharged from the trust hereby created by giving written notice thereof to the
Depositor and the Servicer. Upon

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receiving such notice of resignation, the Depositor will promptly appoint a
successor trustee by written instrument, one copy of which instrument shall be
delivered to the resigning Trustee, one copy to the successor trustee and one
copy to the Servicer. If no successor trustee shall have been so appointed and
shall have accepted appointment within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

                           (b)      If at any time (i) the Trustee shall cease
to be eligible in accordance with the provisions of Section 6.05 and shall fail
to resign after written request therefor by the Depositor, (ii) the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of either of their
property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii) a tax is imposed or threatened with respect to the Trust Fund
by any state in which the Trustee or the Trust Fund held by the Trustee is
located, or (iv) the continued use of the Trustee would result in a downgrading
of the rating by any Rating Agency of any Class of Certificates with a rating,
then the Depositor shall remove the Trustee and the Depositor shall appoint a
successor trustee by written instrument, one copy of which instrument shall be
delivered to the Trustee so removed, one copy each to the successor trustee and
one copy to the Servicer.

                           (c)      The Holders of more than 50% of the Class
Principal Amount (or Percentage Interest) of each Class of Certificates may at
any time upon 30 days' written notice to the Trustee and to the Depositor remove
the Trustee by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor and one copy to the Trustee; the Depositor shall
thereupon appoint a successor trustee in accordance with this Section.

                           (d)      Any resignation or removal of the Trustee
and appointment of a successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance by the successor trustee of
appointment, as provided in Section 6.07.

         Section 6.07. Successor Trustee.

                           (a)      Any successor trustee appointed as provided
in Section 6.06 shall execute, acknowledge and deliver to the Depositor 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 predecessor trustee shall deliver to the successor trustee
all Trustee Mortgage Files and documents and statements related to each Trustee
Mortgage File held by it hereunder, and shall duly assign, transfer, deliver and
pay over to the successor trustee the entire Trust Fund, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records or copies
thereof maintained by the predecessor trustee in the administration hereof as
may be requested by the successor trustee and shall thereupon be discharged from
all duties and responsibilities under this Agreement. In addition, the Depositor
and the predecessor trustee shall execute and deliver such other instruments and
do such other things as may reasonably be required to more fully and certainly
vest and confirm in the successor trustee all such rights, powers, duties and
obligations.

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                           (b)      No successor trustee shall accept
appointment as provided in this Section unless at the time of such appointment
such successor trustee shall be eligible under the provisions of Section 6.05.

                           (c)      Upon acceptance by a successor trustee of
appointment as provided in this Section, the predecessor trustee shall mail
notice of the succession of such successor trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and to any
Rating Agency. The expenses of such mailing shall be borne by the Depositor.

         Section 6.08. Merger or Consolidation of Trustee.

         Any Person into which the Trustee may be merged or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Persons succeeding
to the business of the Trustee shall be the successor to the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding,
provided that, in the case of the Trustee, such Person shall be eligible under
the provisions of Section 6.05.

         Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.

                           (a)      Notwithstanding any other provisions hereof,
at any time, the Trustee, the Depositor or the Certificateholders evidencing
more than 50% of the Class Principal Amount (or Percentage Interest) of every
Class of Certificates shall have the power from time to time to appoint one or
more Persons, approved by the Trustee, to act either as co-trustees jointly with
the Trustee, or as separate trustees, or as custodians, for the purpose of
holding title to, foreclosing or otherwise taking action with respect to any
Mortgage Loan outside the state where the Trustee has its principal place of
business where such separate trustee or co-trustee is necessary or advisable (or
the Trustee has been advised by the Servicer that such separate trustee or
co-trustee is necessary or advisable) under the laws of any state in which a
property securing a Mortgage Loan is located or for the purpose of otherwise
conforming to any legal requirement, restriction or condition in any state in
which a property securing a Mortgage Loan is located or in any state in which
any portion of the Trust Fund is located. The separate trustees, co-trustees, or
custodians so appointed shall be trustees or custodians for the benefit of all
the Certificateholders and shall have such powers, rights and remedies as shall
be specified in the instrument of appointment; provided, however, that no such
appointment shall, or shall be deemed to, constitute the appointee an agent of
the Trustee. The obligation of the Trustee to make Advances pursuant to Section
5.04 hereof shall not be affected or assigned by the appointment of a
co-trustee.

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

                           (i)      all powers, duties, obligations and rights
                  conferred upon the Trustee in respect of the receipt, custody
                  and payment of moneys shall be exercised solely by the
                  Trustee;

                           (ii)     all other 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, co-trustee, or custodian
                  jointly, except to the extent that under any law of any
                  jurisdiction in which any particular act or acts are to be
                  performed the Trustee shall be incompetent or

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<PAGE>

                  unqualified to perform such act or acts, in which event such
                  rights, powers, duties and obligations, including the holding
                  of title to the Trust Fund or any portion thereof in any such
                  jurisdiction, shall be exercised and performed by such
                  separate trustee, co-trustee, or custodian at the sole
                  discretion of the Trustee;

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

                           (iv)     the Trustee may at any time, by an
                  instrument in writing executed by it, with the concurrence of
                  the Depositor, accept the resignation of or remove any
                  separate trustee, co-trustee or custodian, so appointed by it
                  or them, if such resignation or removal does not violate the
                  other terms of this Agreement.

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

                           (d)      Any separate trustee, co-trustee or
custodian 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, co-trustee or custodian shall die, become incapable of
acting, resign or be removed, all of its estates, properties, rights, remedies
and trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.

                           (e)      No separate trustee, co-trustee or custodian
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.05 hereunder and no notice to Certificateholders of the
appointment shall be required under Section 6.07 hereof.

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

                           (g)      The Trust shall pay the reasonable
compensation of the co-trustees (which compensation shall not reduce any
compensation payable to the Trustee under such Section).

         Section 6.10. Authenticating Agents.

                           (a)      The Trustee may appoint one or more
Authenticating Agents which shall be authorized to act on behalf of the Trustee
in authenticating Certificates. If such an agent is so appointed by the Trustee,
wherever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating

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<PAGE>

Agent. Each Authenticating Agent must be a corporation organized and doing
business under the laws of the United States of America or of any state, having
a combined capital and surplus of at least $15,000,000, authorized under such
laws to do a trust business and subject to supervision or examination by federal
or state authorities.

                           (b)      Any Person into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which any
Authenticating Agent shall be a party, or any Person succeeding to the corporate
agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

                           (c)      Any Authenticating Agent may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee and the Depositor. The Trustee may at any time terminate the agency of
any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Depositor. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section
6.10, the Trustee may appoint a successor authenticating agent, shall give
written notice of such appointment to the Depositor and shall mail notice of
such appointment to all Holders of Certificates. Any successor authenticating
agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers, duties and responsibilities of its predecessor hereunder,
with like effect as if originally named as Authenticating Agent. No successor
authenticating agent shall be appointed unless eligible under the provisions of
this Section 6.10. No Authenticating Agent shall have responsibility or
liability for any action taken by it as such at the direction of the Trustee.

         Section 6.11. Indemnification of Trustee.

         The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Depositor and the Trust
Fund; provided that the Trust Fund's indemnification under this Section 6.11 is
limited by Section 4.01(d) for any loss, liability or expense (including,
without limitation, reasonable attorneys' fees and disbursements (and, in
connection with any custody agreement the Trustee may enter pursuant to this
Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel), incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder or in connection with the
performance of their duties hereunder including the costs and expenses of
defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:

                           (i)      with respect to any such claim, the Trustee
                  shall have given the Depositor written notice thereof promptly
                  after the Trustee shall have knowledge thereof;

                           (ii)     while maintaining control over its own
                  defense, the Trustee shall cooperate and consult fully with
                  the Depositor in preparing such defense;

                           (iii)    notwithstanding anything to the contrary in
                  this Section 6.11, the Trust Fund shall not be liable for
                  settlement of any such claim by the Trustee entered into
                  without the prior consent of the Depositor, which consent
                  shall not be unreasonably withheld; and

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                           (iv)     the Trust's Fund's indemnification
                  obligations hereunder shall be limited to losses, liability,
                  costs or expenses, payments in respect of which by the Trust
                  Fund would constitute "unanticipated expenses" within the
                  meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)).

         The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to, any loss, liability or expense
under any environmental law.

         Section 6.12. Fees and Expenses of the Trustee.

         As compensation for its services hereunder, the Trustee shall be
entitled to retain any and all investment earnings on amounts on deposit in the
Distribution Account pending the distribution of such funds to
Certificateholders on each Distribution Date (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). Any expenses incurred by the Trustee shall be reimbursed to the
extent provided in Section 6.11.

         Section 6.13. Collection of Monies.

         Except as otherwise expressly provided in this Agreement, the Trustee
may demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.

         Section 6.14. Events of Default; Trustee To Act; Appointment of
Successor.

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

                           (i)      any failure by the Servicer to make any
                  Advance, to deposit in the Custodial Account or to remit to
                  the Trustee any payment required to be made under the terms of
                  this Agreement on the day it is due;

                           (ii)     any material breach on the part of the
                  Servicer of any other term, agreement, covenant,
                  representation or warranty in this Agreement that has not been
                  cured after written notice and a thirty (30) day curative
                  period;

                           (iii)    following entry against the Servicer of a
                  decree or order of a court or agency or supervisory authority
                  having jurisdiction for the appointment of a trustee,
                  conservator, receiver, liquidator, assignee, custodian or
                  sequestrator (or other similar official) for the Servicer in
                  any federal or state bankruptcy, insolvency, readjustment of
                  debt, marshaling of assets and liabilities or similar
                  proceedings, or for the winding-up or liquidation of the
                  Servicer's affairs, if such decree or order has remained in
                  force undischarged or unstayed for a period of sixty (60)
                  days;

                           (iv)     upon consent by the Servicer to the
                  appointment of a trustee, conservator, receiver, liquidator,
                  assignee, custodian or sequestrator (or other similar
                  official) in, or commencement of a voluntary case under, any
                  federal or

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                  state bankruptcy insolvency, readjustment of debt, marshaling
                  of assets and liabilities or similar proceedings of or
                  relating to the Servicer or of or relating to all or
                  substantially all of the Servicer's property;

                           (v)      upon the Servicer's (A) admitting in writing
                  its inability to pay its debts generally as they become due,
                  (B) filing a petition to take advantage of any applicable
                  insolvency or reorganization statute, (C) making an assignment
                  for the benefit of its creditors or (D) voluntarily suspending
                  payment of its obligations;

                           (vi)     the Servicer ceases to be eligible to sell
                  mortgage loans to or service mortgage loans for FNMA, FHLMC or
                  GNMA or ceases to be a HUD-approved mortgagee;

                           (vii)    the Servicer (a) merges or consolidates with
                  or into another Person, (b) sells substantially all of its
                  assets or (c) sells a controlling interest that results in a
                  change in control of the Servicer (other than any such change
                  of control that results in the Servicer being owned or
                  controlled by an Affiliate of the Servicer, in existence on
                  the date of this Agreement).

         If an Event of Default shall occur and be continuing, then, in each and
every case, subject to applicable law, so long as any such Event of Default
shall not have been remedied within any period of time prescribed by this
Agreement, by notice in writing to the Servicer either (x) the Depositor or (y)
the Trustee may (or the Trustee shall if so directed by Certificateholders
evidencing more than 50% of the Class Principal Amount (or Class Notional
Amount) of each Class of Certificates) terminate all of the rights and
obligations of the Servicer under this Agreement in accordance with the terms of
this Agreement. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee; and the Trustee
is hereby authorized and empowered to execute and deliver, on behalf of the
defaulting Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents or otherwise.

         If any Event of Default shall occur, the Trustee, upon becoming aware
of the occurrence thereof, shall promptly notify the Depositor and each Rating
Agency of the nature and extent of such Event of Default.

                           (b)      Within 90 days of the time the Servicer
receives a notice of termination from the Trustee pursuant to Section 6.14, the
Trustee, unless another Servicer shall have been appointed, shall be the
successor in all respects to the Servicer in its capacity as such under this
Agreement and the transactions set forth or provided for therein and shall have
all the rights and powers and be subject to all the responsibilities, duties and
liabilities relating thereto and arising thereafter placed on the Servicer
thereunder, including the obligation to make Advances; provided, however, that
any failure to perform such duties or responsibilities caused by the Servicer's
failure to provide information required by this Agreement or this Agreement
shall not be considered a default by the Trustee hereunder. In addition, the
Trustee shall have no responsibility for any act or omission of the Servicer
prior to the issuance of any notice of termination. The Trustee shall have no
liability relating to any representations and warranties of the Servicer set
forth in this Agreement. In the Trustee's capacity as such successor, the
Trustee

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<PAGE>

shall have the same limitations on liability provided to the Servicer in this
Agreement. As compensation therefor, the Trustee shall be entitled to receive
all compensation payable to the Servicer under this Agreement.

         The Trustee shall be entitled to be reimbursed by the Depositor and the
Trust Fund (pursuant to Section 6.11 but without regard to any annual limitation
thereunder), in the event that the Servicer does not reimburse the Trustee under
this Agreement, for all costs associated with the transfer of servicing from the
predecessor Servicer, including, without limitation, any costs or expenses
associated with the termination of the predecessor Servicer, the appointment of
a successor servicer, the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee or any successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans property and effectively (such
costs, "Servicing Transfer Costs").

                           (c)      Notwithstanding the above, the Trustee may,
if it shall be unwilling to continue to so act, or shall, if it is unable to so
act, petition a court of competent jurisdiction to appoint, or, with the consent
of the Depositor, appoint on its own behalf any established housing and home
finance institution servicer, or servicing or mortgage servicing institution
having a net worth of not less than $15,000,000 and meeting such other standards
for a successor servicer as are set forth in this Agreement and reasonably
satisfactory to the Depositor, as the successor to the Servicer in the
assumption of all of the responsibilities, duties or liabilities of a servicer,
like the Servicer. Any entity designated by the Trustee as a successor servicer
may be an Affiliate of the Trustee; provided, however, that, unless such
Affiliate meets the net worth requirements and other standards set forth herein
for a successor servicer, the Trustee, in its individual capacity shall agree,
at the time of such designation, to be and remain liable to the Trust Fund for
such Affiliate's actions and omissions in performing its duties under this
Agreement. 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 to the Servicer under
this Agreement. The Trustee and such successor shall take such actions,
consistent with this Agreement, as shall be necessary to effectuate any such
succession and may make other arrangements with respect to the servicing to be
conducted hereunder which are not inconsistent herewith and therewith. Neither
the Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, (ii) the failure of the Servicer to cooperate as required by this Agreement,
(iii) the failure of the Servicer to deliver the Mortgage Loan data to the
Trustee as required by this Agreement or (iv) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer.

         Section 6.15. Additional Remedies of Trustee Upon Event of Default.

         During the continuance of any Event of Default, so long as such Event
of Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy,

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and each and every remedy shall be cumulative and in addition to any other
remedy, and no delay or omission to exercise any right or remedy shall impair
any such right or remedy or shall be deemed to be a waiver of any Event of
Default.

         Section 6.16. Waiver of Defaults.

         More than 50% of the Aggregate Voting Interests of Certificateholders
may waive any default or Event of Default by the Servicer in the performance of
its obligations hereunder, except that a default in the making of any required
deposit to the Distribution Account that would result in a failure of the
Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.

         Section 6.17. Notification to Holders.

         Upon termination of the Servicer or appointment of a successor to the
Servicer, in each case as provided herein, the Trustee shall promptly mail
notice thereof by first class mail to the Certificateholders at their respective
addresses appearing on the Certificate Register. The Trustee shall also, within
45 days after the occurrence of any Event of Default known to the Trustee, give
written notice thereof to the Certificateholders, unless such Event of Default
shall have been cured or waived prior to the issuance of such notice and within
such 45-day period.

         Section 6.18. Directions by Certificateholders and Duties of Trustee
During Event of Default.

         Subject to the provisions of Section 8.01 hereof, during the
continuance of any Event of Default, Holders of Certificates evidencing not less
than 25% of the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct 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; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Servicer or any successor servicer from its rights and duties
as servicer) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability for which it is
not indemnified to its satisfaction or be unjustly prejudicial to the
non-assenting Certificateholders.

         Section 6.19. Preparation of Tax Returns and Other Reports.

                           (a)      The Trustee shall prepare or cause to be
prepared on behalf of the Trust Fund, based upon information calculated in
accordance with this Agreement pursuant to instructions given by the Depositor,
and the Trustee shall file federal tax returns, all in accordance

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<PAGE>

with Article X hereof. The Trustee shall prepare and file such state income tax
returns and such other returns as may be required by applicable law relating to
the Trust Fund, and, if required by state law, and shall file any other
documents to the extent required by applicable state tax law (to the extent such
documents are in the Trustee's possession). The Trustee shall forward copies to
the Depositor of all such returns and Form 1099 supplemental tax information and
such other information within the control of the Trustee as the Depositor may
reasonably request in writing, and shall distribute to each Certificateholder
such forms and furnish such information within the control of the Trustee as are
required by the Code and the REMIC Provisions to be furnished to them, and will
prepare and distribute to Certificateholders Form 1099 (supplemental tax
information) (or otherwise furnish information within the control of the
Trustee) to the extent required by applicable law.

                           (b)      The Trustee shall prepare and file with the
Internal Revenue Service ("IRS"), on behalf of each of REMIC 1, REMIC 2 and the
Upper Tier REMIC, an application on IRS Form SS-4 or shall obtain a Taxpayer
Identification Number for each of REMIC 1, REMIC 2 and the Upper Tier REMIC
using another reasonable method. If the application is filed on Form SS-4, the
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned for each REMIC, shall promptly forward copies of such notices to
the Depositor, upon request. The Trustee will file an IRS Form 8811.

                           (c)      The Depositor shall prepare or cause to be
prepared the initial current report on Form 8-K. Thereafter, within 15 days
after each Distribution Date, the Trustee shall, in accordance with industry
standards, file with the Securities and Exchange Commission (the "Commission")
via the Electronic Data Gathering and Retrieval System (EDGAR), a Form 8-K with
a copy of the statement to the Certificateholders for such Distribution Date as
an exhibit thereto. Prior to January 31, 2005, the Trustee shall, in accordance
with industry standards, file a Form 15 Suspension Notification with respect to
the Trust Fund, if applicable. Prior to March 31, 2005, the Trustee shall file a
Form 10-K executed by the Depositor, in substance conforming to industry
standards, with respect to the Trust Fund. The Depositor shall be responsible
for preparing all filings and certificates required by the Sarbanes-Oxley Act of
2002. The Trustee agrees to promptly furnish to the Depositor, from time to time
upon request, such further information, reports, and financial statements within
its control related to this Agreement and the Mortgage Loans as the Depositor
reasonably deems appropriate to prepare and file all necessary reports with the
Commission.

         Section 6.20. Annual Certificate by Trustee.

                           (a)      By March 15th of each year for which a Form
10-K is to be filed with a certification by the Depositor, an officer of the
Trustee shall execute and deliver an Officer's Certificate, signed by the senior
officer in charge of the Trustee or any officer to whom that officer reports, to
the Depositor for the benefit of such Depositor and its officers, directors and
affiliates, certifying as to the matters described in the Officer's Certificate
attached hereto as Exhibit P.

                           (b)      The Trustee shall indemnify and hold
harmless the Depositor and its officers, directors, agents and affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Trustee or any of its officers, directors, agents or
affiliates of its obligations under this Section 6.20 any material misstatement
or omission in the Officer's Certificate required under this Section or the
negligence, bad faith or willful misconduct of the Trustee in connection
therewith. If the indemnification provided for herein is unavailable

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<PAGE>

or insufficient to hold harmless the Depositor, then the Trustee agrees that it
shall contribute to the amount paid or payable by the Depositor as a result of
the losses, claims, damages or liabilities of the Depositor in such proportion
as is appropriate to reflect the relative fault of the Trustee on the one had
and the Depositor on the other in connection with a breach of the Trustee's
obligations under this Section 6.20, any material misstatement or omission in
the Officer's Certificate required under this Section or the Trustee's
negligence, bad faith or willful misconduct in connection therewith.

                                  ARTICLE VII.

                         PURCHASE OF MORTGAGE LOANS AND
                          TERMINATION OF THE TRUST FUND

         Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund
Upon Purchase or Liquidation of All Mortgage Loans.

                           (a)      The respective obligations and
responsibilities of the Trustee, the Servicer and the Depositor created hereby
(other than the obligation of the Trustee to make payments to Certificateholders
as set forth in Section 7.02), shall terminate on the earliest of (i) the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all REO Property, (ii) the sale of the property held
by the Trust Fund at auction in accordance with Section 7.01(c) and (iii) the
Latest Possible Maturity Date; provided, however, that in no event shall the
Trust Fund 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's, living on the date
hereof. Any termination of the Trust Fund shall be carried out in such a manner
so that the termination of each REMIC included therein shall qualify as a
"qualified liquidation" under the REMIC Provisions.

                           (b)      [Reserved]

                           (c)      Any termination of the Trust Fund pursuant
to clause (a)(ii) above shall be effected by the auction by the Trustee of all
of the Mortgage Loans and REO Properties via a solicitation of bids in
accordance with procedures to be agreed upon by the Trustee and the Depositor.
The Trustee shall accept the highest such bid, provided that such bid equals or
exceeds the amount described in the definition of "Optional Termination Price."
Notwithstanding anything to the contrary herein, the Optional Termination Price
received by the Trustee shall be deposited by the Trustee directly into the
Distribution Account no later than the Business Day prior to the date of
termination.

         The right of the Trustee to conduct an auction pursuant to the
preceding paragraph shall be conditioned upon the aggregate outstanding Stated
Principal Balance of the Mortgage Loans, at the time of such auction,
aggregating ten (10) percent or less of the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date.

                           (d)      The Servicer and the Trustee shall be
reimbursed from the Optional Termination Price for any Advances, Servicer
Advances, accrued and unpaid Servicing Fees, the cost of any auction conducted
pursuant to (c) above or other amounts with respect to the Mortgage Loans that
are reimbursable to such parties under this Agreement.

         Section 7.02. Procedure Upon Termination of Trust Fund.

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<PAGE>

                           (a)      Notice of any optional termination pursuant
to the provisions of Section 7.01(c) specifying the Distribution Date upon which
the final distribution shall be made or the Purchase Date, shall be given
promptly by the Trustee by first class mail to Certificateholders mailed no
later than the first day of the month in which the Distribution Date selected
for purchase of the Mortgage Loans occurs or upon (x) the sale of all of the
property of the Trust Fund by the Trustee or in the case of a sale of assets of
the Trust Fund, or (y) upon the final payment or other liquidation of the last
Mortgage Loan or REO Property in the Trust Fund. Such notice shall specify (A)
the Purchase Date and the Distribution Date upon which final distribution on the
Certificates of all amounts required to be distributed to Certificateholders
pursuant to Section 5.02 will be made upon presentation and surrender of the
Certificates at the Certificate Registrar's Corporate Trust Office, and (B) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, distribution being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Certificate Registrar at the time such
notice is given to Holders of the Certificates. Upon any such termination, the
duties of the Trustee and the Certificate Registrar with respect to the
Certificates shall terminate and the Trustee shall terminate the Distribution
Account and any other account or fund maintained with respect to the
Certificates, subject to the Trustee's obligation hereunder to hold all amounts
payable to Certificateholders in trust without interest pending such payment.

                           (b)      In the event that all of the Holders do not
surrender their Certificates for cancellation within three months after the time
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice any Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps
to contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all amounts
distributable to such Holders for the benefit of such Holders. No interest shall
accrue on any amount held by the Trustee and not distributed to a
Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance with
this Section.

                           (c)      Any reasonable expenses incurred by the
Trustee, to the extent that such expenses, if paid or reimbursed by the Trust
Fund, would constitute "unanticipated expenses" within the meaning of Treasury
Regulations Section 1.860G-1(b)(3)(ii), in connection with any redemption or
termination or liquidation of the Trust Fund shall be reimbursed from proceeds
received from the liquidation of the Trust Fund.

         Section 7.03. Additional Trust Fund Termination Requirements.

                           (a)      Any termination of the Trust Fund shall be
effected in accordance with the following additional requirements, unless the
Trustee seeks and receives an Opinion of Counsel (at the expense of such
requesting party), addressed to the Trustee, to the effect that the failure of
the Trust Fund to comply with the requirements of this Section 7.03 will not (I)
result in the imposition of taxes on any REMIC under the REMIC Provisions or
(II) cause any REMIC established hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding:

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<PAGE>

                           (i)      Within 89 days prior to the time of the
                  making of the final payment on the Certificates upon
                  notification by the Depositor that it intends to exercise its
                  option to cause the termination of the Trust Fund, the Trustee
                  shall adopt a plan of complete liquidation prepared by the
                  Depositor of the Trust Fund on behalf of each REMIC, meeting
                  the requirements of a qualified liquidation under the REMIC
                  Provisions;

                           (ii)     Any sale of the assets of the Trust Fund
                  pursuant to Section 7.01 or 7.02 shall be a sale for cash and
                  shall occur at or after the time of adoption of such a plan of
                  complete liquidation and prior to the time of making of the
                  final payment on the Certificates;

                           (iii)    On the date specified for final payment of
                  the Certificates, the Trustee shall make final distributions
                  of principal and interest on the Certificates in accordance
                  with Section 5.02 and, after payment of, or provision for any
                  outstanding expenses, distribute or credit, or cause to be
                  distributed or credited, to the Holders of the Residual
                  Certificates all cash on hand after such final payment (other
                  than cash retained to meet claims), and the Trust Fund (and
                  each REMIC) shall terminate at that time; and

                           (iv)     In no event may the final payment on the
                  Certificates or the final distribution or credit to the
                  Holders of the Residual Certificates be made after the 89th
                  day from the date on which the plan of complete liquidation is
                  adopted.

                           (b)      By its acceptance of a Residual Certificate,
each Holder thereof hereby agrees to accept the plan of complete liquidation
adopted by the Trustee under this Section and to take such other action in
connection therewith as may be reasonably requested by the Trustee.

                                  ARTICLE VIII.

                          RIGHTS OF CERTIFICATEHOLDERS

         Section 8.01. Limitation on Rights of Holders.

                           (a)      The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement or this Trust
Fund, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or take any action or proceeding in any court for a
partition or winding up of this Trust Fund, 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 Trustee or the operation and management of the Trust Fund,
or the obligations of the parties hereto, nor shall anything herein set forth,
or contained in the terms of the Certificates, be construed so as to constitute
the Certificateholders from time to time as partners or members of an
association, nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.

                           (b)      No Certificateholder, solely by virtue of
its status as Certificateholder, shall have any right by virtue or by availing
itself of any provision of this Agreement to institute any suit, action or
proceeding in equity or at law upon, under or with

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<PAGE>

respect to this Agreement, unless such Holder previously shall have given to the
Trustee a written notice of an Event of Default and of the continuance thereof,
as hereinbefore provided, and unless also the Holders of Certificates evidencing
not less than 25% of the Class Principal Amount or Class Notional Amount (or
Percentage Interest) of Certificates of each Class affected thereby 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 cost, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for sixty
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 and
no direction inconsistent with such written request has been given such Trustee
during such sixty-day period by such Certificateholders; 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 of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the 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 8.02. Access to List of Holders.

                           (a)      If the Trustee is not acting as Certificate
Registrar, the Certificate Registrar will furnish or cause to be furnished to
the Trustee, within fifteen days after receipt by the Certificate Registrar of a
request by the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders of each
Class as of the most recent Record Date.

                           (b)      If three or more Holders or Certificate
Owners (hereinafter referred to as "Applicants") apply in writing to the
Trustee, and such application states that the Applicants desire to communicate
with other Holders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such Applicants reasonable
access during the normal business hours of the Trustee to the most recent list
of Certificateholders held by the Trustee or shall, as an alternative, send, at
the Applicants' expense, the written communication proffered by the Applicants
to all Certificateholders at their addresses as they appear in the Certificate
Register.

                           (c)      Every Holder or Certificate Owner, if the
Holder is a Clearing Agency, by receiving and holding a Certificate, agrees with
the Depositor, the Certificate Registrar and the Trustee that neither the
Depositor, the Certificate Registrar nor the Trustee shall be held accountable
by reason of the disclosure of any information as to the names and addresses of
the Certificateholders hereunder, regardless of the source from which such
information was derived.

         Section 8.03. Acts of Holders of Certificates.

                           (a)      Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by Holders or Certificate Owners, if the Holder is a Clearing
Agency, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly

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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. Such instrument or instruments (as the action embodies therein
and evidenced thereby) are herein sometimes referred to as an "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agents shall be sufficient for
any purpose of this Agreement and conclusive in favor of the Trustee, if made in
the manner provided in this Section.

                           (b)      The fact and date of the execution by any
Person of any such instrument or writing may be proved by the affidavit of a
witness of such execution or by the certificate of any notary public or other
officer authorized by law to take acknowledgments or deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation or a member
of a partnership on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority of
the individual executing the same, may also be proved in any other manner which
the Trustee deems sufficient.

                           (c)      The ownership of Certificates (whether or
not such Certificates shall be overdue and notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Trustee) shall
be proved by the Certificate Register, and neither the Trustee nor the Depositor
shall be affected by any notice to the contrary.

                           (d)      Any request, demand, authorization,
direction, notice, consent, waiver or other action by the Holder of any
Certificate shall bind every future Holder of the same Certificate and the
Holder of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee in reliance thereon, whether or not notation
of such action is made upon such Certificate.

                                  ARTICLE IX.

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

         Section 9.01. Servicer to Act as Servicer.

                           (a)      Commencing on the Closing Date, the Servicer
shall service each Mortgage Loan in accordance with Accepted Servicing
Practices.

                           (b)      The Servicer shall maintain an EDP
containing all information and programming necessary to service the Mortgage
Loans in accordance with Section 2.01(a) hereof. The Mortgage Loans shall be
grouped on the Servicer's EDP to reflect the Trust Fund as the owner of the
Mortgage Loans.

                           (c)      The Servicer may not waive, modify or vary
any term of a Mortgage Note without the Depositor's prior written consent. The
Servicer shall comply with all applicable federal, state and local legal and
regulatory requirements (including laws, statutes, rules, regulations and
ordinances) in connection with the modification of the Mortgage Note.

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                           (d)      Notwithstanding anything herein to the
contrary, the Servicer shall follow any reasonable directions given by the
Trustee and/or the Depositor with respect to the servicing of the Mortgage
Loans.

                           (e)      With the exception of Ancillary Fees and any
other charges expressly permitted by the Mortgage Note and applicable law, the
Servicer covenants and agrees that it will not, without the prior written
consent of the Seller, charge or collect from any Mortgagor, or trustee under a
deed of trust, any fees of any kind including, but not limited to charges for
amounts expended by the Servicer, regardless of the characterization of the fee
or charge.

                           (f)      The Trustee agrees to execute such limited
powers of attorney provided to it by the Servicer as are necessary and
appropriate to assist the Servicer to carry out its servicing and administrative
responsibilities under this Agreement.

                           (g)      In connection with its duties hereunder, in
the event the Servicer requires an original of any document contained in a
Mortgagor's file to service a Mortgage Loan, it shall submit a written request
to the Custodian and the Custodian shall provide the original document to the
Servicer within two (2) Business Days after receipt of the written request,
provided that (a) as to any recorded document, the applicable recorder's office
has returned the recorded document to the Servicer or (b) as to the original
title insurance policy, the Servicer has received such policy. When requesting a
release of documents from the Custodian, the Servicer shall use the form
attached hereto as Exhibit N. Notwithstanding the foregoing, the Servicer
acknowledges and agrees that the Seller maintains agreements with document
custodians selected by it from time to time, pursuant to which such custodians
maintain Mortgage Loan files on behalf of the Seller. The Servicer agrees to
cooperate with such custodians and request from such custodians the documents
and Mortgage Files required by the Servicer which are maintained by such
custodians (with a copy of such request sent to the Seller).

                           (h)      The Servicer shall not, unless default by
the related Mortgagor has occurred or is imminent, knowingly permit any
modification, waiver or amendment of any material term of any Mortgage Loan
(including but not limited to the interest rate, the principal balance, the
amortization schedule, or any other term affecting the amount or timing of
payments on the Mortgage Loan or the collateral therefor) unless the Servicer
shall have provided to the Depositor and the Trustee an Opinion of Counsel in
writing to the effect that such modification, waiver or amendment would not
cause an Adverse REMIC Event.

         Section 9.02. Title, Management and Disposition of REO Property.

                           (a)      If title to a Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Trustee or its designee. Notwithstanding
the foregoing, the Servicer shall not acquire title to any Mortgaged Property,
or proceed with the management of any REO Property, for which the Servicer has
knowledge that such Mortgaged Property or REO Property is affected by hazardous
waste. The Servicer shall either itself, or through an agent, manage, conserve,
protect and operate each REO Property (and may temporarily rent the same) on
behalf of the Trust Fund.

         In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Mortgage Loan, the Servicer
shall dispose of such REO Property not later than the end of the third taxable
year after the year of its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the Internal Revenue

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Service to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the Trust Fund may hold REO Property
for a longer period without adversely affecting the REMIC status of such REMIC
or causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension, then the Servicer shall continue to
attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the "Extended Period"). If
the Servicer has not received such an extension and the Servicer is unable to
sell the REO Property within the period ending 3 months before the end of such
third taxable year after its acquisition by the Trust Fund or if the Servicer
has received such an extension, and the Servicer is unable to sell the REO
Property within the period ending three months before the close of the Extended
Period, the Servicer shall, before the end of the three year period or the
Extended Period, as applicable, (i) purchase such REO Property at a price equal
to the REO Property's fair market value or (ii) auction the REO Property to the
highest bidder (which may be the Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be. The Trustee shall sign any document
prepared by the Servicer or take any other action reasonably requested by the
Servicer which would enable the Servicer, on behalf of the Trust Fund, to
request such grant of extension.

         Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used by or on behalf of the Trust Fund in such a manner or pursuant
to any terms that would: (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code; or
(ii) subject the Trust Fund to the imposition of any federal income taxes on the
income earned from such REO Property, including any taxes imposed by reason of
Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.

                           (b)      The Servicer shall deposit or cause to be
deposited in the applicable Custodial Account, on a daily basis, all revenues
received with respect to each REO Property and shall be permitted to withdraw
therefrom, to the extent of the amount of such revenues on deposit therein,
funds necessary for the proper operation, management and maintenance of such REO
Property, including but not limited to the cost of maintaining any hazard
insurance and the fees of any managing agent acting on behalf of the Servicer.

                           (c)      If the Servicer elects to dispose of an REO
Property without utilizing the services of an agent, the Servicer shall notify
the Trustee of its receipt of any and all bona fide offers to purchase that REO
Property. Each such REO Disposition shall be carried out by the Servicer at such
price, and upon such terms and conditions.

         If the Servicer utilizes the services of an approved agent to dispose
of an REO Property, the Servicer shall provide the Trustee with a copy of such
agent's marketing plan, which shall include, but not be limited to, (i) the
marketing time period, (ii) an estimate of the costs of any repairs or
improvements, (iii) the lowest acceptable sale price for the REO Property and
(iv) other proposed terms and conditions of sale. The REO Disposition shall be
carried out by the Servicer in accordance with the terms thereof. If the
Servicer receives a bona fide offer to purchase an REO Property and would like
to accept the offer, but the offer is outside the parameters of the approved
marketing plan, the Servicer shall provide the Trustee with written notification
of the terms and conditions of the offer.

         The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances from proceeds
received in connection with such REO

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Disposition. If the proceeds from an REO Disposition are insufficient to
reimburse the Servicer for any related unreimbursed Servicing Advances, to the
extent such reimbursement will constitute an "unanticipated expense" (within the
meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)) of a REMIC provided
for herein, the Servicer shall be entitled to withdraw any such deficiency from
amounts on deposit in the applicable Custodial Account. All proceeds from an REO
Disposition, net of any reimbursement to the Servicer as provided above, shall
be remitted to the Trustee within three (3) Business Days following receipt
thereof.

         Section 9.03. Trustee and Depositor's Right to Examine Servicer
Records.

                           (a)      The Servicer shall cooperate with the
Depositor and/or the Trustee, its counsel, accountants (including outside
accountants), supervisory agents, examiners and other representatives in
providing reasonable access during normal business hours to examine and audit
any and all of the books, records, documentation or other information of the
Servicer related to the Mortgage Loans, which may be relevant to the performance
or observance by the Servicer of the terms, covenants or conditions of this
Agreement.

                           (b)      The examination and audit rights and other
rights to access described in clause (a) above shall be afforded by the Servicer
at its offices without charge, upon reasonable request, and during normal
business hours or at such other times as may be reasonable under applicable
circumstances. The Servicer, at its expense, shall make available all customary,
reasonable office space, facilities, and equipment for the visiting party and
shall provide the visiting party with access to reasonable cooperation with its
officers and employees. The salaries, travel, subsistence and other related
expenses for the Depositor's and/or the Trustee's representatives shall be borne
by the Depositor and/or the Trustee.

         Section 9.04. Legal Proceedings Involving the Servicer and/or the
Mortgage Loans.

                           (a)      The Servicer shall commence, defend, appear,
or otherwise participate in any foreclosure, condemnation, bankruptcy, or other
legal proceedings relating to a Mortgage Loan in the name of the Trustee and/or
the Trust Fund. The Servicer shall provide the Trustee, on a monthly basis, with
such written reports as it receives regarding any legal proceedings.

                           (b)      The Servicer shall commence all
foreclosures, bankruptcies and other legal proceedings in the name of the
Trustee and/or the Trust Fund unless otherwise directed in writing by the
Trustee.

         Section 9.05. Material Changes.

         The Servicer shall promptly report to the Trustee and the Depositor any
change in its business operations, financial condition, properties or assets
that could have a material adverse effect on the Servicer's ability to perform
its obligations hereunder. Events for which the Trustee and the Depositor must
receive notice include, but are not limited to, the following:

                           (a)      any merger or consolidation, any changes in
the Servicer's ownership whether directly or indirectly (including any change in
ownership of the Servicer's parent), or any significant reorganization;

                           (b)      any material changes in management ordered
or required by a regulatory authority supervising or licensing the Servicer;

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                           (c)      the entry against the Servicer of a decree
or order of a court or agency or supervisory authority having jurisdiction for
the appointment of a trustee, conservator, receiver, liquidator, assignee,
custodian or sequestrator (or other similar official) in any federal or state
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, if such decree or order has remained in force undischarged or unstayed
for a period of sixty (60) days;

                           (d)      the consent by the Servicer to the
appointment of a trustee, conservator, receiver, liquidator, assignee, custodian
or sequestrator (or other similar official) in, or commencement of a voluntary
case under, any federal or state bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings;

                           (e)      upon the Servicer's (A) admitting in writing
its inability to pay its debts generally as they become due, (B) filing a
petition to take advantage of any applicable insolvency or reorganization
statute, (C) making an assignment for the benefit of its creditors or (D)
voluntarily suspending payment of its obligations;

                           (f)      entry of any court judgment or regulatory
order in which the Servicer is or may be required to pay a claim or claims that
may have a material adverse effect on the Servicer's financial condition;

                           (g)      any admission by the Servicer to the
commission of, or any finding that the Servicer has committed, any violation of
any law, regulation or order in any proceeding or audit commenced by any
governmental, or regulatory authority, or any proceeding commenced in any court
of law;

                           (h)      the commencement of any class action law
suits against the Servicer; and

                           (i)      the Servicer's entry into any agreement with
a third party that would result in any material change in the financial status
or ownership of the Servicer or any merger of the Servicer.

         Section 9.06. Servicer Shall Provide Information as Reasonably
Required.

         During the term of this Agreement, the Servicer shall furnish any
reports or documentation that the Trustee and/or the Depositor may reasonably
request. Reports requested may include reports not specified or otherwise
required by this Agreement or reports required to comply with any regulations
regarding any supervisory agents or examiners of the Trustee and/or the
Depositor, as applicable. All reports will be delivered in accordance with the
Trustee and/or the Depositor's reasonable instructions and directions. The
Servicer agrees to execute and deliver all such instruments and take all such
action as the Trustee and/or the Depositor, as applicable, from time to time,
may reasonably request in order to effectuate the purpose and to carry out the
terms of this Agreement.

         Section 9.07. Servicer Not to Resign.

         The Servicer shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof (to
other than a third party in the case of outsourcing routine tasks such as taxes,
insurance and property inspection, in which case the Servicer shall be fully
liable for such tasks as if the Servicer performed them itself) nor sell or

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otherwise dispose of all or substantially all of its property or assets without
the prior written consent of the Trustee and the Depositor, which consent shall
be granted or withheld in the reasonable discretion of such parties, provided,
however, that (i) the Servicer may assign its rights and obligations hereunder
without prior written consent of the Trustee and the Depositor to any entity
that is directly owned or controlled by the Servicer, and the Servicer
guarantees the performance of such entity hereunder, (ii) the Servicer is no
longer permitted to act as Servicer under applicable law as evidenced by an
Opinion of Counsel or (iii) upon a sale of its servicing rights with respect to
the Mortgage Loans with the prior written consent of the Seller. In the case of
item (i) above, the Servicer shall provide the Trustee and the Depositor with a
written statement guaranteeing the successor entity's performance of the
Servicer's obligations under the Agreement.

         Section 9.08. Custodial Accounts and Escrow Accounts.

         The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets. The Servicer shall create and maintain Custodial Accounts and
Escrow Accounts for the deposit of all funds, except as otherwise provided
herein, received by the Servicer on the Mortgage Loans.

         Section 9.09. Assumption Processing.

         Within three (3) Business Days of receipt by the Servicer of a request
by a Mortgagor to be released from liability for payment of a Mortgage Loan in
connection with an assumption of the related Mortgage Note, the Servicer shall
notify the Trustee of such request. Upon the completion of the assumption
processing, the Seller shall provide the Servicer with all necessary information
to enable the Servicer to update its EDP.

         Section 9.10. Books and Records.

         The Servicer shall be responsible for maintaining, and shall maintain,
a complete set of records for the Mortgage Loans. The Servicer's books and
records shall clearly reflect the ownership of the Mortgage Loans by the Trust
Fund. All documents, records and correspondence, regardless of the media in
which they are stored or maintained, are property of the Trust Fund, and the
Servicer shall hold the same in a fiduciary capacity for the Trust Fund. The
Servicer may retain copies of all such documents, records and correspondence as
may be necessary to service the Mortgage Loans under this Agreement.

         Section 9.11. Annual Statement as to Compliance.

         The Servicer will deliver to the Depositor and the Trustee on or before
February 28 of each year, beginning in 2005 or such other date that the
Depositor gives the Servicer at least 30 days prior notice of in order to remain
in compliance with the Section 302 Requirements, an Officer's Certificate of the
Servicer stating that (i) a review of the activities of the Servicer during the
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.

         Section 9.12. Annual Independent Certified Public Accountants'
Servicing Reports.

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         On or before March 15 of each year, beginning in 2005 or such other
date that the Depositor gives the Servicer at least 30 days prior written notice
of, in order to remain in compliance with the Section 302 Requirements, the
Servicer at its expense shall cause a nationally recognized firm of independent
certified public accountants that is a member of the American Institute of
Certified Public Accountants to furnish a USAP Report to the Trustee and the
Depositor.

         Section 9.13. Officer's Certificate.

                           (a)      By February 28th of each year beginning in
2005 or such other date specified in a written notice within 15 days prior to
the date on which a Form 10-K is required to be filed with a certification by
the Depositor, an officer of the Servicer shall execute and deliver an Officer's
Certificate substantially in the form of Exhibit R attached hereto, signed by
the senior officer in charge of servicing of the Servicer or any officer to whom
that officer reports, to the Trustee and Depositor for the benefit of such
parties and their respective officers, directors and affiliates.

                           (b)      The Servicer shall indemnify and hold
harmless the Depositor and its officers, directors, agents and affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 9.13 any material misstatement
or omission in the Officer's Certificate required under this Section 9.13 or the
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor, then the Servicer agrees that it
shall contribute to the amount paid or payable by the Depositor as a result of
the losses, claims, damages or liabilities of the Depositor in such proportion
as is appropriate to reflect the relative fault of the Servicer on the one had
and the Depositor on the other in connection with a breach of the Servicer's
obligations under this Section 9.13, any material misstatement or omission in
the Officer's Certificate required under this Section 9.13 or the Servicer's
negligence, bad faith or willful misconduct in connection therewith.

         Section 9.14. Servicing Compensation.

                           (a)      Subject to the following paragraph, as
compensation for its services hereunder, the Servicer shall be entitled to a
Servicing Fee payable with respect to each Mortgage Loan. As to each Mortgage
Loan, the Servicing Fee shall be payable monthly from payments of interest on
such Mortgage Loan prior to the deposit of such payments into the applicable
Custodial Account, shall accrue at the applicable Servicing Fee Rate, and shall
be computed on the basis of the same principal amount and for the same period
respecting which such interest payment was computed.

                           (b)      The Servicing Fee for each Mortgage Loan
shall be payable solely from (i) the interest portion of the related Monthly
Payment (to the extent paid by the Mortgagor, but only if a full interest
payment is received), or (ii) from any payment of interest made with respect to
the Mortgage Loan from the proceeds of foreclosure or any judgment, writ of
attachment or levy against the Mortgagor or the Mortgagor's assets, or (iii)
from funds paid in connection with any prepayment in full, or (iv) from
Insurance Proceeds or Liquidation Proceeds.

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                           (c)      As additional compensation hereunder, the
Servicer may retain (i) all net interest earnings on balances maintained in the
Custodial Account and Escrow Accounts and (ii) the Ancillary Fees.

                           (d)      The Servicer's right to the Servicing Fee
shall not be transferred in whole or in part except in connection with any
permitted transfer of all the Servicer's obligations under this Agreement. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for herein.

         Section 9.15. Indemnification.

         The Servicer shall indemnify and hold the Trustee, the Trust Fund and
the Depositor and their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") harmless from, and will reimburse the
Indemnified Parties for, any and all Losses incurred by any of the Indemnified
Parties to the extent that such Losses result from, are caused by or arise out
of any one or more of the following:

                           (i)      Any material misrepresentations made by the
                  Servicer in this Agreement, or in any schedule, exhibit, or
                  certificate furnished pursuant hereto;

                           (ii)     Any material breach of any of the
                  representations and warranties of the Servicer or the
                  nonfulfillment of any term, covenant, condition or obligation
                  of the Servicer set forth in this Agreement or in any
                  schedule, statement, exhibit, or certificate furnished
                  pursuant hereto, or any default or failure to perform by the
                  Servicer hereunder;

                           (iii)    Any failure of the Servicer to comply with
                  Accepted Servicing Practices in connection with servicing the
                  Mortgage Loans;

                           (iv)     Any liabilities or obligations, contingent
                  or otherwise, of the Servicer of any nature whatsoever
                  relating to the Servicer's obligations under this Agreement,
                  to the extent that any related Loss to the Trustee, Trust Fund
                  or Depositor is not increased by negligence, bad faith or
                  willful misconduct on the part of the Trustee, Trust Fund or
                  Depositor; or

                           (v)      Any non-compliance with the terms of the
                  powers of attorney or the use thereof that results in a Loss
                  to the Trustee, Trust Fund or Depositor.

         The indemnity provided in this Section 9.15 shall remain in full force
and effect regardless of any investigation made by the Trustee, Trust Fund or
Depositor or its representatives. The provisions of this Section 9.15 shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

         Section 9.16. Non Solicitation.

         For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer

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which are directed to the general public at large, or certain segments thereof,
shall not constitute solicitation as that term is used in this Section 9.16.

         Section 9.17. Successor to the Servicer.

         Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) the Trustee shall, in accordance with the
provisions of this Agreement (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor meeting the eligibility requirements set forth herein and
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement with the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. If the
Trustee shall succeed to and assume the Servicer's responsibilities, rights,
duties and obligations under this Agreement, such succession shall not be
effective prior to 90 days after the Trustee's knowledge that the Servicer shall
be terminated hereunder. The Servicer shall not be removed hereunder prior to
the effectiveness of the assumption of its responsibilities, rights, duties and
obligations by the successor thereto. Any successor to the Servicer that is not
at that time a servicer of other Mortgage Loans for the Trust Fund shall be
subject to the approval of the Depositor, the Trustee and each Rating Agency.
Unless the successor servicer is at that time a servicer of other mortgage loans
for the Trust Fund, each Rating Agency must deliver to the Trustee a letter to
the effect that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates.
In connection with such appointment and assumption, the Trustee or the
Depositor, as applicable, may make such arrangements for the compensation of
such successor out of payments on the Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
that permitted the Servicer under this Agreement. In the event that the
Servicer's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.17 and
shall in no event relieve the Servicer of the representations and warranties
made herein and the remedies available to the Trustee herein, it being
understood and agreed that the provisions of this Agreement regarding
indemnification and nonsolicitation shall be applicable to the Servicer
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.

         Section 9.18. Statements to the Trustee.

                           (a)      Not later than the 15th calendar day of each
month (or if such calendar day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall furnish to the Trustee (i) a monthly
remittance advice in the format set forth in Exhibit D-1 hereto and a monthly
defaulted loan report in the format set forth in Exhibit D-2 hereto relating to
the period ending on the first day of the current calendar month and (ii) all
such information required on a magnetic tape or other similar media mutually
agreed upon by the Trustee and the Servicer.

                           (b)      The Servicer shall provide the Trustee with
=such information concerning the Mortgage Loans as is necessary for the Trustee
to prepare its federal income tax return as the Trustee may reasonably request
from time to time.

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         Section 9.19. Limitation on Liability of the Servicer.

         Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Servicer or any such Person against any breach
of representations or warranties made by it herein or protect the Servicer or
any such Person from any liability which would otherwise be imposed by reasons
of willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of its obligations and duties hereunder. The
Servicer and any director, officer, employee or agent of the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates or any other unanticipated or
extraordinary expense, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder and which in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its discretion undertake
any such action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto and interests of the
Trustee and the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Servicer shall be
entitled to be reimbursed therefor out of the Custodial Account.

                                   ARTICLE X.

                              REMIC ADMINISTRATION

         Section 10.01. REMIC Administration.

                           (a)      REMIC elections as set forth in the
Preliminary Statement shall be made on Forms 1066 or other appropriate federal
tax or information return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. The regular interests and
residual interest in each REMIC shall be as designated in the Preliminary
Statement and Section 1.01.

                           (b)      The Closing Date is hereby designated as the
"Startup Day" of each REMIC within the meaning of section 860G(a)(9) of the
Code. The latest possible maturity date for purposes of Treasury Regulation
1.860G-1(a)(4) will be the Latest Possible Maturity Date.

                           (c)      The Trustee shall represent the Trust Fund
in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The Trustee shall pay
any and all tax-related expenses (not including taxes) of each REMIC, including
but not limited to any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to such REMIC that involve
the Internal Revenue Service or state tax authorities, but only to the extent
that (i) such expenses are ordinary or routine expenses, including expenses of a
routine audit but not expenses of litigation (except as described in (ii)); or
(ii) such expenses or liabilities (including taxes and penalties) are
attributable to the negligence or willful misconduct of the Trustee in
fulfilling its duties hereunder (including

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its duties as tax return preparer). The Trustee shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Distribution Account, provided, however, the Trustee shall not be entitled to
reimbursement for expenses incurred in connection with the preparation of tax
returns and other reports as required by Section 6.19 and this Section.

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

                           (e)      The Trustee or its designee shall perform on
behalf of each REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Trustee shall provide, upon receipt of
additional reasonable compensation, to the Treasury or other governmental
authority such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any disqualified person or
organization pursuant to Treasury Regulation 1.860E-2(a)(5) and any person
designated in Section 860E(e)(3) of the Code.

                           (f)      The Trustee and the Holders of Certificates
shall take any action or cause any REMIC to take any action necessary to create
or maintain the status of any REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee nor the Holder of any Residual Certificate shall knowingly take any
action, cause any REMIC to take any action or fail to take (or fail to cause to
be taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could (i) endanger the status of any REMIC as a REMIC or (ii)
result in the imposition of a tax upon any REMIC (including but not limited to
the tax on prohibited transactions as defined in Code Section 860F(a)(2) and the
tax on prohibited contributions set forth on Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Trustee has received an
Opinion of Counsel (at the expense of the party seeking to take such action) to
the effect that the contemplated action will not endanger such status or result
in the imposition of such a tax. In addition, prior to taking any action with
respect to any REMIC or the assets therein, or causing any REMIC to take any
action, which is not expressly permitted under the terms of this Agreement, any
Holder of a Residual Certificate will consult with the Trustee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur with
respect to any REMIC, and no such Person shall take any such action or cause any
REMIC to take any such action as to which the Trustee has advised it in writing
that an Adverse REMIC Event could occur; provided, however, that if no Adverse
REMIC Event would occur but such action could result in the imposition of
additional taxes on the Residual Certificateholders, no such Person shall take
any such action, or cause any REMIC to take any such action without the written
consent of the Residual Certificateholders.

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

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

                           (i)      No additional contributions of assets shall
be made to any REMIC, except as expressly provided in this Agreement.

                           (j)      The Trustee shall not enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.

                           (k)      (i) The Trustee shall treat the Class A-1
Certificates as representing ownership, through a grantor trust, of the Upper
Tier REMIC Class A-1 Interest. The Trustee shall treat the rights of the Holders
of the Class A-1 Certificates to receive distributions in respect of Basis Risk
Shortfalls and Unpaid Basis Risk Shortfalls, as interests in interest rate cap
contracts written by the Holders of the Class X-A Certificates (as holders of
interests in the X-A1 Component) in favor of the Holders of the Class A-1
Certificates.

                           (ii)     The Trustee shall treat the Class A-2
                  Certificates as representing ownership, through a grantor
                  trust, of the Upper Tier REMIC Class A-2 Interest. The Trustee
                  shall treat the rights of the Holders of the Class A-2
                  Certificates to receive distributions in respect of Basis Risk
                  Shortfalls and Unpaid Basis Risk Shortfalls, as interests in
                  interest rate cap contracts written by the Holders of each of
                  the Class X-A Certificates (as holders of interests in the
                  X-A2 Component) in favor of the Holders of the Class A-2
                  Certificates.

                           (iii)    The Trustee shall treat each of the Class
                  B-1, Class B-2 and Class B-3 Certificates as representing
                  ownership, through grantor trusts, of the Upper Tier REMIC
                  Class B-1 Interest, the Upper Tier REMIC Class B-2 Interest
                  and the Upper Tier REMIC Class B-3 Interest respectively. The
                  Trustee shall treat the rights of the Holders of the Class
                  B-1, Class B-2 and Class B-3 Certificates to receive payments
                  in respect of Basis Risk Shortfalls and Unpaid Basis Risk
                  Shortfalls as interests in interest rate cap contracts written
                  by the Holders of the Class X-B Certificate in favor of the
                  Holders of the Class B-1, Class B-2 and Class B-3
                  Certificates.

                           (iv)     For purposes of determining the issue prices
                  of the REMIC regular interests or portions thereof represented
                  by the Certificates, the interest rate cap contracts described
                  in this Section 10.01(k) shall be assumed to have a zero value
                  unless and until required otherwise by an applicable taxing
                  authority.

                           (v)      Each holder or beneficial owner of a Class
                  A-1, Class A-2, Class X-A, Class X-B, Class B-1, Class B-2 or
                  Class B-3 Certificate agrees, by its acceptance of such
                  Certificate or a beneficial interest therein, to treat, for
                  tax purposes, such Certificate in a manner consistent with the
                  treatment described in this Section 10.01(k). For information
                  reporting purposes, the Trustee shall treat the rights of the
                  holders of the Class A-1, Class A-2, Class B-1, Class B-2 and
                  Class B-3 Certificates to receive payments that are treated
                  under this Section 10.01(k) as payments on cap contracts or
                  interest rate cap agreements as having no value unless and
                  until required otherwise by an applicable taxing authority.

                           (vi)     For federal income tax purposes, the Trustee
                  shall treat distributions from the Trust Fund as occurring as
                  required by the terms of the

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                  Upper Tier REMIC Interests, with any difference between such
                  and actual distributions being treated as resulting from
                  payments in respect of the interest rate cap agreements
                  described in this Section 10.01(k).

                           (l)      The Class A-R Holder shall act as "tax
matters person" with respect to each REMIC and irrevocably appoints the Trustee
to act as its agent in such roles.

                           (m)      Neither the Trustee nor the Depositor, as
assignees under this Agreement, shall provide any consent pursuant to this
Agreement or knowingly take any action under this Agreement that would conflict
with or violate the provisions of this Article X.

         Section 10.02. Prohibited Transactions and Activities.

         Neither the Depositor nor the Trustee shall sell, dispose of, or
substitute for any of the Mortgage Loans, except in a disposition pursuant to
(i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund,
(iii) the termination of each REMIC pursuant to Article VII of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a repurchase
of Mortgage Loans pursuant to Article II of this Agreement, nor acquire any
assets for any REMIC, nor sell or dispose of any investments in the Distribution
Account for gain, nor accept any contributions to any REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of any such REMIC as a REMIC or of the interests therein other than the
Residual Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.

         Section 10.03. Indemnification with Respect to Prohibited Transactions
or Loss of REMIC Status.

         In the event that a REMIC fails to qualify as a REMIC, loses its status
as a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Trustee of its duties and obligations set forth
herein, the Trustee shall indemnify the Certificateholders of the related
Residual Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Trustee shall not be liable for any such Losses attributable to the action or
inaction of the Depositor or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Trustee has relied. Notwithstanding the foregoing, however,
in no event shall the Trustee have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement or the Mortgage
Loan Purchase and Sale Agreement, (2) for any Losses other than arising out of
malfeasance, willful misconduct or negligent performance by the Trustee with
respect to its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders of the related Residual
Certificate (in addition to payment of principal and interest on the
Certificates).

         Section 10.04. REO Property.

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<PAGE>

                           (a)      Notwithstanding any other provision of this
Agreement, the Trustee shall not, except to the extent provided in this
Agreement, knowingly permit any Servicer to rent, lease, or otherwise earn
income on behalf of any REMIC with respect to any REO Property which might cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or result in the receipt by any REMIC
of any "income from non-permitted assets" within the meaning of section
860F(a)(2) of the Code or any "net income from foreclosure property" which is
subject to tax under the REMIC Provisions unless the Servicer has provided to
the Trustee an Opinion of Counsel concluding that, under the REMIC Provisions,
such action would not adversely affect the status of any REMIC as a REMIC and
any income generated for any REMIC by the REO Property would not result in the
imposition of a tax upon such REMIC.

                           (b)      The Depositor shall cause the Servicer (to
the extent provided in this Agreement) to make reasonable efforts to sell any
REO Property for its fair market value. In any event, however, the Depositor
shall, or shall cause the Servicer (to the extent provided in this Agreement)
to, dispose of any REO Property within three years of its acquisition by the
Trust Fund unless the Depositor or the Servicer (on behalf of the Trust Fund)
has received a grant of extension from the Internal Revenue Service to the
effect that, under the REMIC Provisions and any relevant proposed legislation
and under applicable state law, the REMIC may hold REO Property for a longer
period without adversely affecting the REMIC status of such REMIC or causing the
imposition of a Federal or state tax upon such REMIC. If such an extension has
been received, then the Depositor, acting on behalf of the Trustee hereunder,
shall, or shall cause the Servicer to, continue to attempt to sell the REO
Property for its fair market value for such period longer than three years as
such extension permits (the "Extended Period"). If such an extension has not
been received and the Depositor or the Servicer, acting on behalf of the Trust
Fund hereunder, is unable to sell the REO Property within 33 months after its
acquisition by the Trust Fund or if such an extension, has been received and the
Depositor or the Servicer is unable to sell the REO Property within the period
ending three months before the close of the Extended Period, the Depositor shall
cause the Servicer, before the end of the three year period or the Extended
Period, as applicable, to (i) purchase such REO Property at a price equal to the
REO Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed to produce
a fair price prior to the expiration of the three-year period or the Extended
Period, as the case may be.

                                  ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

         Section 11.01. Binding Nature of Agreement; Assignment.

         This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

         Section 11.02. Entire Agreement.

         This Agreement contains the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

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         Section 11.03. Amendment.

                           (a)      This Agreement may be amended from time to
time by the Depositor, the Servicer and the Trustee, without notice to or the
consent of any of the Holders, (i) to cure any ambiguity or mistake, (ii) to
cause the provisions herein to conform to or be consistent with or in
furtherance of the statements made with respect to the Certificates, the Trust
Fund or this Agreement in any Offering Document, or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein or
with the provisions of this Agreement, (iii) to add any other provisions with
respect to matters or questions arising under this Agreement, (iv) to modify
alter, amend, add to or rescind any of the terms or provisions contained in this
Agreement or (v) to add, delete, or amend any provisions to the extent necessary
or desirable to comply with any requirements imposed by the Code and the REMIC
Provisions. No such amendment effected pursuant to the preceding sentence shall,
as evidenced by an Opinion of Counsel, adversely affect the status of any REMIC
created pursuant to this Agreement, nor shall such amendment effected pursuant
to clauses (iii) or (iv) of such sentence adversely affect in any material
respect the interests of any Holder unless such Holder has consented thereto.
Prior to entering into any amendment without the consent of Holders pursuant to
this paragraph, the Trustee shall be provided with an Opinion of Counsel (at the
expense of the party requesting such amendment) to the effect that such
amendment is permitted under this Section. Any such amendment shall be deemed
not to adversely affect in any material respect any Holder, if the Trustee
receives written confirmation from each Rating Agency that such amendment will
not cause such Rating Agency to reduce the then current rating assigned to the
Certificates.

                           (b)      This Agreement may also be amended from time
to time by the Depositor, the Servicer and the Trustee, with the consent of the
Holders of not less than 66-2/3% of the Class Principal Amount (or Percentage
Interest) of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders; provided, however, that no such amendment shall be made unless the
Trustee receives an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of any REMIC
as a REMIC or cause a tax to be imposed on such REMIC; and provided further,
that no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate, without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentages of Class Principal Amount
or Class Notional Amount (or Percentage Interest) of Certificates of each Class,
the Holders of which are required to consent to any such amendment without the
consent of the Holders of 100% of the Class Principal Amount or Class Notional
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.

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

                           (d)      It shall not be necessary for the consent of
Holders under this Section 11.03 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Holders shall be subject to such
reasonable regulations as the Trustee may prescribe.

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<PAGE>

                           (e)      Notwithstanding anything to the contrary in
this Agreement, the Trustee shall not consent to any amendment of this Agreement
except pursuant to the standards provided in this Section with respect to
amendment of this Agreement.

                           (f)      Neither the Seller nor the Trustee shall
consent to the assignment by the Servicer of the Servicer's rights and
obligations under this Agreement without the prior written consent of the
Depositor, which consent shall not be unreasonably withheld.

         Section 11.04. Voting Rights.

         Except to the extent that the consent of all affected
Certificateholders is required pursuant to this Agreement, with respect to any
provision of this Agreement requiring the consent of Certificateholders
representing specified percentages of aggregate outstanding Certificate
Principal Amount or Class Notional Amount (or Percentage Interest), Certificates
owned by the Depositor, the Trustee, the Servicer or any Affiliates thereof are
not to be counted so long as such Certificates are owned by the Depositor, the
Trustee, the Servicer or any Affiliate thereof.

         Section 11.05. Provision of Information.

                           (a)      For so long as any of the Certificates of
any Series or Class are "restricted securities" within the meaning of Rule
144(a)(3) under the Act, each of the Depositor, the Servicer and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such holder, upon the
request of such holder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Act. Any reasonable, out-of-pocket expenses
incurred by the Trustee or the Servicer in providing such information shall be
reimbursed by the Depositor.

                           (b)      The Trustee shall provide to any person to
whom a Prospectus was delivered, upon the request of such person specifying the
document or documents requested, (i) a copy (excluding exhibits) of any report
on Form 8-K or Form 10-K filed with the Securities and Exchange Commission and
(ii) a copy of any other document incorporated by reference in the Prospectus.
Any reasonable out-of-pocket expenses incurred by the Trustee in providing
copies of such documents shall be reimbursed by the Depositor.

                           (c)      On each Distribution Date, the Trustee shall
deliver or cause to be delivered by first class mail or make available on its
website to the Depositor, a copy of the report delivered to Certificateholders
pursuant to Section 4.02.

         Section 11.06. Governing Law.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.

         Section 11.07. Notices.

         All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when

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<PAGE>

received by (a) in the case of the Depositor, Merrill Lynch Mortgage Investors,
Inc., 250 Vesey Street, 4 World Financial Center, 10th Floor, New York, New
York, 10080, telecopy number (212) 449-9015, Attention: Merrill Lynch Mortgage
Investors Trust Series MLCC 2004-HB1, (b) in the case of the Servicer, Cendant
Mortgage Corporation, 3000 Leadenhall Road, Mt. Laurel New Jersey 08054,
telecopy number (856) 917-6910, Attention: Robert E. Groody, Chief Operating
Officer, (c) in the case of the Seller, Merrill Lynch Credit Corporation, 4802
Deer Lake Drive East, Jacksonville, Florida 32246, telecopy number (908)
218-8848, Attention: Merrill Lynch Mortgage Investors Trust Series MLCC
2004-HB1, and (d) with respect to the Trustee or the Certificate Registrar, P.O.
Box 98, Columbia, Maryland 21046, Attention: Client Manager - MLMI Trust Series
MLCC 2004-HB1, with a copy to it at its respective Corporate Trust Office, or as
to each party such other address as may hereafter be furnished by such party to
the other parties in writing. All demands, notices and communications to a party
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to such party at the relevant address, facsimile number or electronic
mail address set forth above or at such other address, facsimile number or
electronic mail address as such party may designate from time to time by written
notice in accordance with this Section 11.07.

         Section 11.08. 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 11.09. Indulgences; No Waivers.

         Neither the failure nor any delay on the part of a party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.

         Section 11.10. Headings Not To Affect Interpretation.

         The headings contained in this Agreement are for convenience of
reference only, and they shall not be used in the interpretation hereof.

         Section 11.11. Benefits of Agreement.

         Nothing in this Agreement or in the Certificates, express or implied,
shall give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.

         Section 11.12. Special Notices to the Rating Agencies.

                           (a)      The Depositor shall give prompt notice to
the Rating Agencies of the occurrence of any of the following events of which it
has notice:

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<PAGE>

                           (i)      any amendment to this Agreement pursuant to
                  Section 11.03;

                           (ii)     the occurrence of any Event of Default;

                           (iii)    any notice of termination given to the
                  Servicer pursuant to Section 6.14 or any resignation of the
                  Servicer pursuant to this Agreement;

                           (iv)     the appointment of any successor to the
                  Servicer pursuant to Section 6.14; and

                           (v)      the making of a final payment pursuant to
                  Section 7.02.

                           (b)      All notices to the Rating Agencies provided
for this Section shall be in writing and sent by first class mail, telecopy or
overnight courier, as follows:

If to Moody's, to:

                  Moody's Investors Service, Inc.
                  99 Church Street
                  New York, New York 10007
                  Attention: ABS Monitoring

                  If to S&P, to:

                  Standard & Poor's Ratings Service,
                    a division of The McGraw-Hill Companies, Inc.
                  55 Water Street
                  New York, New York 10041
                  Attention: Residential Mortgages

                  If to Fitch Ratings, to:

                  Fitch, Inc.
                  One State Street Plaza
                  30th Floor
                  New York, New York 10004
                  Attention: Surveillance Group

                           (c)      The Trustee shall provide or make available
to the Rating Agencies reports prepared pursuant to Section 4.02. In addition,
the Trustee shall, at the expense of the Trust Fund, make available to each
Rating Agency such information as such Rating Agency may reasonably request
regarding the Certificates or the Trust Fund, to the extent that such
information is reasonably available to the Trustee.

         Section 11.13. [RESERVED].

         Section 11.14. Counterparts.

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<PAGE>

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.

         Section 11.15. No Petitions.

         The Trustee and the Servicer, by entering into this Agreement, hereby
covenants and agrees that it shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.

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<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.

                                               MERRILL LYNCH MORTGAGE INVESTORS,
                                               INC., as Depositor

                                               By:_________________________
                                                   Name:  Matthew Whalen
                                                   Title: President

                                               CENDANT MORTGAGE CORPORATION,
                                               as Servicer

                                               By:_________________________
                                                   Name:  Richard Bradfield
                                                   Title: Vice President

                                               WELLS FARGO BANK N.A.,
                                               as Trustee

                                               By:_________________________
                                                   Name:  Sandra Whalen
                                                   Title: Vice President

Solely for purposes of Section 2.04,
accepted and agreed to by:

MERRILL LYNCH CREDIT
CORPORATION

By:________________________
    Name:  Kathy Ciaffa
    Title: Vice President

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                                    EXHIBIT A

                              FORMS OF CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                       A-1
<PAGE>

                                    EXHIBIT B

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF         )
                 )  ss.:
COUNTY OF        )

         [NAME OF OFFICER], _________ being first duly sworn, deposes and says:

         1.       That he [she] is [title of officer] ________________________
                  of [name of Purchaser] _____________________________________
                  (the "Purchaser"), a _______________________ [description of
                  type of entity] duly organized and existing under the laws of
                  the [State of __________] [United States], on behalf of which
                  he [she] makes this affidavit.

         2.       That the Purchaser's Taxpayer Identification Number is [    ].

         3.       That the Purchaser is not a "disqualified organization" within
                  the meaning of Section 860E(e)(5) of the Internal Revenue Code
                  of 1986, as amended (the "Code") and will not be a
                  "disqualified organization" as of [date of transfer], and that
                  the Purchaser is not acquiring a Residual Certificate (as
                  defined in the Agreement) for the account of, or as agent
                  (including a broker, nominee, or other middleman) for, any
                  person or entity from which it has not received an affidavit
                  substantially in the form of this affidavit. For these
                  purposes, a "disqualified organization" means the United
                  States, any state or political subdivision thereof, any
                  foreign government, any international organization, any agency
                  or instrumentality of any of the foregoing (other than an
                  instrumentality if all of its activities are subject to tax
                  and a majority of its board of directors is not selected by
                  such governmental entity), any cooperative organization
                  furnishing electric energy or providing telephone service to
                  persons in rural areas as described in Code Section
                  1381(a)(2)(C), any "electing large partnership" within the
                  meaning of Section 775 of the Code, or any organization (other
                  than a farmers' cooperative described in Code Section 521)
                  that is exempt from federal income tax unless such
                  organization is subject to the tax on unrelated business
                  income imposed by Code Section 511.

         4.       That the Purchaser is not, and on __________________ [date of
                  transfer] will not be, an employee benefit plan subject to
                  Title I of the Employee Retirement Income Security Act of
                  1974, as amended ("ERISA"), a plan subject to Section 4975 of
                  the Code, or a plan or arrangement subject to any provisions
                  of state, local or other federal law substantively similar to
                  the foregoing provisions of ERISA or the Code (collectively, a
                  "Plan"), and is not directly or indirectly acquiring a
                  Residual Certificate for, on behalf of or with any assets of
                  any such Plan.

                                      B-1
<PAGE>

         5.       That the Purchaser hereby acknowledges that under the terms of
                  the Pooling and Servicing Agreement dated as of July 1, 2004
                  (the "Agreement"), among Merrill Lynch Mortgage Investors,
                  Inc., as Depositor, Cendant Mortgage Corporation, as Servicer
                  and Wells Fargo Bank N.A., as Trustee with respect to Merrill
                  Lynch Mortgage Investors Trust Series MLCC 2004-HB1 Mortgage
                  Pass-Through Certificates, no transfer of the Residual
                  Certificates shall be permitted to be made to any person
                  unless the Certificate Registrar and Trustee have received a
                  certificate from such transferee containing the
                  representations in paragraphs 3 and 4 hereof.

         6.       That the Purchaser does not hold REMIC residual securities as
                  nominee to facilitate the clearance and settlement of such
                  securities through electronic book-entry changes in accounts
                  of participating organizations (such entity, a "Book-Entry
                  Nominee").

         7.       That the Purchaser does not have the intention to impede the
                  assessment or collection of any federal, state or local taxes
                  legally required to be paid with respect to such Residual
                  Certificate.

         8.       That the Purchaser will not transfer a Residual Certificate to
                  any person or entity (i) as to which the Purchaser has actual
                  knowledge that the requirements set forth in paragraph 3,
                  paragraph 6 or paragraph 10 hereof are not satisfied or that
                  the Purchaser has reason to believe does not satisfy the
                  requirements set forth in paragraph 7 hereof, and (ii) without
                  obtaining from the prospective Purchaser an affidavit
                  substantially in this form and providing to the Trustee and
                  the Certificate Registrar a written statement substantially in
                  the form of Exhibit C to the Agreement.

         9.       That the Purchaser understands that, as the holder of a
                  Residual Certificate, the Purchaser may incur tax liabilities
                  in excess of any cash flows generated by the interest and that
                  it intends to pay taxes associated with holding such Residual
                  Certificate as they become due.

         10.      That the Purchaser (i) is not a Non-U.S. Person or (ii) is a
                  Non-U.S. Person that holds a Residual Certificate in
                  connection with the conduct of a trade or business within the
                  United States and has furnished the transferor, the Trustee
                  and the Certificate Registrar with an effective Internal
                  Revenue Service Form W-8ECI (Certificate of Foreign Person's
                  Claim for Exemption From Withholding on Income Effectively
                  Connected With the Conduct of a Trade or Business in the
                  United States) or successor form at the time and in the manner
                  required by the Code. "Non-U.S. Person" means an individual,
                  corporation, partnership or other person other than (i) a
                  citizen or resident of the United States; (ii) a corporation,
                  partnership or other entity created or organized in or under
                  the laws of the United States or any state thereof, including
                  for this purpose, the District of Columbia; (iii) an estate
                  that is subject to U.S. federal income tax regardless of the
                  source of its income; (iv) a trust if a court within the
                  United States is able to exercise primary supervision over the
                  administration of the trust and one or more United States
                  trustees have authority to control all substantial decisions
                  of the trust; and, (v) to the extent provided in Treasury
                  regulations, certain trusts in existence on August 20, 1996
                  that are treated as United States persons prior to such date
                  and elect to continue to be treated as United States persons.

                                      B-2
<PAGE>

         11.      The Purchaser will not cause income from the Residual
                  Certificate to be attributable to a foreign permanent
                  establishment or fixed base (within the meaning of an
                  applicable income tax treaty) of the Purchaser or another U.S.
                  taxpayer.

         12.      That the Purchaser agrees to such amendments of the Agreement
                  as may be required to further effectuate the restrictions on
                  transfer of any Residual Certificate to such a "disqualified
                  organization," an agent thereof, a Book-Entry Nominee, or a
                  person that does not satisfy the requirements of paragraph 7
                  and paragraph 10 hereof.

         13.      That the Purchaser consents to the designation of the Trustee
                  to act as agent for the "tax matters person" of each REMIC
                  created by the Trust Fund pursuant to the Agreement.

         14.      That the Purchaser agrees to be bound by Section 3.03(f) of
                  the Agreement.

                                      B-3
<PAGE>

         IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 20__.

                                               _________________________________
                                               [Name of Purchaser]

                                               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
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.

         Subscribed and sworn before me this _____ day of __________ 20__.

NOTARY PUBLIC

COUNTY OF ________________________________

STATE OF  ________________________________

My commission expires the _____ day of __________ 20__.

                                      B-4
<PAGE>

                                    EXHIBIT C

              RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

                                                    ____________________________
                                                                Date

Re:      Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1
         Mortgage Pass-Through Certificates

         _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.

                                          Very truly yours,

                                          ______________________________________
                                          Name:
                                          Title:

                                      C-1
<PAGE>

                                   EXHIBIT D-1

                  STANDARD LAYOUT FOR MONTHLY REMITTANCE ADVICE

                             [INTENTIONALLY OMITTED]

                                     D-1-1
<PAGE>

                                   EXHIBIT D-2

                STANDARD LAYOUT FOR MONTHLY DEFAULTED LOAN REPORT

<TABLE>
<CAPTION>
------------   ----------  --------  ---------  ----  ----  ---------  --------  -------------------  -----
OUR LOAN NO.    INVESTOR   INVESTOR  MORTGAGOR  DUE   PAYT  PRINCIPAL  PRIN-INT                       LOAN
               BK. CAT TP  LOAN NO.    NAME     DATE   NO.   BALANCE   CONSTANT   --DELINQUENCIES--   DESC.
------------   ----------  --------  ---------  ----  ----  ---------  --------  ---------  --------  -----
                                                                                 PRINCIPAL  INTEREST
<S>            <C>         <C>       <C>        <C>   <C>   <C>        <C>       <C>        <C>       <C>
</TABLE>

                                     D-2-1
<PAGE>

                                    EXHIBIT E

                                   [RESERVED]

                                      E-1
<PAGE>

                                    EXHIBIT F

                                   [RESERVED]

                                      F-1
<PAGE>

                                    EXHIBIT G

                     FORM OF RULE 144A TRANSFER CERTIFICATE

Re:      Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1
         Mortgage Pass-Through Certificates

         Reference is hereby made to the Pooling and Servicing Agreement, dated
as of July 1, 2004 (the "Agreement"), among Merrill Lynch Mortgage Investors,
Inc., as Depositor, Cendant Mortgage Corporation, as Servicer and Wells Fargo
Bank N.A., as Trustee. Capitalized terms used but not defined herein shall have
the meanings given to them in the Agreement.

         This letter relates to $__________ initial Certificate Balance of Class
Certificates which are held in the form of Definitive Certificates registered in
the name of (the "Transferor"). The Transferor has requested a transfer of such
Definitive Certificates for Definitive Certificates of such Class registered in
the name of [insert name of transferee].

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

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.

                                             ___________________________________
                                             [Name of Transferor]

                                             By:________________________________
                                                 Name:
                                                 Title:

Dated:__________________________

                                      G-1
<PAGE>

                                    EXHIBIT H

                         FORM OF PURCHASER'S LETTER FOR
                        INSTITUTIONAL ACCREDITED INVESTOR

                                      Date

Dear Sirs:

         In connection with our proposed purchase of $______________ principal
amount of Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1 Mortgage
Pass-Through Certificates (the "Privately Offered Certificates") of Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), we confirm that:

         (1) We understand that the Privately Offered Certificates have not
been, and will not be, registered under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Privately Offered
Certificates within two years of the later of the date of original issuance of
the Privately Offered Certificates or the last day on which such Privately
Offered Certificates are owned by the Depositor or any affiliate of the
Depositor we will do so only (A) to the Depositor, (B) to "qualified
institutional buyers" (within the meaning of Rule 144A under the Securities Act)
in accordance with Rule 144A under the Securities Act ("QIBs"), (C) pursuant to
the exemption from registration provided by Rule 144 under the Securities Act,
or (D) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that is not
a QIB (an "Institutional Accredited Investor") which, prior to such transfer,
delivers to the Certificate Registrar under the Pooling and Servicing Agreement,
dated as of July 1, 2004 (the "Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as Depositor, Cendant Mortgage Corporation, as Servicer and
Wells Fargo Bank N.A., as Trustee, a signed letter in the form of this letter;
and we further agree, in the capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates from us a notice advising
such purchaser that resales of the Privately Offered Certificates are restricted
as stated herein.

         (2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor, we will
be required to furnish to the Certificate Registrar a certification from such
transferee in the form hereof to confirm that the proposed sale is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to the
foregoing effect.

         (3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Privately Offered Certificates,

                                      H-1
<PAGE>

and we and any account for which we are acting are each able to bear the
economic risk of such investment.

         (4) We are an Institutional Accredited Investor and we are acquiring
the Privately Offered Certificates purchased by us for our own account or for
one or more accounts (each of which is an Institutional Accredited Investor) as
to each of which we exercise sole investment discretion.

         (5) We have received such information as we deem necessary in order to
make our investment decision.

         (6) If we are acquiring ERISA-Restricted Certificates, we are not a
Plan and we are not acquiring the ERISA Restricted Certificates for, on behalf
of or with any assets of anu such Plan, except as may be permitted pursuant to
Section 3.03(d) of the Pooling and Servicing Agreement.

         Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Agreement.

                                      H-2
<PAGE>

         You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

                                            Very truly yours,

                                            ____________________________________
                                            [Purchaser]

                                            By:_________________________________
                                            Name:
                                            Title:

                                      H-3
<PAGE>

                                    EXHIBIT I

                        FORM OF ERISA TRANSFER AFFIDAVIT

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

         The undersigned, being first duly sworn, deposes and says as follows:

         1.       The undersigned is the ______________________ of
______________ (the "Investor"), a [corporation duly organized] and existing
under the laws of __________, on behalf of which he makes this affidavit.

         2.       (a)      With respect to a transfer of an ERISA-Restricted
Certificate that is a Class A-R Certificate, the Investor is not and on
____________ [date of transfer] will not be, an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code") or a plan or arrangement subject to any state, local or
other federal law substantively similar to the foregoing provisions of ERISA or
the Code ("Similar Law") (collectively, a "Plan"), and is not directly or
indirectly acquiring a Class A-R Certificate for, on behalf of or with any
assets of any such Plan.

                  (b)      With respect to a transfer of an ERISA-Restricted
Certificate that is a Class B-4, Class B-5 or Class B-6 Certificate, the
Investor shall provide the Trustee and the Depositor with (A) a representation
to the effect that the Investor is not a Plan and is not directly or indirectly
acquiring the Certificate for, on behalf of or with any assets of any such Plan,
(B) if the Certificate has been the subject of an ERISA-qualifying underwriting,
a representation that the Investor is an insurance company that is acquiring the
Certificate with funds contained in an "insurance company general account," as
defined in Section V(E) of Prohibited Transaction Class Exemption ("PTCE")
95-60, and the acquisition and holding of the Certificate are covered and exempt
under Sections I and III of PTCE 95-60, or (C) solely in the case of a
Definitive Certificate, an Opinion of Counsel satisfactory to the Trustee and
the Depositor to the effect that the acquisition and holding of such Certificate
will not constitute or result in a nonexempt prohibited transaction under ERISA
or the Code, or a violation of Similar Law, and will not subject the Trustee,
the Certificate Registrar, the Servicer or the Depositor to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Certificate Registrar, the
Servicer or the Depositor.

         3.       The Investor hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of July 1, 2004 (the "Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as Depositor, Cendant Mortgage
Corporation, as Servicer and Wells Fargo Bank N.A., as Trustee, no transfer of
the ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Certificate Registrar has received a certificate from such transferee
in the form hereof.

                                      I-1
<PAGE>

         IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________ 20___.

                                            ____________________________________
                                            [Investor]

                                            By:_________________________________
                                                 Name:
                                                 Title:

ATTEST:

___________________________

STATE OF                   )
                           ) ss.:
COUNTY OF                  )

         Personally appeared before me the above-named ________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________________ of the Investor, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Investor.

         Subscribed and sworn before me this _____ day of _________ 20___.

                                            ____________________________________
                                            NOTARY PUBLIC

                                            My commission expires the
                                            _____ day of __________, 20___.

                                      I-2
<PAGE>

                                    EXHIBIT J

                        FORM OF LETTER OF REPRESENTATIONS
                        WITH THE DEPOSITORY TRUST COMPANY

                             [INTENTIONALLY OMITTED]

                                      J-1
<PAGE>

                                    EXHIBIT K

                          FORM OF INITIAL CERTIFICATION
           MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2004-HB1

                                ___________, 2004

To:      Merrill Lynch Mortgage Investors, Inc.
         250 Vesey Street
         4 World Financial Center, 10th Floor
         New York, New York 10080

         Cendant Mortgage Corporation
         3000 Leadenhall Road
         Mt. Laurel, New Jersey 08054

         Merrill Lynch Credit Corporation
         4802 Deer Lake Drive East
         Jacksonville, Florida 32246

         Reference is made to the Pooling and Servicing Agreement among Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), Cendant Mortgage Corporation
(the "Servicer") and Wells Fargo Bank N.A., as trustee (the "Trustee"), dated as
of July 1, 2004 (the "Agreement"), pursuant to which the Depositor has delivered
to the Trustee, with respect to each Mortgage Loan set forth on Schedule A
hereto (the "Mortgage Loan Schedule"), the documents set forth in Section 2.01
of the Agreement.

         With respect to each Mortgage Loan listed on the Mortgage Loan Schedule
and except as otherwise noted on the Schedule of Exceptions set forth on
Schedule B hereto, the Trustee confirms that (1) the Trustee has received all of
the documents required to be delivered to the Trustee pursuant to Section 2.01
of the Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2.02(a) of the Agreement, and the documents contained in
each Trustee's Mortgage File conform to the requirements set forth in such
Section 2.02(a), and (3) the Trustee has physical possession of the documents in
each Trustee's Mortgage File. The Trustee has not independently verified the
validity, enforceability, sufficiency, recordability, due authorization or
genuineness or any document in any Trustee's Mortgage File or any related
Mortgage Loan, nor the collectibility, insurability, effectiveness or
suitability of any related Mortgage Loan.

                                      K-1
<PAGE>

         All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.

                                      WELLS FARGO BANK N.A.,
                                      as Trustee

                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________

                                      K-2
<PAGE>

                                    EXHIBIT L

                           FORM OF FINAL CERTIFICATION
           MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2004-HB1

                               _____________, 2004

To:      Merrill Lynch Mortgage Investors, Inc.
         250 Vesey Street
         4 World Financial Center, 10th Floor
         New York, New York 10080

         Cendant Mortgage Corporation
         3000 Leadenhall Road
         Mt. Laurel, New Jersey 08054

         Merrill Lynch Credit Corporation
         4802 Deer Lake Drive East
         Jacksonville, Florida 32246

         Reference is made to the Pooling and Servicing Agreement among Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), Cendant Mortgage Corporation
(the "Servicer") and Wells Fargo Bank N.A., as Trustee (the "Trustee"), dated as
of July 1, 2004 (the "Agreement"), pursuant to which the Depositor has delivered
to the Trustee, with respect to each Mortgage Loan set forth on Schedule A
hereto (the "Mortgage Loan Schedule"), the documents set forth in Section 2.01
of the Agreement.

         With respect to each Mortgage Loan listed on the Mortgage Loan Schedule
and except as otherwise noted on the Schedule of Exceptions set forth on
Schedule B hereto, the Trustee confirms that (1) the Trustee has received all of
the documents required to be delivered to the Custodian pursuant to Section 2.01
of the Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2 of Amendment No. 1 to the Custodial Agreement, and the
documents contained in each Trustee's Mortgage File conform to the requirements
set forth in such Section 2, and (3) the Trustee has physical possession of the
documents in each Trustee's Mortgage File. The Trustee has not independently
verified the validity, enforceability, sufficiency, recordability, due
authorization or genuineness or any document in any Trustee's Mortgage File or
any related Mortgage Loan, nor the collectibility, insurability, effectiveness
or suitability of any related Mortgage Loan.

                                      L-1
<PAGE>

         All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.

                                      WELLS FARGO BANK N.A.,
                                      as Trustee

                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________

                                      L-2
<PAGE>

                                    EXHIBIT M

                           LIST OF SERVICING OFFICERS

                             [INTENTIONALLY OMITTED]

                                      M-1
<PAGE>

                                    EXHIBIT N

                               REQUEST FOR RELEASE

To:      Wells Fargo Bank, N.A.
         1015 10th Avenue S.E.
         Minneapolis, Minnesota  55414
         (Attention: Merrill Lynch Mortgage Investors Trust Series MLCC
          2004-HB1)

         Re:      Pooling and Servicing Agreement, dated as of July 1, 2004,
                  among Merrill Lynch Mortgage Investors, Inc., as Depositor,
                  Cendant Mortgage Corporation, as Servicer and Wells Fargo
                  Bank, N.A., as Trustee

         In connection with the administration of the pool of Mortgage Loans
held by you as Trustee for the benefit of Certificateholders, we request the
release of the (Trustee's Mortgage File/[specify documents]) for the Mortgage
Loan described below, for the reason indicated.

File/document to be sent to:

                  [Company]
                  [Address]
                  [Attn:]
                  [Telephone Number ____]

Mortgagor's Name, Address & Zip Code:

Mortgage Loan Number:

Reason for Requesting Documents (check one)

         1.       Mortgage Loan Paid in Full
                  ([Seller/Depositor] [Servicer], hereby certifies that all
                  amounts received in connection therewith have been credited to
                  the Custodial Account or the Distribution Account, as
                  applicable.)

         2.       Mortgage Loan in Foreclosure

         3.       Mortgage Loan Repurchased or Substituted For
                  ([Seller/Depositor] [Servicer], hereby certifies that any
                  applicable repurchase price or substitution shortfall amount
                  has been credited to the Custodial Account or the Distribution
                  Account, as applicable.)

         4.       Mortgage Loan Liquidated
                  ([Seller/Depositor] [Servicer], hereby certifies that all
                  proceeds of

                                      N-1
<PAGE>

                  foreclosure, insurance or other liquidation have been finally
                  received and credited to the Custodial Account or the
                  Distribution Account, as applicable.)

         5.       Other (explain) _________________________________
                  If box 1, 2 or 3 above is checked, and if all or part of the
                  Trustee's Mortgage File was previously released to us, please
                  release to us our previous receipt on file with you, as well
                  as any additional documents in your possession relating to
                  the above specified Mortgage Loan.

                  If box 4 or 5 above is checked, upon our return of all of the
                  above documents to you as Trustee, please acknowledge your
                  receipt by signing in the space indicated below, and
                  returning this form.

                                            [SELLER/DEPOSITOR]
                                            [SERVICER]

                                            By:   ______________________________
                                            Date: ______________________________

Documents returned to Trustee:

____________________________________________,
as Trustee

By:   ______________________________________
Date: ______________________________________

                                      N-2
<PAGE>

                                    EXHIBIT O

                               CUSTODIAL AGREEMENT

         THIS CUSTODIAL AGREEMENT dated as of December 15, 2000 (this
"Agreement"), between MERRILL LYNCH CREDIT CORPORATION ("MLCC") having an
address at 4802 Deer Lake Drive East, Jacksonville, Florida 32246 and WELLS
FARGO BANK MINNESOTA, N.A. ("Custodian"), having an address at Sixth and
Marquette, Minneapolis, Minnesota 55479- 0031.

                              PRELIMINARY STATEMENT

         MLCC may, from time to time, purchase certain Mortgage Loans from third
party sellers pursuant to the terms and conditions of certain mortgage loan
purchase agreements entered into between MLCC and such third parties (each, a
"Purchase Agreement"). MLCC desires that the Custodian act as custodian with
respect to the documents for the Mortgage Loans delivered from time to time to
the Custodian hereunder, and the Custodian desires to act as custodian with
respect to the documents for the Mortgage Loans.

         NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:

         1.       Definitions.

         "Additional Collateral Mortgage Loan": Each Mortgage Loan that is
either a Mortgage 100sm Loan or Parent Power(R) Mortgage Loan as to which the
Additional Collateral is provided. For purposes hereof, the term "Additional
Collateral" shall mean (i) with respect to any Mortgage 100sm Loan, the
marketable securities subject to a security interest pursuant to the related
Mortgage 100sm Pledge Agreement, or (ii) with respect to any Parent Power(R)
Mortgage Loan, the related Parent Power(R) Agreement.

         "Agreement": This Custodial Agreement and all amendments and
attachments hereto and supplements hereof.

         "Assignment": An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record
notice of the sale or transfer of the Mortgage Loan.

         "Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking or savings associations in the State of New Jersey or the
State of Minnesota are authorized or obligated by law or executive order to be
closed.

         "Closing Date": With respect to each Mortgage Loan, the date upon which
the MLCC completes the purchase of such Mortgage Loan.

         "Custodian": Wells Fargo Bank Minnesota, N.A., or its successor in
interest or assigns.

                                      O-1
<PAGE>

         "Custodian's Mortgage File": As to each Mortgage Loan, all Mortgage
Loan documents delivered to the Custodian pursuant hereto and held by the
Custodian with respect to each Mortgage Loan.

         "Custody Receipt": An Initial Custody Receipt and/or a Final Custody
Receipt.

         "Cut-off Date": With respect to each Mortgage Loan, the first day of
the month in which the related Delivery Date occurs or such other date specified
by the Registered Holder.

         "Delivery Date": The date on which MLCC delivers or causes to be
delivered to the Custodian the Mortgage Loans listed on the related Mortgage
Loan Schedule.

         "Exception Report": The Exception Report prepared by the Custodian as
part of the Initial Custody Receipt and as updated thereafter.

         "Final Custody Receipt": A final custody receipt as to each Mortgage
Loan, which final custody receipt is delivered to MLCC, or its successor in
interest or assigns, by the Custodian in the form annexed hereto as Exhibit Two.

         "First Mortgage Loan": A Mortgage Loan that is secured by a first lien
on the Mortgaged Property securing the related Mortgage Note.

         "Gross Margin": With respect to each adjustable rate Mortgage Loan, the
fixed number of basis points set forth in the Mortgage Loan Schedule that is
added to the Index on each Interest Rate Adjustment Date in accordance with the
terms of the related Mortgage Note to determine the Mortgage Interest Rate for
such Mortgage Loan, subject to any applicable Periodic Rate Cap or Lifetime Rate
Cap.

         "Index": With respect to each adjustable rate Mortgage Loan, a rate per
annum to which the Gross Margin is added on each Interest Rate Adjustment Date
to determine the new Mortgage Interest Rate for such Mortgage Loan.

         "Initial Custody Receipt": An initial custody receipt as to each
Mortgage Loan, which initial custody receipt is delivered to MLCC, or its
successor in interest or assigns, by the Custodian in the form annexed hereto as
Exhibit One.

         "Interest Rate Adjustment Date": With respect to each adjustable rate
Mortgage Loan, the date on which the Mortgage Interest Rate is adjusted in
accordance with the terms of the related Mortgage Note.

         "Lifetime Rate Cap": With respect to each adjustable rate Mortgage
Loan, the maximum Mortgage Interest Rate that may be borne thereby, as set forth
in the related Mortgage Note.

         "Loan-to-Value Ratio": With respect to any First Mortgage Loan, as of
any date of determination, the ratio on such date of the outstanding principal
balance of such Mortgage Loan to the Appraised Value of the related Mortgaged
Property.

         "Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on real property securing the Mortgage Note.

                                      O-2
<PAGE>

         "Mortgage Interest Rate": The annual rate at which interest accrues on
any Mortgage Loan and with respect to any adjustable rate Mortgage Loan, as such
annual rate may be adjusted on any Interest Rate Adjustment Date and subject to
the limitations on such interest rate imposed by any Lifetime Rate Cap or any
Periodic Rate Cap.

         "Mortgage Loan": An individual Mortgage Loan, including but not limited
to all documents included in the Custodian's Mortgage File, monthly payments,
principal prepayments, proceeds from REO dispositions and any and all rights,
benefits, proceeds and obligations arising therefrom or in connection therewith,
and which is the subject of this Agreement.

         "Mortgage Loan Schedule": The list of Mortgage Loans purchased by MLCC
from a third party seller from time to time that are subject to this Agreement
which list shall set forth the following information with respect to each
Mortgage Loan:

                           (i)      the loan number;

                           (ii)     the Mortgagor's name, social security
                  number, and FICO score;

                           (iii)    the street address of the Mortgaged
                  Property, including city, state and zip code, if available;

                           (iv)     the Mortgage Interest Rate at origination
                  and, in the case of an adjustable rate Mortgage Loan, the
                  Mortgage Interest Rate in effect as of the related Cut-off
                  Date, which rate may vary from that reflected in the Mortgage
                  and Note;

                           (v)      for each adjustable rate Mortgage Loan, the
                  first Interest Rate Adjustment Date;

                           (vi)     for each adjustable rate Mortgage Loan, the
                  Gross Margin;

                           (vii)    for each adjustable rate Mortgage Loan, the
                  Lifetime Rate Cap, if applicable;

                           (viii)   for each adjustable rate Mortgage Loan, the
                  Periodic Rate Cap, if applicable;

                           (ix)     the original term to maturity and remaining
                  term to maturity;

                           (x)      the original principal balance;

                           (xi)     the first payment due date;

                           (xii)    the maturity date;

                           (xiii)   the monthly payment in effect as of the
                  related Cut-off Date;

                           (xiv)    the principal balance as of the related
                  Cut-off Date;

                           (xv)     as to any First Mortgage Loan the
                  Loan-to-Value Ratio at origination;

                                      O-3
<PAGE>

                           (xvi)    a code indicating whether the Mortgaged
                  Property is occupied by the Mortgagor;

                           (xvii)   a code indicating the type of Residential
                  Dwelling;

                           (xviii)  a code indicating the purpose of the
                  Mortgage Loan;

                           (xix)    a code indicating the Mortgage Loan
                  documentation type (i.e. limited documentation, full
                  documentation, easy documentation, etc.); and

                           (xx)     for each adjustable rate Mortgage Loan, a
                  code indicating the type of Index.

         "Mortgage Note": The note evidencing the indebtedness of a Mortgagor
secured by a Mortgage.

         "Mortgaged Property": The underlying real property securing repayment
of a Mortgage Note, consisting of a fee simple estate in a single parcel of real
property improved by a Residential Dwelling.

         "Mortgagor": The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor in title to the Mortgaged Property.

         "Opinion of Counsel": A document signed by an attorney, explaining the
attorney's understanding of the law as applicable to a state of facts submitted
for the purpose of an opinion.

         "Periodic Rate Cap": With respect to each adjustable rate Mortgage Loan
as to which the related Mortgage Loan Schedule indicates the existence of a
Periodic Rate Cap, the provision of the related Mortgage Note that provides for
a maximum amount by which the Mortgage Interest Rate may increase (or, if so
indicated on such Mortgage Loan Schedule, decrease) on an Interest Rate
Adjustment Date above (or below) the Mortgage Interest Rate in effect
immediately prior to such Interest Rate Adjustment Date.

         "Pledge Agreement": Any Mortgage 100 Pledge Agreement, Parent Power
Guaranty and Security Agreement for Securities Account, or Parent Power Guaranty
Agreement for Real Estate related to an Additional Collateral Mortgage Loan.

         "Registered Holder": MLCC, its successors in interest or assigns, in
whole or in part, as the case may be.

         "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae-eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative.

         "Second Mortgage Loan": A Mortgage Loan that is secured by a second
lien on the Mortgaged Property securing the related Mortgage Note.

                                      O-4
<PAGE>

         2.       Delivery of Mortgage Loan Schedule and Custodian's Mortgage
                  File.

         MLCC may, from time to time, deliver or cause to be delivered to the
Custodian a Mortgage Loan Schedule and the following documents for each Mortgage
Loan listed on such Mortgage Loan Schedule, to be held by the Custodian for the
benefit of the Registered Holder, as the owner thereof:

                           (a)      The original Mortgage Note endorsed, "Pay to
the order of ___________, without recourse" and signed in the name of the name
of last endorsee, by an authorized officer of the last endorsee. If the Mortgage
Loan was acquired by the last endorsee in a merger or other type of acquisition,
the endorsement must be by "[name of last endorsee], successor [by merger to or
in interest to, as applicable] [name of predecessor]"; and if the Mortgage Loan
was acquired or originated by the last endorsee while doing business under
another name, the endorsement must be by "[name of last endorsee], successor in
interest to [previous name]." The Mortgage Note shall include all intervening
endorsements showing a complete chain of title from the originator to the last
endorsee.

                           (b)      The original recorded Mortgage, with
evidence of recording thereon, or, if the original Mortgage has not yet been
returned from the recording office, a copy of the original Mortgage certified by
the previous owner to be a true copy of the original of the Mortgage which has
been delivered for recording in the appropriate recording office of the
jurisdiction in which the Mortgaged Property is located.

                           (c)      The original Assignment of each Mortgage,
executed in blank by either MLCC or its Servicer. If the Mortgage Loan was
acquired by the last endorsee in a merger or other type of acquisition, the
assignment must be by "[name of last assignee], successor [by merger to or in
interest to, as applicable] [name of predecessor]"; and if the Mortgage Loan was
acquired or originated by the last endorsee while doing business under another
name, the assignment must be by "[name of last assignee], successor in interest
to [previous name]."

                           (d)      The original policy of title insurance (or a
preliminary title report if the original title insurance policy has not been
received from the title insurance company).

                           (e)      Originals of any intervening assignments of
the Mortgage, with evidence of recording thereon or, if the original intervening
assignment has not yet been returned from the recording office, a copy of such
assignment certified by the Seller to be a true copy of the original of the
assignment which has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.

                           (f)      With respect to a Mortgage Loan that,
according to the Mortgage Loan Schedule is covered by a primary mortgage
insurance policy, the original or a copy of primary mortgage insurance
certificate, if any.

                           (g)      If indicated on the Mortgage Loan Schedule,
originals of all assumption and modification agreements, if any, with originals
or copies of the underlying instruments being modified.

                           (h)      With respect to each Additional Collateral
Mortgage Loan,

                                      O-5
<PAGE>

                                    1.       Copy of the related Mortgage 100
Pledge Agreement for Securities Account or the Parent Power Guaranty and
Security Agreement for Securities Account or the Parent Power Guaranty Agreement
for Real Estate, as the case may be;

                                    2.       copy of the UCC-1 (applicable for
South Carolina and Rhode Island only);

                                    3.       an original form UCC-3, if
applicable;

                                    4.       For loans originated by a
correspondent lender, an original assignment of security interest of the related
Mortgage 100 Pledge Agreement or Parent Power Agreement, as the case may be.

                           (i)      With respect to each Cooperative Loan:

                                    1.       the original proprietary lease;

                                    2.       the original recognition agreement;

                                    3.       the original security agreement;

                                    4.       the original or copy of the
assignment of proprietary lease;

                                    5.       the original cooperative stock
certificate and stock power executed by borrower in blank;

                                    6.       the original UCC-1 Financing
Statements; and

                                    7.       the original UCC-3 Financing
Statements.

                           (j)      Power of Attorney, if applicable.

         From time to time, MLCC shall forward or cause to be forwarded to the
Custodian additional documents, original or otherwise, evidencing an assumption
or modification of a Mortgage Loan which documents shall become part of the
Custodian's Mortgage File.

         3.       Obligations of the Custodian.

                           (a)      With respect to each Custodian's Mortgage
File, the Custodian is exclusively the custodian for the Registered Holder from
and after the related Delivery Date. The Custodian shall hold all documents
constituting the Custodian's Mortgage File received by it for the exclusive use
and benefit of the Registered Holder, and shall make disposition thereof only in
accordance with this Agreement and the instructions furnished by the Registered
Holder. The Custodian shall segregate and maintain continuous custody of all
documents constituting the Custodian's Mortgage File received by it in secure
and fire-resistant facilities in accordance with customary standards for such
custody. The Custodian represents and warrants that it will verify the receipt
of required documents, the accuracy of certain information, and indicate
discrepancies pursuant to the custody receipt requirements herein. The Custodian
makes no representations or warranties as to, and shall not be responsible to,
verify: (i) the validity, legality, enforceability, sufficiency, recordability,
due authorization or genuineness of any of the documents contained in

                                      O-6
<PAGE>

each Custodian's Mortgage File or any of the Mortgage Loans or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan. No provision of this Agreement shall be construed to impose on the
Custodian any obligation of a third party seller under this Agreement or a
Purchase Agreement under any circumstances.

                           (b)      The Custodian shall, at its own expense,
maintain at all times during the existence of this Agreement and keep in full
force and effect a fidelity bond, errors and omissions insurance, theft and
documents insurance and forgery insurance in amounts and with standard coverage
as is customary for insurance typically maintained by institutions that act as
custodians. The minimum coverage under any such bond and insurance policies
shall be at least equal to the corresponding amounts required by the Government
National Mortgage Association, Fannie Mae or Freddie Mac either of the Custodian
or in their respective Seller/Servicing Guides. A certificate of an authorized
officer for the Custodian shall be furnished to the Registered Holder upon
request as evidence of its compliance with any such requirement.

         4.       Custody Receipts.

                           (a)      Initial Custody Receipt. The Custodian shall
review the documents delivered to it on each Delivery Date and shall deliver to
MLCC as initial Registered Holder within two (2) Business Days following the
Delivery Date, or within a mutually agreed upon time between the Bank and the
Custodian, but prior to the Closing Date, an Initial Custody Receipt with
respect to the Mortgage Loans, in which the Custodian shall certify that such
Mortgage Loans are held for MLCC (as Registered Holder) and that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such certification
as not covered by such certification), (a) all documents described in Paragraphs
2(a) through 2(e) and to the extent provided in the Custodian's Mortgage Files
Paragraphs 2(f) through 2(j), if applicable, of this Agreement are in its
possession and (b) each Mortgage Note has been endorsed and each Assignment has
been executed as provided in Paragraph 2 hereof. If the Custodian determines
from such verification that any discrepancy or deficiency exists with respect to
a Custodian's Mortgage File, the Custodian shall note such discrepancy on the
schedule of exceptions attached to the Initial Custody Receipt as Schedule B
thereto (the "Exception Report").

         The Custodian shall also note on the Exception Report, with respect to
each Mortgage Loan, whether a certified copy of the related Mortgage was
delivered to the Custodian in lieu of the original of such Mortgage, whether a
certified copy of an intervening assignment of the related Mortgage was
delivered to the Custodian in lieu of the original of such assignment, and
whether a preliminary title report with respect to such Mortgage Loan was
delivered to the Custodian in lieu of the original policy of title insurance.

         On the first Business Day of each calendar month following delivery of
the Initial Custody Receipt until the month in which the Final Custody Receipt
is to be delivered pursuant to Subsection (b) below, the Custodian shall deliver
to the Registered Holder of the Initial Custody Receipt, an updated Exception
Report, revised to reflect any changes with respect to the status of the
exceptions noted for the related Mortgage Loans.

                           (b)      Final Custody Receipt. Not later than sixty
(60) days following the date of each delivery of an Initial Custody Receipt, the
Custodian shall deliver to the Registered Holder of the Initial Custody Receipt
the Final Custody Receipt, with respect to the Mortgage Loans related to such
Initial Custody Receipt, in which the Custodian shall certify to the Registered
Holder that, as to each Mortgage Loan listed in the related Mortgage Loan

                                      O-7
<PAGE>

Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (a) all documents described in Paragraphs 2(a) through 2(e), and
to the extent provided in the Custodian's Mortgage Files Paragraphs 2(f) through
2(j), if applicable, of this Agreement are in its possession, (b) such documents
have been reviewed by it and appear regular on their face and relate to such
Mortgage Loan, (c) based on its examination and only as to the foregoing
documents, the information set forth in items (i), (ii), (iii) excluding the zip
code requirement, (iv), (vi), (vii), (viii) and (x) of the definition of
"Mortgage Loan Schedule" respecting such Mortgage Loan is correct, and which as
to items (iv), (vi), (viii), and (x) for adjustable rate Mortgage Loans may
reflect interest rates or amounts that as of the Cutoff Date vary from those
provided in the Mortgage Loan Documents and (d) each Mortgage Note has been
endorsed and each Assignment has been executed as provided in Paragraph 2
hereof. If the Custodian determines from such verification that any discrepancy
or deficiency exists with respect to a Custodian's Mortgage File, the Custodian
shall note such discrepancy on the Exception Report attached to the Final
Custody Receipt as Schedule B thereto. The Custodian shall also note on such
Exception Report, with respect to each Mortgage Loan, whether a certified copy
of the related Mortgage was delivered to the Custodian in lieu of the original
of such Mortgage, whether a certified copy of an intervening assignment of the
related Mortgage was delivered to the Custodian in lieu of the original of such
assignment, and whether a preliminary title report with respect to such Mortgage
Loan was delivered to the Custodian in lieu of the original policy of title
insurance. Except as specifically provided above, the Custodian shall be under
no duty to review, inspect or examine such documents to determine that any of
them are enforceable or appropriate for their prescribed purpose. Upon delivery
of the Final Custody Receipt to the Registered Holder of the Initial Custody
Receipt, the Initial Custody Receipt shall be of no further force or effect.

                           (c)      Within five (5) days of receipt of written
directions, in the form attached hereto as Exhibit Six, from the Registered
Holder with respect to all or a portion of the Mortgage Loans owned by such
Registered Holder, and upon the prior tender by such Registered Holder of the
applicable Initial and/or Final Custody Receipt(s), as applicable, the Custodian
shall deliver all or any portion of the Custodian's Mortgage Files held by it to
the Registered Holder, or to such other party as the Registered Holder may
direct, as provided in Paragraph 19, at the place indicated in any such written
direction from the Registered Holder and shall deliver to the Registered Holder
a new Initial or Final Custody Receipt, as applicable, with respect to the
Custodian's Mortgage Files retained by the Custodian. The Registered Holder may
require the Custodian to complete the endorsements on any Mortgage Notes in its
possession and to complete the Assignment of Mortgages prepared by the Servicer
in blank, within a reasonable period of time. The cost of this shall be
reimbursed by the Registered Holder. A list of authorized signatures for such
written directions has been furnished to the Custodian by the Registered Holder
pursuant to Paragraph 20 hereof. Upon the Custodian's receipt of such written
notification from the Registered Holder that the Registered Holder has sold any
or all of the Mortgage Loans, which notification shall be accompanied by the
Initial and/or Final Custody Receipt(s), as applicable that relate to such
Mortgage Loans, the Custodian shall change its records to reflect that such
purchaser is the owner of such Mortgage Loans and shall immediately, upon the
direction of such Registered Holder, either deliver the related Custodian's
Mortgage Files to such purchaser at the expense of such purchaser or issue an
Initial or Final Custody Receipt in the name of such purchaser. Such purchaser,
as a Registered Holder, shall be required to simultaneously furnish to the
Custodian a list of authorized signatures for written directions pursuant to
Paragraph 20 hereof. The Custodian shall then deliver to the Registered Holder a
new Initial and/or Final Custody Receipt, as applicable reflecting all Mortgage
Loans with respect to which the Custodian still holds the related Custodian's
Mortgage Files on behalf of the Registered Holder. The Registered Holder and the
Custodian agree herein that any purchaser of any or all of

                                      O-8
<PAGE>

the Mortgage Loans shall succeed to the rights and obligations of the Registered
Holder under this Agreement with respect to such Mortgage Loans upon receipt of
the related Initial and/or Final Custody Receipt, as applicable subject to the
provisions of Paragraph 15 hereof.

         5.       Fees and Expenses of the Custodian.

         It is understood that the Custodian will charge such fees for its
services under this Agreement as are set forth in a separate agreement between
the Custodian and MLCC, the payment of which, together with the Custodian's
expenses in connection herewith, shall be solely the obligation of the
Registered Holder with respect to the related Mortgage Loans.

         6.       Removal of the Custodian.

         Any Registered Holder with respect to all or a portion of the Mortgage
Loans owned by such Registered Holder, with or without cause, may, upon thirty
(30) days' written notice to the Custodian, remove and discharge or any
successor Custodian thereafter appointed, as to such portion or all of the
Mortgage Loans the Custodian, from the performance of its duties under this
Agreement. In the event of any such removal, upon tender of the Custody Receipts
and satisfaction of any outstanding fees and expenses of the Custodian, the
Custodian shall promptly transfer to such Registered Holder or to a successor
Custodian appointed by such Registered Holder at the expense of such Registered
Holder, as directed by such Registered Holder in writing, all Custodian's
Mortgage Files related to the Mortgage Loans as to which the Custodian is being
terminated.

         7.       Examination of the Custodian's Mortgage File.

         Upon reasonable prior written notice to the Custodian, but not less
than two (2) Business Day, any Registered Holder with respect to all or a
portion of the Mortgage Loans owned by such Registered Holder and its agents,
accountants, attorneys, auditors, prospective purchasers, and third-party
contractors authorized by such Registered Holder will be permitted, during
normal business hours, to examine the Custodian's Mortgage Files, documents,
records and other papers in the possession of or under the control of the
Custodian relating to any or all of the Mortgage Loans for which the Custodian
holds the related Custodian's Mortgage File for such Registered Holder at the
expense of the inspecting party.

         8.       Counterparts.

         For the purpose of facilitating the execution 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 all of which together shall constitute and be
one and the same instrument.

         9.       Periodic Statements.

         Upon the request of any Registered Holder at any other time with at
least two (2) Business Days' notice to the Custodian, the Custodian shall
provide to the Registered Holder with respect to all or a portion of the
Mortgage Loans owned by such Registered Holder, a list of all of the Mortgage
Loans for which the Custodian holds a Custodian's Mortgage File pursuant to this
Agreement. Such list may be in the form of a copy of the Mortgage Loan Schedule
with manual deletions to denote specifically any Mortgage Loans paid off,
liquidated or repurchased or otherwise released by the Custodian since the date
of this Agreement.

                                      O-9
<PAGE>

         10.      Governing Law.

         This Agreement shall be construed in accordance with the laws of the
State where MLCC is headquartered, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.

         11.      Copies of Mortgage Documents.

         Upon the request of the Registered Holder with respect to all or a
portion of the Mortgage Loans owned by such Registered Holder, and at the cost
and expense of such party, the Custodian shall provide such Registered Holder
with copies or originals as provided in Section 21 hereof, of the Mortgage
Notes, Mortgages, Assignments and other documents to the extent that such
documents are part of the Custodian's Mortgage File relating to one or more of
the Mortgage Loans.

         12.      No Adverse Interest of Custodian.

         By execution of this Agreement, the Custodian represents, warrants and
covenants that it currently does not hold, and during the existence of this
Agreement shall not hold, any adverse interest, by way of security or otherwise,
in any Mortgage Loan.

         13.      Termination By Custodian.

         The Custodian may terminate its obligations under this Agreement upon
at least sixty (60) days' notice to the Registered Holder with respect to all or
a portion of the Mortgage Loans owned by such Registered Holder. The Custodian
shall then be responsible for all costs associated with such termination,
including costs associated with the transfer of the Custodial Files. If, in the
event of such termination, the Registered Holder shall appoint a successor
Custodian within such sixty day period, then upon such appointment and tender of
the related Custody Receipts, the Custodian shall promptly transfer to such
successor Custodian, as directed by the Registered Holder with respect to all or
a portion of the Mortgage Loans owned by such Registered Holder, all of the
Custodian's Mortgage Files being administered under this Agreement and shall
either complete the Assignments and endorse the Mortgage Notes as directed by
the Registered Holder or allow the Registered Holder or its agents or attorneys,
access to the Custodian's Mortgage Files for such purpose. Notwithstanding the
foregoing, if the Registered Holder fails to appoint a Custodian within such
sixty day period, the Custodian may petition any court of competent jurisdiction
for the appointment of a successor Custodian.

         14.      Termination of Agreement.

         This Agreement shall terminate upon the earlier of (a) the final
payment or other liquidation (or advance with respect thereto) of the last
Mortgage Loan, (b) the disposition of all property acquired upon foreclosure or
by deed in lieu of foreclosure of the last Mortgage Loan, or (c) the delivery by
the Custodian of the last Custodian's Mortgage File pursuant to the direction of
the Registered Holder hereunder. In such event the Registered Holder with
respect to all or a portion of the Mortgage Loans owned by such Registered
Holder shall so notify the Custodian and tender all Custody Receipts, and
thereafter all documents remaining in the Custodian's Mortgage Files shall be
forwarded to the Registered Holder.

                                      O-10
<PAGE>

         15.      Assignment of Agreement.

         The Registered Holder with respect to all or a portion of the Mortgage
Loans owned by such Registered Holder shall have the right to assign, in whole
or in part, its interests under this Agreement with respect to some or all of
the Mortgage Loans, and to designate any person or exercise any rights of the
Registered Holder hereunder, and such assignee or designee shall accede to the
rights and obligations hereunder of the Registered Holder with respect to such
Mortgage Loans. All references to the Registered Holder shall be deemed to
include its assignee or designee. In connection with any such assignment, the
Registered Holder with respect to all or a portion of the Mortgage Loans owned
by such Registered Holder may require that arrangements reasonably satisfactory
to it be made for the exchange of previously executed and outstanding Custody
Receipt(s) for a Custody Receipt representing such assignment. The Custodian may
not assign its interests or delegate its duties under this Agreement without the
prior written consent of the Registered Holder. In the event of any such
assignment or delegation, the Registered Holder shall not be responsible for any
fees of the successor Custodian in excess of the fees formerly paid by the
Registered Holder to the Custodian.

         16.      Notice.

         All demands, notices and communications hereunder shall be in writing
and shall be sent to the other party at the address shown on the first page
hereof, or such other address as may hereafter be furnished to the other party
by written notice given to the other party hereto in a notice complying with the
terms and provisions of this Section 16 or on an Exhibit Six notice provided
pursuant to Section 4(c).

         Any such demand, notice or communication hereunder shall be deemed
conclusively to have been given if personally delivered at or mailed by
registered mail, postage prepaid, and return receipt requested or transmitted by
telex, telegraph or facsimile transmission and by a similar writing to the other
party at its address as described in Subclause (a).

         17.      Indemnification.

                           (a)      Neither the Custodian nor any of its
directors, officers, agents or employees, shall be liable for any action taken
or omitted to be taken by it or them hereunder or in connection herewith in good
faith and believed by it or them to be within the purview of this Agreement,
except for its or their own negligence, lack of good faith or willful
misconduct.

                           (b)      The Registered Holder and the Custodian
agree to indemnify and hold each other and their respective directors, officers,
agents and employees harmless against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, including reasonable attorney's
fees, that may be imposed on, incurred by, or asserted against it or them in any
action taken or not taken by it or them hereunder. This indemnification shall
include, but not be limited to, the claims of third parties arising from or
related to this Agreement or the Mortgage Loans. This indemnification applies if
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, disbursements, or claims were imposed on, incurred by or
asserted against the party seeking indemnification because of the breach of the
obligations, negligence, lack of good faith or willful misconduct of the other
party or any of its directors, officers, agents or employees. The foregoing
indemnification shall survive any termination of this Agreement and the
resignation or removal of the Custodian.

                                      O-11
<PAGE>

                           (c)      In the event that the Custodian fails to
produce a Mortgage Note, Assignment of Mortgage or any other document related to
a Mortgage Loan that was in its possession pursuant to Section 2 within four (4)
Business Days after required or requested by the Registered Holder or its
Servicer (a "Custodial Delivery Failure"), and provided that (i) Custodian
previously delivered to the Registered Holder an Initial Custody Receipt which
did not list such document as an exception; (ii) such document is not
outstanding pursuant to a request for release in the form annexed hereto as
Exhibit Five; and (iii) such document was held by the Custodian on behalf of the
Registered Holder, then the Custodian shall: (a) with respect to any missing
Mortgage Note, promptly deliver to the Registered Holder upon request, a Lost
Note Affidavit in the form of Exhibit Seven hereto and (b) with respect to any
missing document related to such Mortgage Loan, including but not limited to a
missing Mortgage Note, (1) indemnify the Registered Holder, and its successor in
interest, in accordance with the succeeding paragraph and, (2) obtain and
maintain an insurance bond in the name of the Registered Holder, and its
successors in interest and assigns, insuring against any losses associated with
the loss of such document, in an amount equal to the then outstanding principal
balance of the related Mortgage Loan or such lesser amount requested by the
Registered Holder, at the Registered Holder's sole option, at any time the long
term obligations of the Custodian are rated below the second highest rating
category of Moody's Investors Service, Inc. or Standard and Poor's Ratings
Group, a division of McGraw-Hill, Inc.

                           (d)      The Custodian agrees to indemnify and hold
the Registered Holder, and its designees, harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of a Custodial Delivery
Failure, as defined herein, or the Custodian's negligence, lack of good faith or
willful misconduct. The forgoing indemnification shall survive any termination
or assignment of this Agreement.

         18.      Reliance of Custodian.

         In the absence of bad faith on the part of the Custodian, the Custodian
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any request, instructions, certificate,
opinion or other document furnished to the Custodian, reasonably believed by
Custodian to be genuine and to have been signed or presented by the proper party
or parties and conforming to the requirements of this Agreement. No
representations, warranties, covenants or obligations of the Custodian shall be
implied with respect to this Agreement or the Custodian's services hereunder.

         19.      Transmission of Custodian's Mortgage File.

         Written instructions as to the method of shipment and shipper(s)
Custodian is directed to utilize in connection with transmission of mortgage
files and loan documents in the performance of the Custodian's duties hereunder
shall be delivered by the Registered Holder (the "Requesting Party") with
respect to all or a portion of the Mortgage Loans owned by such Registered
Holder to the Custodian prior to any shipment of any mortgage files and loan
documents hereunder. The Registered Holder will arrange for the provision of
such services at its sole cost and expense (or, at Custodian's option, reimburse
Custodian for all costs and expenses incurred by Custodian consistent with such
instructions) and will maintain such insurance against loss or damage to
mortgage files and loan documents as the Requesting Party deems appropriate.
Without limiting the generality of the provisions of Paragraph 17 above, it is
expressly agreed that in no event shall the Custodian have any liability for any
losses or damages to any person, including, without

                                      O-12
<PAGE>

limitation, the Requesting Party, arising out of actions of the Custodian
consistent with instructions of the Requesting Party. In the absence of any
written instructions with respect to the transmission of the Custodian's
Mortgage Files, the parties hereby agree that the Custodian may utilize any
nationally recognized overnight courier service and shall be entitled to
reimbursement from the Registered Holder.

         20.      Authorized Representative.

         Unless the Registered Holder shall have given the Custodian written
notice to the contrary, each individual designated as an authorized
representative of the Registered Holder with respect to all or a portion of the
Mortgage Loans owned by such Registered Holder, and the Custodian, respectively
(an "Authorized Representative"), is authorized to give and receive notices,
requests and instructions and to deliver certificates and documents in
connection with this Agreement on behalf of the Registered Holder with respect
to all or a portion of the Mortgage Loans owned by such Registered Holder, or
the Custodian, as the case may be, and the specimen signature for each such
Authorized Representative of MLCC as the initial Registered Holder and each such
Authorized Representative of the Custodian initially authorized hereunder is set
forth on Exhibit Three and Exhibit Four hereof, respectively. Any subsequent
Registered Holder of the Mortgage Loans shall provide the Custodian specimen
signatures for each Authorized Representative of such Registered Holder. From
time to time, the Registered Holder and the Custodian may, by delivering to the
other party a revised exhibit, change the information previously given pursuant
to this Paragraph, but each of the parties hereto shall be entitled to rely
conclusively on the then current exhibit until receipt of a superseding exhibit.

         21.      Release of Custodian's File for Servicing.

         Upon written request by the Registered Holder or its Servicer with
respect to all or a portion of the Mortgage Loans owned by such Registered
Holder, pursuant to the form attached hereto as Exhibit Five, the Custodian
shall use its best efforts to promptly, and in no event no later than two (2)
Business Days after receipt of such written request completed in accordance with
this Agreement, release to the Registered Holder or its Servicer for the
servicing or foreclosure of any of the Mortgage Loans the related Custodian's
Mortgage File. All Custodian's Mortgage Files so released to the Registered
Holder's Servicer shall be held by such Servicer in trust for the benefit of the
Registered Holder in accordance with the provisions of a servicing agreement
entered into between the Registered Holder and such Servicer. The Registered
Holder or its Servicer shall return to the Custodian the Custodian's Mortgage
File that has been released to the Registered Holder or its Servicer, when the
Registered Holder's or its Servicer's need therefor in connection with such
servicing or foreclosure no longer exists, unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certification to this effect from
the Registered Holder or its Servicer to the Custodian in the form annexed
hereto as Exhibit Five, and the Custodian shall thereupon reflect any such
liquidation on the list of Mortgage Loans maintained by it pursuant to Paragraph
9 of this Agreement.

         Custodian shall not release more than 5% of the number of Mortgage
Loans at any time without additional written consent from Registered Holder.
This limitation shall not apply to the release of Custodial Files upon payment
in full.

         22.      Release of Custodian's Mortgage File for Payment.

         Upon the repurchase or substitution of any Mortgage Loan pursuant to a
Purchase Agreement or the payment in full of any Mortgage Loan, which shall be
evidenced by the

                                      O-13
<PAGE>

Custodian's receipt of a request for release, receipt and certification in the
form annexed hereto as Exhibit Five (which certification shall include a
statement to the effect that all amounts received in connection with such
payment or repurchase have been credited to the account of the Registered
Holder), the Custodian shall use its best efforts promptly and in no event later
than two (2) Business Days after receipt of the written request therefor
completed in accordance with this Agreement, release the related Custodian's
Mortgage File to the Registered Holder or, at the request of the Registered
Holder, its Servicer, such repurchase thereupon to be noted on the list
maintained by the Custodian pursuant to Paragraph 9 of this Agreement.

         23.      Reproduction of Documents.

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, and (b) certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

         24.      Severability.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, the invalidity
of any such covenant, agreement, provision or term of this Agreement shall in no
way affect the validity or enforceability of the other provisions of this
Agreement; provided, however, that if the invalidity of any covenant, agreement
or provision shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement.

         25.      Amendment; Exhibits.

         This Agreement may be amended from time to time by the parties hereto
only by a written agreement signed by the parties hereto. The exhibits to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement.

         26.      Captions.

         Section headings are used herein for convenience only and do not limit
or expand the scope of the provisions herein.

         28.      Representations and Warranties of Custodian.

         Custodian represents and warrants to and covenants with MLCC as
follows:

                           (a)      Custodian is a corporation duly
incorporated, validly existing and in good standing under the laws of Minnesota.

                           (b)      Custodian has full corporate power to
execute, deliver and perform the obligations under this Agreement. MLCC may rely
on the actions of Custodian

                                      O-14
<PAGE>

without further inquiry. No additional consent, authorization, or regulatory
filing is required in order for Custodian to legally perform its obligations.

                           (c)      This agreement constitutes a legal, valid
and binding obligation of Custodian, enforceable against Custodian in accordance
with the terms herein except as limited by bankruptcy, insolvency, liquidation
or other similar laws affecting generally the enforcement of creditor's rights.

                                      O-15
<PAGE>

         IN WITNESS WHEREOF, the Custodian and MLCC have caused this Agreement
to be executed as of the date and year first written above.

                                         WELLS FARGO BANK MINNESOTA, N.A.,
                                         Custodian

                                         By:____________________________________
                                         Name:  ________________________________
                                         Title: ________________________________

                                         MERRILL LYNCH CREDIT CORPORATION
                                         ("MLCC")

                                         By:____________________________________
                                         Name:  ________________________________
                                         Title: ________________________________

                                      O-16
<PAGE>

                                    EXHIBIT P

                       AMENDMENT NO. 1 CUSTODIAL AGREEMENT

         Amendment No. 1, dated as of January 16, 2002 (this "Amendment"),
between Merrill Lynch Credit Corporation ("MLCC") and Wells Fargo Bank
Minnesota, N.A. (the "Custodian"), to the Custodial Agreement, dated as of
December 15, 2000 (the "Custodial Agreement").

                                    RECITALS

         WHEREAS, MLCC may from time to time, purchase certain Mortgage Loans
from third party sellers pursuant to the terms and condition of certain mortgage
loan purchase agreements entered into between MLCC and such parties (each, a
"Purchase Agreement");

         WHEREAS, pursuant to the Custodial Agreement, the Custodian has agreed
to take possession of mortgage notes evidencing Mortgage Loans and certain other
Mortgage Loan Documents delivered from time to time pursuant to the Custodial
Agreement;

         WHEREAS, MLCC and the Custodian have agreed, subject to the terms and
conditions of this Amendment, that the Custodial Agreement be amended to reflect
the replacement of individual certifications with a Master Trust Receipt; and

         Accordingly, MLCC and Custodian hereby agree, in consideration of the
mutual promises and mutual obligations set forth herein, that the Custodial
Agreement is hereby amended as follows:

                  SECTION 1. Definitions:

                  (a)      Section 1 of the Custodial Agreement is hereby
amended by deleting the definitions of "Custody Receipt", "Final Custody
Receipt" and "Initial Custody Receipt."

                  (b)      Section 1 of the Custodial Agreement is hereby
amended by inserting the following definition into its proper alphabetical
order:

                  "Trust Receipt": A trust receipt in the form annexed hereto as
                  Exhibit One delivered to MLCC by the Custodian covering all of
                  the Mortgage Loans subject to this Custodial Agreement from
                  time to time, as reflected in the Mortgage Loan Schedule and
                  Exception Report attached thereto in accordance with Section
                  4(b).

                  (c)      Section 1 of the Custodial Agreement is hereby
amended by deleting the definition of " Exception Report" and replacing it in
its entirety as follows:

                  "Exception Report": The Exception Report prepared by the
                  Custodian as an annex to the Trust Receipt which lists all
                  exceptions with respect to the Mortgage Loan Schedule and
                  attached thereto as Schedule B, as updated from time to time
                  in accordance with Section 4 hereof.

                                      P-1
<PAGE>

                  SECTION 2. Trust Receipt. Section 4 is hereby deleted in its
entirety and replaced in its entirety with the following:

                  (a)      The Custodian shall review the documents delivered to
it on each Delivery Date and shall deliver to Registered Holder within the time
frames outlined in exhibit B to this amendment, but prior to Closing Date, a
Mortgage Loan Schedule and Exception Report with respect to the Mortgage Loans,
and the delivery of each Mortgage Loan Schedule and Exception Report by the
Custodian hereunder shall be the Custodian's certification that such Mortgage
Loans are held for MLCC (as Registered Holder) and that, as to each Mortgage
Loan listed in the related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such certification
as not covered by the Exception Report), (a) all documents described in
Paragraphs 2(a) through 2(e) and to the extent provided in the Custodian's
Mortgage Files Paragraphs 2(f) through 2(j), if applicable, of this Agreement
are in its possession, (b) such documents have reviewed by it and appear regular
on their face and relate to such Mortgage Loan, (c) based on its examination and
only as to the foregoing documents, the information set forth in terms (i),
(ii), (iii) excluding the zip code requirement, (iv), (vi), (vii), (viii) and
(x) of the definition of "Mortgage Loan Schedule" respecting such Mortgage Loan
is correct, and which as to items (iv) (vi), (viii) and (x) for adjustable rate
Mortgage Loan Documents and (d) each Mortgage Note has been endorsed and each
Assignment has been executed as provided in Paragraph 2 hereof. The Custodian
shall determine whether any discrepancy or deficiency exists with respect to a
Custodian's Mortgage File and shall note such discrepancy on the Exception
Report. The Custodian shall also note on such Exception Report, with respect to
each Mortgage Loan, whether a certified copy of the related Mortgage was
delivered to the Custodian in lieu of the original of such Mortgage, whether a
certified copy of an intervening assignment of the related Mortgage was
delivered to the Custodian in lieu of the original of such assignment, and
whether a preliminary title report with respect to such Mortgage Loan was
delivered to the Custodian in lieu of the original policy of title insurance.
Except as specifically provided above, the Custodian shall be under no duty to
review, inspect or examine such documents to determine that any of them are
enforceable or appropriate for their prescribed purpose.

                  (b)      On the date of this Amendment, the Custodian shall
deliver to MLCC, a Trust Receipt with a Mortgage Loan Schedule and Exception
Report attached thereto reflecting all Mortgage Loans subject to the Custodial
Agreement as of such date.

                  (c)      Each Mortgage Loan Schedule and Exception Report
delivered by the Custodian to MLCC shall supersede and cancel the Mortgage Loan
Schedule and Exception Report previously delivered by the Custodian to MLCC
hereunder, and shall replace the then existing Mortgage Loan Schedule and
Exception Report to be attached to the Trust Receipt. Notwithstanding anything
to the contrary set forth herein, in the event that the Mortgage Loan Schedule
and Exception Report attached to the Trust Receipt is different from the most
recently delivered Mortgage Loan Schedule and Exception Report, then the most
recently delivered Mortgage Loan Schedule and Exception Report shall control and
be binding upon the parties hereto.

                  (d)      The Custodian shall deliver to MLCC, electronically a
Mortgage Loan Schedule and Exception Report reflecting any additional Mortgage
Loans received and reviewed in accordance with the procedures set forth in
Section 2(a) hereof.

                  (e)      Within five (5) days of receipt of written
directions, in the form attached hereto as Exhibit Six, from the Registered
Holder with respect to all or a portion of the Mortgage

                                      P-2
<PAGE>

Loans owned by such Registered Holder, the Custodian shall deliver all or any
portion of the Custodian's Mortgage Files held by it to Registered Holder, or to
such other party as the Registered Party may direct, as provided in Paragraph
19, at the place indicated in any such written direction from the Registered
Holder and shall deliver to the Registered Holder a new Mortgage Loan Schedule
and Exception Report, with respect to the Custodian's Mortgage Files retained by
the Custodian. The Registered Holder may require the Custodian to complete the
endorsements on any Mortgage Notes in its possession and to complete the
Assignment of Mortgages prepared by the Servicer in blank, within a reasonable
period of time. The cost of this shall be reimbursed by the Registered Holder. A
list of authorized signatures for such written directions has been furnished to
the Custodian by the Registered Holder pursuant to Paragraph 20 hereof. Upon the
Custodian's receipt of such written notification from the Registered Holder that
the Registered Holder has sold any or all of the Mortgage Loans, which
notification shall be accompanied by a Mortgage Loan Schedule identifying such
Mortgage Loans, the Custodian shall change its records to reflect that such
purchaser is the owner of such Mortgage Loans and shall immediately, upon the
direction of such Registered Holder, either deliver the related Custodian's
Mortgage Files to such purchaser at the expense of such purchaser or issue a
Mortgage Loan Schedule and Exception Report in the name of such purchaser. Such
purchaser, as a Registered Holder, shall be required to simultaneously furnish
to the Custodian a list of authorized signatures for written directions pursuant
to Paragraph 20 hereof. The Custodian shall then deliver to the Registered
Holder a new Mortgage Loan Schedule and Exception Report, reflecting all
Mortgage Loans with respect to which the Custodian still holds the related
Custodian's Mortgage Files on behalf of the Registered Holder. The Registered
Holder and the Custodian agree herein that any purchaser of any or all of the
Mortgage Loans shall succeed to the rights and obligations of the Registered
Holder under this Agreement with respect to such Mortgage Loans upon receipt of
its own Trust Receipt and Mortgage Loan Schedule and Exception Report, as
further specified in Paragraph 15 hereof.

                  SECTION 3. Termination of Agreement. Section 14 of the
Custodial Agreement is hereby amended by deleting "Custody Receipts" from the
sixth line of the paragraph and replacing it with "Mortgage Loan Schedule and
Exception Report."

                  SECTION 4. Assignment of Agreement. Section 15 of the
Custodial Agreement is hereby deleted in its entirety and replaced in its
entirety with the following:

                           "The Registered Holder with respect to all or a
portion of the Mortgage Loans owned by such Registered Holder shall have the
right to assign, in whole or in part, its interests under this Agreement with
respect to some or all of the Mortgage Loans, and to designate any person (such
person, an "Assignee") or exercise any rights of the Registered Holder
hereunder, and such assignee or designee shall accede to the rights and
obligations hereunder of the Registered Holder with respect to such Mortgage
Loans. All references to the Registered Holder shall be deemed to include its
assignee or designee. In connection with any such assignment, the Registered
Holder with respect to all or a portion of the Mortgage Loans owned by such
Registered Holder, the Custodian shall issue (a) a Trust Receipt in the form of
Exhibit One hereto with a Mortgage Loan Schedule and Exception Report with
respect to the Mortgage Loans subject to such assignment to the Assignee and (b)
an updated Mortgage Loan Schedule and Exception Report to the assigning
Registered Holder with respect to the Mortgage Loans which the Custodian holds
for the Registered Holder. The Custodian may not assign its interest or delegate
its duties under this Agreement without the prior written consent of the
Registered Holder. In the event of any such assignment or delegation, the
Registered Holder shall not be

                                      P-3
<PAGE>

responsible for any fees of the successor Custodian in excess of the fees
formerly paid by the Registered Holder to the Custodian."

                  SECTION 5. Indemnification. Section 17 of the Custodial
Agreement is hereby amended by deleting "an Initial Custody Receipt" from the
fifth line of subsection (c) and replacing it with "a Mortgage Loan Schedule and
Exception Report."

                  SECTION 6. Exhibits. The Exhibits of the Custodial Agreement
are hereby amended by deleting "Exhibit One" and "Exhibit Two" and adding The
Form of Trust Receipt attached as Exhibit A to this Amendment as Exhibit One to
the Custodial Agreement.

                  SECTION 7. Delivered Documents. On the date hereof, MLCC shall
have received the following documents, each of which shall be satisfactory to
the MLCC in form and substance:

                  (a)      Amendment. This Amendment No. 1, executed and
delivered by a duly authorized officer of MLCC and the Custodian; and

                  (b)      Other Documents. Such other documents as the
Purchaser or counsel to the Purchaser may reasonably request.

                  SECTION 8. Limited Effect. Except as expressly amended and
modified by this Amendment, the Custodial Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms.

                  SECTION 9. Counterparts. This Amendment may be executed by
each of the parties hereto on any number of separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same instrument.

                  SECTION 10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                            [SIGNATURE PAGE FOLLOWS]

                                      P-4
<PAGE>

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

                                    WELLS FARGO BANK MINNESOTA, N.A.,
                                    ("CUSTODIAN")

                                    By:___________________________________
                                        Name: Sarah J. Kerr
                                        Title: Assistant Vice President

                                    MERRILL LYNCH CREDIT CORPORATION ("MLCC")

                                    By:___________________________________
                                        Name: ____________________________
                                        Title: ___________________________

                                      P-5
<PAGE>

                                    EXHIBIT Q

                         OFFICER'S CERTIFICATE - TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:      Pooling and Servicing Agreement (the "Agreement") dated as of July 1,
         2004 among Merrill Lynch Mortgage Investors, Inc., as depositor (the
         "Depositor"), Cendant Mortgage Corporation, as servicer (the
         "Servicer") and Wells Fargo Bank N.A., as trustee (the "Trustee") -
         Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1 Mortgage
         Loan Pass-Through Certificates

         I, [identify the certifying individual], a [title] of the Trustee
hereby certify to the Depositor, and its officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification, that:

         1.       I have reviewed the Monthly Statements delivered pursuant to
                  Section 4.02 the Agreement since the last Officer's
                  Certificate executed pursuant to Section 6.20 of the Agreement
                  [or in the case of the first certification, since the Cut-off
                  Date] (the "Trustee Information").

         2.       Based on my knowledge, the information in the Monthly
                  Statements, taken as a whole, does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading as of the date hereof;

         3.       Based on my knowledge, the Monthly Statements required to be
                  prepared by the Trustee under the Agreement has been prepared
                  and provided in accordance with the Agreement; and

         4.       I am responsible for reviewing the activities performed by the
                  Trustee under the Agreement and the Trustee has, as of the
                  date hereof fulfilled its obligations under the Agreement and
                  there are no significant deficiencies relating to the
                  Trustee's compliance with this Agreement.

Date:                                        Wells Fargo Bank, N.A., as Trustee

                                             By:________________________________
                                             Name:______________________________
                                             Title:_____________________________

                                      Q-1
<PAGE>

                                    EXHIBIT R

                        OFFICER'S CERTIFICATE - SERVICER

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank N.A.
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479

Re:      Pooling and Servicing Agreement (the "Agreement") dated as of July 1,
         2004 among Merrill Lynch Mortgage Investors, Inc., as depositor (the
         "Depositor"), Cendant Mortgage Corporation, as servicer (the
         "Servicer") and Wells Fargo Bank N.A., as trustee ( the "Trustee") -
         Merrill Lynch Mortgage Investors Trust Series MLCC 2004-HB1 Mortgage
         Loan Pass-Through Certificates

         cc.      I, [identify the certifying individual], a [title] of the
Servicer hereby certify to the Trustee and the Depositor, and their respective
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:

         1.       I have reviewed the information required to be delivered to
the Trustee pursuant to the Agreement (the "Servicing Information").

         2.       Based on my knowledge, the information in the Annual Statement
of Compliance, and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans submitted to the
Trustee by the Servicer taken as a whole, does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading as of the last day of the period covered by the Annual
Statement of Compliance;

         3.       Based on my knowledge, the Servicing Information required to
be provided to the Trustee by the Servicer under the Agreement has been provided
to the Trustee;

         4.       I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based upon the review required under the
Agreement, and except as disclosed in the Annual Statement of Compliance, the
Annual Independent Certified Public Accountant's Servicing Report and all
servicing reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Trustee by the Servicer, the
Servicer has, as of the last day of the period covered by the Annual Statement
of Compliance fulfilled its obligations under the Agreement; and

         5.       I have disclosed to the Trustee and the Depositor all
significant deficiencies relating to the Servicer's compliance with the minimum
servicing standards in accordance with a review conducted in compliance with the
Uniform Single Attestation Program for Mortgage Bankers as set forth in the
Agreement.

                                      R-1
<PAGE>

Date:                                  Cendant Mortgage Corporation, as Servicer

                                       By:______________________________________
                                       Name:____________________________________
                                       Title:___________________________________

                                      R-2
<PAGE>

                                   SCHEDULE A
                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                  Schedule A-1

<PAGE>

                                   SCHEDULE B
                  MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
                                  OF THE SELLER

         The Seller hereby represents and warrants to the Depositor as to each
Mortgage Loan, as of the Closing Date as follows:

                  (a)      The information set forth in the Mortgage Loan
Schedule is true and correct in all material respects as of the Cut-off Date;

                  (b)      As of the related Closing Date, the Mortgage Loan is
not delinquent in payment more than 30 days and the Mortgage Loan has not been
dishonored; there are no material defaults under the terms of the Mortgage Loan;
the Seller has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan;

                  (c)      To the best of the Seller's knowledge, with respect
to those Mortgage Loans as to which the Mortgagors are required to deposit funds
into an escrow account for payment of taxes, assessments, insurance premiums and
similar items as they become due, there are no delinquent taxes, ground rents,
water charges, sewer rents, assessments or other outstanding charges which
constitute a lien on the related Mortgaged Property, and all escrow deposits
have been collected, are under the control of the Servicer, and have been
applied to the payment of such items in a timely fashion, in accordance with
such Mortgage. No escrow deposits or escrow payments or other charges or
payments due the Servicer have been capitalized under the related Mortgage or
Mortgage Note. With respect to those Mortgage Loans for which escrow deposits
are not required, to the best of the Seller's knowledge, there are no delinquent
taxes or other outstanding charges affecting the related Mortgaged Property
which constitute a lien on the related Mortgaged Property;

                  (d)      The terms of the Mortgage Note and the Mortgage have
not been impaired, waived, altered or modified in any respect, except by written
instruments contained in the Mortgage File, approved, if necessary, by the
insurer under any Primary Mortgage Insurance Policy and recorded in all places
necessary to maintain the first priority of the lien, the substance of which
waiver, alteration or modification is reflected on the Mortgage Loan Schedule.
No Mortgagor has been released, in whole or in part, except in connection with
an assumption agreement which assumption agreement is part of the Mortgage File
and the terms of which are reflected in the Mortgage Loan Schedule;

                  (e)      Neither the Mortgage Note nor the Mortgage is subject
to any right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note and the Mortgage, or the exercise of any right thereunder, render the
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury and
to the best of the Seller's knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted by any Person with respect thereto;

                  (f)      All buildings upon the Mortgaged Property are
required to be insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customarily included
in extended coverage in the area where the Mortgaged

                                  Schedule B-1

<PAGE>

Property is located, pursuant to standard hazard insurance policies in an amount
which is equal to the lesser of (A) the replacement cost of the improvements
securing such Mortgage Loan or (B) the principal balance owing on such Mortgage
Loan. To the best knowledge of the Seller, all such standard hazard policies are
in effect. On the date of origination, such standard hazard policies contained a
standard mortgagee clause naming the Seller or the originator of the Mortgage
Loan and their respective successors in interest as mortgagee and, to the best
knowledge of the Seller, such clause is still in effect and, to the best of the
Seller's knowledge, all premiums due thereon have been paid. If the Mortgaged
Property is located in an area identified by the Federal Emergency Management
Agency as having special flood hazards under the National Flood Insurance Act of
1994, as amended, such Mortgaged Property is covered by flood insurance in the
amount required under the National Flood Insurance Act of 1994. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to maintain such insurance at Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor;

                  (g)      To the best of the Seller's knowledge, at the time of
origination of such Mortgage Loan and thereafter, all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws required to be complied with by the
Seller as the originator of the Mortgage Loan and applicable to the Mortgage
Loan have been complied with in all material respects;

                  (h)      The Mortgage has not been satisfied as of the Closing
Date, canceled or subordinated, in whole, or rescinded, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part (except for a release that does not materially impair the security of the
Mortgage Loan or a release the effect of which is reflected in the Loan-to-Value
Ratio for the Mortgage Loan as set forth in the Mortgage Loan Schedule), nor to
the best of the Seller's knowledge has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;

                  (i)      Ownership of the Mortgaged Property is held in fee
simple or a leasehold estate. With respect to Mortgage Loans that are secured by
a leasehold estate, (i) the lease is valid, in full force and effect, and
conforms to all of Fannie Mae's requirements for leasehold estates; (ii) all
rents and other payments due under the lease have been paid; (iii) the lessee is
not in default under any provision of the lease; (iv) the term of the lease
exceeds the maturity date of the related Mortgage Loan by at least five (5)
years; and (v) the terms of the lease provide a Mortgagee with an opportunity to
cure any defaults. Except as permitted by the fourth sentence of this paragraph
(i), the Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence on their face of any security interest or other
interest or right thereto. Such lien is free and clear of all adverse claims,
liens and encumbrances having priority over the first lien of the Mortgage
subject only to (1) the lien of non-delinquent current real property taxes and
assessments not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording which are acceptable to mortgage lending institutions generally, or
which are specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and either (A) which are
referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan,

                                  Schedule B-2

<PAGE>

or (B) which do not in the aggregate adversely affect the appraised value of the
Mortgaged Property as set forth in such appraisal, and (3) other matters to
which like properties are commonly subject which do not in the aggregate
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien and first
priority security interest on the property described therein;

                  (j)      The Mortgage Note is not subject to a third party's
security interest or other rights or interest therein;

                  (k)      The Mortgage Note and the related Mortgage are
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors. All parties to the Mortgage Note and the Mortgage had the legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage. The Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The proceeds of the Mortgage Loan have been
fully disbursed and there is no requirement for future advances thereunder, and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with;

                  (l)      Seller has good title to, and the full right to
transfer and sell, the Mortgage Loan free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest, including, to the best
knowledge of the Seller, any lien, claim or other interest arising by operation
of law;

                  (m)      To the best of the Seller's knowledge, each Mortgage
Loan is covered by an ALTA lender's title insurance policy or other generally
acceptable form of policy or insurance acceptable to Fannie Mae or FHLMC, issued
by a title insurer acceptable to Fannie Mae or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained in paragraph (ix)(1) (2) and (3) above) the
Seller, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan. To the best of
the Seller's knowledge, the Seller is the sole insured of such lender's title
insurance policy, such title insurance policy has been duly and validly endorsed
to the purchaser or the assignment to the purchaser of the Seller's interest
therein does not require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions contemplated by this
Agreement. To the best of the Seller's knowledge, no claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage has done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy;

                  (n)      To the best of the Seller's knowledge, there is no
default, breach, violation or event of acceleration existing under the Mortgage
or the related Mortgage Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event permitting acceleration, except for any
Mortgage Loan payment which is not late by more than 30 days, and the Seller has
not waived any default, breach, violation or event permitting acceleration;

                                  Schedule B-3

<PAGE>

                  (o)      To the best of the Seller's knowledge, there are no
mechanics' or similar liens or claims which have been filed for work, labor or
material (and, to the best of the Seller's knowledge, no rights are outstanding
that under law could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;

                  (p)      To the best of the Seller's knowledge, all
improvements subject to the Mortgage, lay wholly within the boundaries and
building restriction lines of the Mortgaged Property (and wholly within the
project with respect to a condominium unit) and no improvements on adjoining
properties encroach upon the Mortgaged Property except those which are insured
against by the title insurance policy referred to in paragraph (xiii) above and
all improvements on the property comply with all applicable zoning and
subdivision laws and ordinances;

                  (q)      To the best of the Seller's knowledge, each Mortgage
Loan was originated by the Seller or by a savings association, a savings bank, a
commercial bank or similar banking institution that is supervised and examined
by a Federal or state banking authority, a mortgagee approved by the Secretary
of HUD pursuant to Section 203 and 211 of the National Housing Act, or a Fannie
Mae- or FHLMC-approved seller. To the best of the Seller's knowledge, each
Mortgage Loan was underwritten generally in accordance with the Underwriting
Standards as in effect at the time of origination. To the best of the Seller's
knowledge, the Mortgage contains the usual and customary provision of the Seller
at the time of origination for the acceleration of the payment of the unpaid
principal balance of the Mortgage Loan if the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;

                  (r)      The Mortgaged Property at origination or acquisition
was and, to the best of the Seller's knowledge, currently is free of material
damage and waste and at origination there was, and to the best of the Seller's
knowledge there currently is, no proceeding pending for the total or partial
condemnation thereof;

                  (s)      The related Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (1) in the case of a
Mortgage designated as a deed of trust, by trustee's sale or judicial
foreclosure, and (2) otherwise by judicial foreclosure. The Seller has no
knowledge of any homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage;

                  (t)      To the best of the Seller's knowledge, if the
Mortgage constitutes a deed of trust, a trustee, duly qualified if required
under applicable law to act as such, has been properly designated and currently
so serves and is named in the Mortgage, and no fees or expenses are or will
become payable to the trustee under the deed of trust, except in connection with
a trustee's sale or attempted sale after default by the Mortgagor;

                  (u)      With respect to each Mortgage Loan, there is an
appraisal on a Fannie Mae-approved form (or a narrative residential appraisal)
of the related Mortgaged Property that conforms to the applicable requirements
of the Financial Institutions Reform Recovery and Enforcement Act and that was
signed prior to the approval of such Mortgage Loan application by a qualified
appraiser, appointed by the Seller or the originator of such Mortgage Loan, as
appropriate, who has no interest, direct or indirect, in the Mortgaged Property
or in any loan made

                                  Schedule B-4

<PAGE>

on the security thereof, and whose compensation is not affected by the approval
or disapproval of such Mortgage Loan;

                  (v)      No Mortgage Loan contains "subsidized buydown" or
"graduated payment" features;

                  (w)      The Mortgaged Property is a single-family (one- to
four-unit) dwelling residence erected thereon, or an individual condominium unit
in a condominium, or an individual unit in a planned unit development or in a de
minimis planned unit development as defined by Fannie Mae. No such residence is
a mobile home or a manufactured dwelling which is not permanently attached to
the land;

                  (x)      No Mortgage Loan provides for negative amortization;

                  (y)      No Mortgage Loan had an original term in excess of
thirty (30) years;

                  (z)      [RESERVED]

                  (aa)     As of the Closing Date, each Mortgage Loan is a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code
(without regard to Treasury Regulations Section 1.860G-2(f) or any similar rule
that provides that a defective obligation is a qualified mortgage for a
temporary period);

                  (bb)     As of the Closing Date, no Mortgage Loan provides for
interest other than at either (x) a single fixed rate in effect throughout the
term of the Mortgage Loan or (y) a single "variable rate" (within the meaning of
Treasury Regulations Section 1.860G-1(a)(3)) in effect throughout the term of
the Mortgage Loan.

                  (cc)     As of the Closing Date, no Mortgage Loan is the
subject of pending or final foreclosure proceedings.

                  (dd)     Based on delinquencies in payment on the Mortgage
Loans as of the Closing Date, Seller would not initiate foreclosure proceedings
with respect to any of the Mortgage Loans prior to the next scheduled payment
date on such Mortgage Loan.

                  (ee)     Each Mortgage Note is comprised of one original
promissory note and each such promissory note constitutes an "instrument" for
purposes of section 9-102(a)(65) of the UCC.

                  (ff)     No Mortgage Loan is covered by the Home Ownership and
Equity Protection Act of 1994 ("HOEPA") and no Mortgage Loan is "high cost" as
defined by any applicable federal, state or local predatory or abusive lending
law. Any breach of this representation shall be deemed to materially and
adversely affect the value of the Mortgage Loan and shall require a repurchase
of the affected Mortgage Loan.

                  (gg)     Each Mortgage Loan at the time it was made complied
in all material respects with applicable local, state and federal laws,
including, but not limited to, all applicable predatory or abusive lending laws.

                  (hh)     No Mortgage Loan is a High Cost Loan or Covered Loan,
as applicable (as such terms are defined in the then current Standard & Poor's
LEVELS(R) Glossary which is

                                  Schedule B-5

<PAGE>

now Version 5.6 Revised, Appendix E, attached to the Mortgage Loan Purchase and
Sale Agreement as Exhibit A) and no Mortgage Loan originated on or after October
1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending Act.

                                  Schedule B-6

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