Document:

<PAGE>

                                                                     EXHIBIT 4.1

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                    Depositor

                          WILSHIRE CREDIT CORPORATION,
                                    Servicer

                                       and

                       LASALLE BANK NATIONAL ASSOCIATION,
                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT
                           Dated as of January 1, 2006

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

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST,
            MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-SL1

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                                TABLE OF CONTENTS

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

ARTICLE II   CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..................................     38

  Section 2.01.  Conveyance of Mortgage Loans..............................................................     38

  Section 2.02.  Acceptance by the Trustee of the Mortgage Loans...........................................     41

  Section 2.03.  Representations, Warranties and Covenants of the Depositor................................     42

  Section 2.04.  Representations and Warranties of the Servicer............................................     46

  Section 2.05.  Substitutions and Repurchases of Mortgage Loans that are not "Qualified
                 Mortgages"................................................................................     48

  Section 2.06.  Authentication and Delivery of Certificates...............................................     48

  Section 2.07.  REMIC Elections...........................................................................     48

  Section 2.08.  [RESERVED]................................................................................     51

  Section 2.09.  Covenants of the Servicer.................................................................     51

  Section 2.10.  [RESERVED]................................................................................     52

  Section 2.11.  Permitted Activities of the Trust.........................................................     52

  Section 2.12.  Qualifying Special Purpose Entity.........................................................     52

ARTICLE III  ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................................     52

  Section 3.01.  Servicer to Service Mortgage Loans........................................................     52

  Section 3.02.  Servicing and Subservicing; Enforcement of the Obligations of Servicer....................     54

  Section 3.03.  Rights of the Depositor and the Trustee in Respect of the Servicer........................     54

  Section 3.04.  Trustee to Act as Servicer................................................................     54

  Section 3.05.  Collection of Mortgage Loan Payments; Collection Account; Certificate
                 Account...................................................................................     55

  Section 3.06.  Collection of Taxes, Assessments and Similar Items; Escrow Accounts.......................     59

  Section 3.07.  Access to Certain Documentation and Information Regarding the Mortgage
                 Loans.....................................................................................     59

  Section 3.08.  Permitted Withdrawals from the Collection Account and Certificate Account.................     60

  Section 3.09.  [RESERVED]................................................................................     62

  Section 3.10.  [RESERVED]................................................................................     62

  Section 3.11.  Enforcement of Due-On-Sale Clauses; Assumption Agreements.................................     62

  Section 3.12.  Realization Upon Defaulted Mortgage Loans; Determination of Excess
                 Proceeds; Special Loss Mitigation.........................................................     63
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                               TABLE OF CONTENTS
                                  (continued)

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<CAPTION>                                                                                                      PAGE
<S>                                                                                                             <C>
  Section 3.13.  Trustee to Cooperate; Release of Mortgage Files...........................................     66

  Section 3.14.  Documents, Records and Funds in Possession of Servicer to be Held for the
                 Trustee...................................................................................     67

  Section 3.15.  Servicing Compensation....................................................................     67

  Section 3.16.  Access to Certain Documentation...........................................................     68

  Section 3.17.  Annual Statement as to Compliance.........................................................     68

  Section 3.18.  Annual Independent Public Accountants' Servicing Statement; Financial
                 Statements................................................................................     68

  Section 3.19.  [RESERVED]................................................................................     71

  Section 3.20.  Periodic Filings..........................................................................     71

  Section 3.21.  Annual Certificate by Trustee.............................................................     74

  Section 3.22.  Annual Certificate by Servicer............................................................     75

  Section 3.23.  Prepayment Charge Reporting Requirements..................................................     75

  Section 3.24.  Information to the Trustee................................................................     75

  Section 3.25.  Indemnification...........................................................................     76

  Section 3.26.  Nonsolicitation...........................................................................     76

  Section 3.27.  High Cost Mortgage Loans..................................................................     76

ARTICLE IV   DISTRIBUTIONS.................................................................................     77

  Section 4.01.  Advances..................................................................................     77

  Section 4.02.  Reduction of Servicing Compensation in Connection with Prepayment
                 Interest Shortfalls.......................................................................     78

  Section 4.03.  Distributions on the REMIC Interests......................................................     78

  Section 4.04.  Distributions.............................................................................     78

  Section 4.05.  Monthly Statements to Certificateholders..................................................     82

ARTICLE V    THE CERTIFICATES..............................................................................     86

  Section 5.01.  The Certificates..........................................................................     86

  Section 5.02.  Certificate Register; Registration of Transfer and Exchange of
                 Certificates..............................................................................     87

  Section 5.03.  Mutilated, Destroyed, Lost or Stolen Certificates.........................................     94

  Section 5.04.  Persons Deemed Owners.....................................................................     95

  Section 5.05.  Access to List of Certificateholders' Names and Addresses.................................     95

  Section 5.06.  Book-Entry Certificates...................................................................     95

  Section 5.07.  Notices to Depository.....................................................................     96

  Section 5.08.  Definitive Certificates...................................................................     96
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                                  (continued)

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<CAPTION>                                                                                                      PAGE
<S>                                                                                                            <C>
  Section 5.09.  Maintenance of Office or Agency...........................................................     97

  Section 5.10.  Authenticating Agents.....................................................................     97

ARTICLE VI   THE DEPOSITOR AND THE SERVICER................................................................     98

  Section 6.01.  Respective Liabilities of the Depositor and the Servicer..................................     98

  Section 6.02.  Merger or Consolidation of the Depositor or the Servicer..................................     98

  Section 6.03.  Limitation on Liability of the Depositor, the Servicer and Others.........................     99

  Section 6.04.  Limitation on Resignation of Servicer.....................................................     99

  Section 6.05.  Errors and Omissions Insurance; Fidelity Bonds............................................     99

  Section 6.06.  Special Servicing Agreements.............................................................     100

ARTICLE VII  DEFAULT; TERMINATION OF SERVICER.............................................................     100

  Section 7.01.  Events of Default........................................................................     100

  Section 7.02.  Trustee to Act; Appointment of Successor.................................................     102

  Section 7.03.  Notification to Certificateholders.......................................................     103

ARTICLE VIII CONCERNING THE TRUSTEE.......................................................................     103

  Section 8.01.  Duties of the Trustee....................................................................     103

  Section 8.02.  Certain Matters Affecting the Trustee....................................................     104

  Section 8.03.  Trustee Not Liable for Certificates or Mortgage Loans....................................     106

  Section 8.04.  Trustee May Own Certificates.............................................................     106

  Section 8.05.  Trustee's Fees and Expenses..............................................................     106

  Section 8.06.  Indemnification and Expenses of Trustee..................................................     106

  Section 8.07.  Eligibility Requirements for Trustee.....................................................     107

  Section 8.08.  Resignation and Removal of Trustee.......................................................     107

  Section 8.09.  Successor Trustee........................................................................     108

  Section 8.10.  Merger or Consolidation of Trustee.......................................................     108

  Section 8.11.  Appointment of Co-Trustee or Separate Trustee............................................     109

  Section 8.12.  Tax Matters..............................................................................     110

ARTICLE IX   TERMINATION..................................................................................     112

  Section 9.01.  Termination upon Liquidation or Repurchase of all Mortgage Loans.........................     112

  Section 9.02.  Final Distribution on the Certificates...................................................     113

  Section 9.03.  Additional Termination Requirements......................................................     114

ARTICLE X    MISCELLANEOUS PROVISIONS.....................................................................     115

  Section 10.01. Amendment................................................................................     115
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<S>                                                                                                          <C>
Section 10.02. Counterparts.............................................................................     117

Section 10.03. Governing Law............................................................................     117

Section 10.04. Intention of Parties.....................................................................     117

Section 10.05. Notices..................................................................................     118

Section 10.06. Severability of Provisions...............................................................     119

Section 10.07. Assignment...............................................................................     119

Section 10.08. Inspection and Audit Rights..............................................................     121

Section 10.09. Certificates Nonassessable and Fully Paid................................................     121

Section 10.10. Compliance with Regulation AB............................................................     121
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<TABLE>
<S>            <C>
EXHIBIT A      FORMS OF CERTIFICATES
EXHIBIT B      MORTGAGE LOAN SCHEDULE
EXHIBIT C      [RESERVED]
EXHIBIT D      FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1    FORM OF CLASS R TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2    FORM OF CLASS R TRANSFEROR'S AFFIDAVIT
EXHIBIT F      FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G      FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H      FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I      FORM OF REQUEST FOR RELEASE
EXHIBIT J      MLML LIST OF TRANSFER AGREEMENTS AND BRING DOWN LETTERS
EXHIBIT K      FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L      FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1    [RESERVED]
EXHIBIT M-2    [RESERVED]
EXHIBIT M-3    [RESERVED]
EXHIBIT N      FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
               FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
EXHIBIT O      FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
               A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
EXHIBIT P      FORM OF ASSESSMENT OF COMPLIANCE
EXHIBIT Q      SERVICING CRITERIA TO BE ADDRESSED
EXHIBIT R      FORM OF SARBANES-OXLEY CERTIFICATION
EXHIBIT S      FORM OF ITEM 1123 CERTIFICATION OF SERVICER
SCHEDULE X
SCHEDULE Y
SCHEDULE Z
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                                      -i-

<PAGE>

      POOLING AND SERVICING AGREEMENT, dated as of January 1, 2006, among
MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as
servicer (the "Servicer"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association, as trustee (the "Trustee").

      The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) two real estate mortgage investment conduits,
(ii) the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof and (iii) the grantor trusts described in
Section 2.07 hereof. The Lower Tier REMIC will consist of all of the assets
constituting the Trust Fund (other than the assets described in clauses (ii) and
(iii) above and the Lower Tier REMIC Regular Interests) and will be evidenced by
the Lower Tier REMIC Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Lower Tier REMIC) and the Class LTR
Interest as the single "residual interest" in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular Interests. The Upper Tier REMIC will
consist of the Lower Tier REMIC Regular Interests and will be evidenced by the
REMIC Regular Interests (which will represent the "regular interests" in the
Upper Tier REMIC) and the Residual Interest as the single "residual interest" in
the Upper Tier REMIC. The Class R Certificate will represent beneficial
ownership of the Class LTR Interest and the Residual Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.

      All covenants and agreements made by the Seller in the Sale Agreement and
by the Depositor 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.

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

                                   ARTICLE I

                                   DEFINITIONS

      Whenever used in this Agreement, 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 Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties are located.

      Accountant's Attestation: As defined in Section 3.18.

      Accrual Period: With respect to each Class of Class A, Class R, Class M
and Class B Certificates (other than the Class B-4 and Class B-5 Certificates)
and the Lower Tier REMIC Interests and any Distribution Date, the period
commencing on the immediately preceding Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) and ending on the day immediately
preceding such Distribution Date and with respect to the Class B-4 and Class B-5
Certificates and any Distribution Date,

<PAGE>

the calendar month immediately preceding the month in which such Distribution
Date occurs. All calculations of interest on each Class of Class A, Class R,
Class M and Class B Certificates (other than the Class B-4 and Class B-5
Certificates) and the Lower Tier REMIC Interests will be made on the basis of
the actual number of days elapsed in the related Accrual Period and a 360 day
year and all calculations of interest on the Class B-4 and Class B-5
Certificates will be made on a the basis of a 360 day year consisting of twelve
30-day months.

      Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (net of the related Servicing Fees) on the related
Mortgage Loans that were due during the applicable Due Period and not received
as of the close of business on the related Determination Date, less the
aggregate amount of any such Delinquent payments that the Servicer has
determined would constitute a Non-Recoverable Advance were an advance to be made
with respect thereto; provided, however, that with respect to any Mortgage Loan
that is 150 days delinquent or more (whether or not the Mortgage Loan has been
converted to an REO Property), there will be no obligation to make advances and,
provided further, however, that with respect to any Mortgage Loan that has been
converted to an REO Property which is less than 150 days delinquent, the
obligation to make Advances shall only be to payments of interest.

      Advance Facility: A financing or other facility as described in Section
10.07.

      Advancing Person: A Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 10.07.

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

      Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A Certificate Principal Balance, the Class R Certificate
Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2
Certificate Principal Balance, the Class B-1 Certificate Principal Balance, the
Class B-2 Certificate Principal Balance, the Class B-3 Certificate Principal
Balance, the Class B-4 Certificate Principal Balance and the Class B-5
Certificate Principal Balance, in each case as of such date of determination.

      Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.

      Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.

      Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of

                                      - 2 -
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the origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.

      Assessment of Compliance: As defined in Section 3.18.

      Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.

      Auction: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.

      Auction Date: The date on which the Auction occurs.

      Authenticating Agent: As defined in Section 5.10.

      Available Funds Cap: As of any Distribution Date with respect to the Class
A, Class R, Class M and Class B Certificates (other than the Class B-4 and Class
B-5 Certificates), a per annum rate equal to 12 times the quotient of (i) the
total scheduled interest on the Mortgage Loans based on the Net Mortgage Rates
in effect on the related Due Date, divided by (ii) the Aggregate Certificate
Principal Balance for such Distribution Date with such rate being multiplied by
30 and divided by the actual number of days in the related Accrual Period and as
of any Distribution Date with respect to the Class B-4 and Class B-5
Certificates, a per annum rate equal to 12 times the quotient of (i) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates in
effect on the related Due Date, divided by (ii) the Aggregate Certificate
Principal Balance for such Distribution Date.

      Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 years or 20 years which provides for level monthly payments
of principal and interest based on a 30-year amortization schedule, with a
balloon payment of the remaining outstanding principal balance due on such
Mortgage Loan at its stated maturity.

      Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M and Class B Certificates constitutes a Class of Book-Entry
Certificates.

      Bring Down Letters: Those certain letter agreements, dated as of January
26, 2006 between MLML and certain Transferors set out on Exhibit J hereto.

      Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Oregon, State
of Illinois and in the City of New York, New York are authorized or obligated by
law or executive order to be closed.

                                     - 3 -
<PAGE>

      Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Authenticating Agent in substantially the forms
attached hereto as Exhibits A.

      Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(e) in the name of the Trustee for the
benefit of the Certificateholders and designated "LaSalle Bank National
Association, as trustee, in trust for registered holders of Merrill Lynch
Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-SL1." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

      Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

      Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any Distribution Date relating to a Due Period
in which a Subsequent Recovery has been received by the Servicer, the
Certificate Principal Balance of any Class of Certificates then outstanding for
which any Applied Realized Loss Amount has been allocated will be increased, in
order of seniority, by an amount equal to the lesser of (i) the Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).

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

      Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any Affiliate of the Depositor in determining which
Certificates are registered in the name of an Affiliate of the Depositor.

      Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.

                                     - 4 -
<PAGE>

      Class A Certificate: Any Certificate designated as a "Class A Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A Certificates.

      Class A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A Pass-Through Rate on
the Class A Certificate Principal Balance as of such Distribution Date plus the
Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class A Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.

      Class A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class A
Certificates with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
A Pass-Through Rate for the related Accrual Period.

      Class A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.180% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.360% per annum.

      Class A Pass-Through Rate: For the first Distribution Date, 4.71375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class A Margin and (2) the Available Funds Cap for such Distribution
Date.

      Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the aggregate Certificate Principal Balance of the Class A and
Class R Certificates immediately prior to such Distribution Date over (B) the
lesser of (i) 31.40% of the Stated Principal Balance of the Mortgage Loans as of
such Distribution Date and (ii) the excess of the Stated Principal Balance of
the Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount; provided, however, that in no event will the Class
A Principal Distribution Amount with respect to any Distribution Date exceed the
aggregate Certificate Principal Balance of the Class A and Class R Certificates.

      Class B Certificates: The Class B-1 Certificates, Class B-2 Certificates,
Class B-3 Certificates, Class B-4 Certificates and Class B-5 Certificates.

      Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.

      Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

                                     - 5 -
<PAGE>

      Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.

      Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.

      Class B-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 1.300% per annum and as of any Distribution
Date after the Initial Optional Termination Date, 1.950% per annum.

      Class B-1 Pass-Through Rate: For the first Distribution Date, 5.83375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-1 Margin and (2) the Available Funds Cap for such Distribution
Date.

      Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance and the Class M-2 Certificate Principal Balance have been reduced to
zero and a Trigger Event exists, or as long as a Trigger Event does not exist,
the excess of (1) the sum of (A) the aggregate Certificate Principal Balance of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date) and (D) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 69.40% of
the aggregate Stated Principal Balances of the Mortgage Loans as of such
Distribution Date and (B) the excess of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount, provided, however, that on any Distribution Date
prior to the Stepdown Date on which the Class A Certificate Principal Balance,
the Class R Certificate Principal Balance and the Class M Certificate Principal
Balance have been reduced to zero, the Class B-1 Principal Distribution Amount
for such Distribution Date will equal the lesser of (A) the outstanding Class
B-1 Certificate Principal Balance and (B) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R and Class M
Certificates; and provided further, however, that in no event will the Class B-1
Principal Distribution Amount with respect to any Distribution Date exceed the
Class B-1 Certificate Principal Balance.

                                     - 6 -
<PAGE>

      Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.

      Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.

      Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.

      Class B-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 1.450% per annum and as of any Distribution
Date after the Initial Optional Termination Date, 2.175% per annum.

      Class B-2 Pass-Through Rate: For the first Distribution Date, 5.98375%. As
of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the
Class B-2 Margin and (2) the Available Funds Cap for such Distribution Date.

      Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance and the Class B-1
Certificate Principal Balance have been reduced to zero and a Trigger Event
exists, or as long as a Trigger Event does not exist, the excess of (1) the sum
of (A) the aggregate Certificate Principal Balance of the Class A and Class R
Certificates (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date), (C) the Class M-2
Certificate Principal Balance (after taking into account distributions of the
Class M-2 Principal

                                     - 7 -
<PAGE>

Distribution Amount on such Distribution Date), (D) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date) and (E) the Class B-2
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 73.20% of the Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the aggregate Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount; provided, however, that on any
Distribution Date prior to the Stepdown Date on which the Class A Certificate
Principal Balance, the Class R Certificate Principal Balance, the Class M
Certificate Principal Balance and the Class B-1 Certificate Principal Balance
have been reduced to zero, the Class B-2 Principal Distribution Amount for such
Distribution Date will equal the lesser of (A) the outstanding Class B-2
Principal Distribution Amount and (B) 100% of the Principal Distribution Amount
remaining after any distributions on such Class A, Class R, Class M and Class
B-1 Certificates; and provided further, however, that in no event will the Class
B-2 Principal Distribution Amount with respect to any Distribution Date exceed
the Class B-2 Certificate Principal Balance.

      Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance".

      Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.

      Class B-3 Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.

      Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-3 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3 Pass-Through Rate for the related Accrual Period.

      Class B-3 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 2.500% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 3.750% per annum.

                                     - 8 -

<PAGE>

      Class B-3 Pass-Through Rate: For the first Distribution Date, 7.03375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-3 Margin and (2) the Available Funds Cap for such Distribution
Date.

      Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class B-1 Certificate
Principal Balance and the Class B-2 Certificate Principal Balance have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the aggregate Certificate Principal
Balance of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class B-1 Certificate Principal Balance
(after taking into account distributions of the Class B-1 Principal Distribution
Amount on such Distribution Date), (E) the Class B-2 Certificate Principal
Balance (after taking into account distributions of the Class B-2 Principal
Distribution Amount on such Distribution Date) and (F) the Class B-3 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 76.40% of the aggregate Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount; provided, however, that on any
Distribution Date prior to the Stepdown Date on which the Class A Certificate
Principal Balance, the Class R Certificate Principal Balance, the Class M
Certificate Principal Balance, the Class B-1 Certificate Principal Balance and
the Class B-2 Certificate Principal Balance have been reduced to zero, the Class
B-3 Principal Distribution Amount for such Distribution Date will equal the
lesser of (A) the outstanding Class B-3 Certificate Principal Balance and (B)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, the Class R, Class M, Class B-1 and Class B-2 Certificates; and
provided further, however, that in no event will the Class B-3 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-3
Certificate Principal Balance.

      Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class B-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-4 Certificates.

      Class B-4 Certificate: Any Certificate designated as a "Class B-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-4 Certificates.

                                     - 9 -

<PAGE>

      Class B-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-4 Pass-Through Rate on
the Class B-4 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-4 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-4 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-4 Pass-Through Rate for the related Accrual Period.

      Class B-4 Pass-Through Rate: For any Distribution Date on or before the
Optional Termination Date, the lesser of (1) 7.500% and (2) the Available Funds
Cap for such Distribution Date. For any Distribution Date after the Optional
Termination Date, the lesser of (1) 8.000% and (2) the Available Funds Cap.

      Class B-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class B-1 Certificate
Principal Balance, the Class B-2 Certificate Principal Balance and the Class B-3
Certificate Principal Balance have been reduced to zero and a Trigger Event
exists, or as long as a Trigger Event does not exist, the excess of (1) the sum
of (A) the aggregate Certificate Principal Balance of the Class A and Class R
Certificates (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date), (C) the Class M-2
Certificate Principal Balance (after taking into account distributions of the
Class M-2 Principal Distribution Amount on such Distribution Date), (D) the
Class B-1 Certificate Principal Balance (after taking into account distributions
of the Class B-1 Principal Distribution Amount on such Distribution Date), (E)
the Class B-2 Certificate Principal Balance (after taking into account
distributions of the Class B-2 Principal Distribution Amount on such
Distribution Date), (F) the Class B-3 Certificate Principal Balance (after
taking into account distributions of the Class B-3 Principal Distribution Amount
on such Distribution Date) and (G) the Class B-4 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 80.10% of
the aggregate Stated Principal Balances of the Mortgage Loans as of such
Distribution Date and (B) the excess of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount; provided, however, that on any Distribution Date
prior to the Stepdown Date on which the Class A Certificate Principal Balance,
the Class R Certificate Principal Balance, the Class M Certificate Principal
Balance, the Class B-1 Certificate Principal Balance, the Class B-2 Certificate
Principal Balance and the Class B-3 Certificate Principal Balance have been
reduced to zero, the Class B-4 Principal Distribution Amount for such
Distribution Date will equal the lesser of (A) the outstanding Class B-4
Certificate Principal Balance and (B) 100% of the Principal Distribution Amount
remaining after any distributions on such Class A, Class R, Class M, Class B-1,
Class B-2 and Class B-3 Certificates; and provided further, however, that in no
event will the Class B-4 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-4 Certificate Principal Balance.

                                     - 10 -
<PAGE>

      Class B-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class B-5 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-5 Certificates.

      Class B-5 Certificate: Any Certificate designated as a "Class B-5
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class B-5 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-5 Certificates.

      Class B-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-5 Pass-Through Rate on
the Class B-5 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class B-5 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class B-5 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-5 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-5 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-5 Pass-Through Rate for the related Accrual Period.

      Class B-5 Pass-Through Rate: For any Distribution Date on or before the
Optional Termination Date, the lesser of (1) 7.500% and (2) the Available Funds
Cap for such Distribution Date. For any Distribution Date after the Optional
Termination Date, the lesser of (1) 8.000% and (2) the Available Funds Cap.

      Class B-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class B-1 Certificate
Principal Balance, the Class B-2 Certificate Principal Balance, the Class B-3
Certificate Principal Balance and the Class B-4 Certificate Principal Balance
have been reduced to zero and a Trigger Event exists, or as long as a Trigger
Event does not exist, the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A and Class R Certificates (after taking into
account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class B-1 Certificate Principal
Balance (after taking into account distributions of the Class B-1 Principal
Distribution Amount

                                     - 11 -
<PAGE>

on such Distribution Date), (E) the Class B-2 Certificate Principal Balance
(after taking into account distributions of the Class B-2 Principal Distribution
Amount on such Distribution Date), (F) the Class B-3 Certificate Principal
Balance (after taking into account distributions of the Class B-3 Principal
Distribution Amount on such Distribution Date), (G) the Class B-4 Certificate
Principal Balance (after taking into account distributions of the Class B-4
Principal Distribution Amount on such Distribution Date) and (H) the Class B-5
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 83.60% of the aggregate Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount; provided, however, that on any
Distribution Date prior to the Stepdown Date on which the Class A Certificate
Principal Balance, the Class R Certificate Principal Balance, the Class M
Certificate Principal Balance, the Class B-1 Certificate Principal Balance, the
Class B-2 Certificate Principal Balance, the Class B-3 Certificate Principal
Balance and the Class B-4 Certificate Principal Balance have been reduced to
zero, the Class B-5 Principal Distribution Amount for such Distribution Date
will equal the lesser of (A) the outstanding Class B-5 Certificate Principal
Balance and (B) 100% of the Principal Distribution Amount remaining after any
distributions on such Class A, Class R, Class M, Class B-1, Class B-2, Class B-3
and Class B-4 Certificates; and provided further, however, that in no event will
the Class B-5 Principal Distribution Amount with respect to any Distribution
Date exceed the Class B-5 Certificate Principal Balance.

      Class B-5 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-5 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-5 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-5 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.

      Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C Certificates.

      Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to the aggregate principal balance of the Lower
Tier REMIC Regular Interests immediately prior to such Distribution Date, plus
the interest portion of any previous distributions on such Class that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class C Certificates.

      Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower Tier
REMIC Regular Interests (treating for purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker Classes as being capped at the
interest rate of its Related Certificates (as adjusted for the length of the
Accrual Period) and treating the Class LTX Interest as being capped at zero).
The averages described in the preceding sentence shall be weighted on the basis
of the

                                     - 12 -
<PAGE>

respective principal balances of the Lower Tier REMIC Regular Interests
immediately prior to any date of determination.

      Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates.

      Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."

      Class LTA Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificates and an interest rate equal to the Net Rate.

      Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTB-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTB-5 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

      Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.

                                     - 13 -
<PAGE>

      Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
Cut-off Date Principal Balance of the Mortgage Loans over (ii) the aggregate
initial principal balance of the Lower Tier REMIC Marker Classes and an interest
rate equal to the Net Rate.

      Class M Certificate Principal Balance: As of any date of determination,
the sum of the Class M-1 Certificate Principal Balance and the Class M-2
Certificate Principal Balance.

      Class M Certificates: The Class M-1 Certificates and the Class M-2
Certificates.

      Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.

      Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.

      Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.

      Class M-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.400% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.600% per annum.

      Class M-1 Pass-Through Rate: For the first Distribution Date, 4.93375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-1 Margin and (2) the Available Funds Cap for such Distribution
Date.

      Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if each of the Class A Certificate Principal Balance
and the Class R Certificate Principal Balance has been reduced to zero and a
Trigger Event exists, or as long as a Trigger Event does not exist, the excess
of (1) the sum of (A) the aggregate Certificate Principal Balance of the Class A
and Class R Certificates (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date) and (B) the

                                     - 14 -
<PAGE>

Class M-1 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 47.50% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the aggregate
Stated Principal Balances for the Mortgage Loans as of such Distribution Date
over the Minimum Required Overcollateralization Amount; provided, however, that
on any Distribution Date prior to the Stepdown Date on which the Class A
Certificate Principal Balance and the Class R Certificate Principal Balance have
been reduced to zero, the Class M-1 Principal Distribution Amount will equal the
lesser of (A) the outstanding Class M-1 Certificate Principal Balance and (B)
100% of the Principal Distribution Amount remaining after any distributions on
the Class A and Class R Certificates; and, provided, further that in no event
will the Class M-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-1 Certificate Principal Balance.

      Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.

      Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

      Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.

      Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class M-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

      Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.

      Class M-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.620% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.930% per annum.

      Class M-2 Pass-Through Rate: For the first Distribution Date, 5.15375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-2 Margin and (2) the Available Funds Cap for such Distribution
Date.

                                     - 15 -
<PAGE>

      Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if each of the Class A Certificate Principal Balance,
Class R Certificate Principal Balance and the Class M-1 Certificate Principal
Balance has been reduced to zero and a Trigger Event exists, or as long as a
Trigger Event does not exist, the excess of (1) the sum of (A) the aggregate
Certificate Principal Balance of the Class A and Class R Certificates (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
61.10% of the aggregate Stated Principal Balances of the Mortgage Loans as of
such Distribution Date and (B) the excess of the Stated Principal Balances of
the Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount; provided, however, that on any Distribution Date
prior to the Stepdown Date on which the Class A Certificate Principal Balance,
the Class R Certificate Principal Balance and the Class M-1 Certificate
Principal Balance have been reduced to zero, the Class M-2 Principal
Distribution Amount will equal the lesser of (A) the outstanding Class M-2
Certificate Principal Balance and (B) 100% of the Principal Distribution Amount
remaining after any distributions on such Class A, Class R and Class M-1
Certificates; provided, further, however, in no event will the Class M-2
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-2 Certificate Principal Balance.

      Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

      Class P Certificate: Any Certificate designated as a "Class P Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class R Certificate: Any Certificate designated as a "Class R Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

      Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.

      Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of such Distribution Date plus the
Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class R Certificate. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.

      Class R Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual Period.

                                     - 16 -
<PAGE>

      Class R Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.180% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.360% per annum.

      Class R Pass-Through Rate: For the first Distribution Date, 4.71375% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class R Margin and (2) the Available Funds Cap for such Distribution
Date.

      Closing Date: January 26, 2006.

      Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

      Collection Account: The separate Eligible Accounts created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated, "Wilshire
Credit Corporation, as servicer for LaSalle Bank National Association, as
trustee, in trust for registered holders of Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-SL1". Funds in the
Collection Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.

      Combined Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the sum of (1) the original principal balance of the
related Mortgage Loan and (2) any outstanding principal balances of Mortgage
Loans the liens on which are senior to the lien on such related Mortgage Loan
(such sum calculated at the date of origination of such related Mortgage Loan)
and the denominator of which is the lesser of (A) the Appraised Value of the
related Mortgaged Property and (B) the sales price of the related Mortgaged
Property at time of origination.

      Commission: The Securities and Exchange Commission.

      Compensating Interest: For any Distribution Date and all Principal
Prepayments in full in respect of a Mortgage Loan that are received during the
period from the first day of the related Prepayment Period through the last day
of the calendar month preceding such Distribution Date, a payment made by the
Servicer in an amount not to exceed the product of (a) one-twelfth of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date, equal to the amount of interest at the Net Mortgage Rate for
that Mortgage Loan from the date of prepayment through the 30th day of such
preceding calendar month; provided that any month consisting of less than 30
days shall be deemed to consist of 30 days.

      Current Interest: Any of the Class A Current Interest, the Class R Current
Interest, the Class M-1 Current Interest, the Class M-2 Current Interest, the
Class B-1 Current Interest, the Class B-2 Current Interest, the Class B-3
Current Interest, the Class B-4 Current Interest, the Class B-5 Current Interest
and the Class C Current Interest.

      Custodial Agreement: The Custodial Agreement, dated as of January 26,
2006, by and between the Custodian and the Trustee.

      Custodian: Wells Fargo Bank, N.A.

      Cut-off Date: January 1, 2006.

                                     - 17 -
<PAGE>

      Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.

      Definitive Certificates: As defined in Section 5.06.

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

      Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. With
respect to any Mortgage Loan due on any day other than the first day of the
month, such Mortgage Loan shall be deemed to be due on the first day of the
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.

      Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."

      Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.

      Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.

      Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.

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

      Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.

      Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.

                                     - 18 -
<PAGE>

      Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.

      Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in February 2006.

      Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.

      Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.

      Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first 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 with which such account is maintained, or (v) maintained
at an eligible institution whose commercial paper, short-term debt or other
short-term deposits are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi)
maintained with a federal or state chartered depository institution the deposits
in which are insured by the FDIC to the applicable limits and the short-term
unsecured debt obligations of which (or, in the case of a depository institution
that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by S&P, F-1 by Fitch or
Prime-1 by Moody's at the time any deposits are held on deposit therein, (vii) a
trust account or accounts maintained with the corporate trust department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $50,000,000 or (viii) otherwise acceptable
to each Rating Agency, as evidenced by a letter from each Rating Agency to the
Trustee.

      ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.

      ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements would
satisfy the requirements of Prohibited Transaction Exemption 90-29, Exemption
Application No. D-8012, 55 Fed. Reg. 21459 (1990), as amended, granted

                                     - 19 -
<PAGE>

by the United States Department of Labor (or any other applicable underwriter's
exemption granted by the United States Department of Labor), except, in relevant
part, for the requirement that the certificates have received a rating at the
time of acquisition that is in one of the three (or four, in the case of a
"designated transaction") highest generic rating categories by at least one of
S&P, Moody's or Fitch.

      ERISA Restricted Certificates: The Class C Certificates, Class P
Certificates, Class B-4 Certificates and Class B-5 Certificates and any other
Certificate, as long as the acquisition and holding of such Certificate is not
covered by and exempt under an underwriter's exemption.

      Event of Default: As defined in Section 7.01 hereof.

      Excess Interest: On any Distribution Date, for the Class A Certificates,
Class R Certificate, Class M-1 Certificates, Class M-2 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates, Class B-4
Certificates and Class B-5 Certificates, the excess, if any, of (1) the amount
of interest such Class of Certificates is entitled to receive on such
Distribution Date over (2) the amount of interest such Class of Certificates
would have been entitled to receive on such Distribution Date at an interest
rate equal to the REMIC Pass-Through Rate.

      Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.

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

      Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess, if any, of (A) the sum of (i)
the Aggregate Certificate Principal Balance immediately preceding such
Distribution Date reduced by the Principal Funds with respect to such
Distribution Date and (ii) $32,904,903 over (B) the Pool Stated Principal
Balance of the Mortgage Loans as of such Distribution Date and (2) on and after
the Stepdown Date, the excess, if any, of (A) the sum of (x) the Aggregate
Certificate Principal Balance immediately preceding such Distribution Date,
reduced by the Principal Funds with respect to such Distribution Date and (y)
the greater of (a) 16.40% of the Pool Stated Principal Balance of the Mortgage
Loans and (b) the Minimum Required Overcollateralization Amount over (B) the
Pool Stated Principal Balance of the Mortgage Loans as of such Distribution
Date; provided, however, that if on any Distribution Date a Trigger Event is in
effect, the Extra Principal Distribution Amount will not be reduced to the
applicable percentage of the then-current Pool Stated Principal Balance of the
Mortgage Loans (and will remain fixed at the applicable percentage of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Distribution
Date immediately prior to the Trigger Event) until the next Distribution Date on
which the Trigger Event is not in effect.

      Fannie Mae: 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.

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

                                     - 20 -
<PAGE>

      Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a Class of the Class A, Class R,
Class M or Class B Certificates is based upon the Available Funds Cap, the
excess of (x) the amount of interest that such Class would have been entitled to
receive on such Distribution Date had the Pass-Through Rate for that Class not
been calculated based on the Available Funds Cap over (y) the amount of interest
payable on such Class on such Distribution Date based on the Available Funds
Cap, together with (i) the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate for such Class, without giving effect to the Available Funds
Cap) and (ii) any amount previously distributed with respect to Floating Rate
Certificate Carryover for such Class that is recovered as a voidable preference
by a trustee in bankruptcy.

      Freddie Mac: 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.

      Grantor Trusts: The grantor trusts described in Section 2.07 hereof.

      Indenture: An indenture relating to the issuance of NIM Notes.

      Initial Certificate Principal Balance: With respect to any Class A, Class
R, Class M, Class B or Class C Certificate, the Certificate Principal Balance of
such Certificate or any predecessor Certificate on the Closing Date as set forth
in Section 5.01 hereof.

      Initial Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.

      Institutional Accredited Investors: Institutions which are "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) promulgated
pursuant to Regulation D.

      Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies.

      Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the Trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, 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 Carry Forward Amount: Any of the Class A Interest Carry Forward
Amount, the Class R Interest Carry Forward Amount, the Class M-1 Interest Carry
Forward Amount, the Class M-2 Interest Carry Forward Amount, the Class B-1
Interest Carry Forward Amount, the Class B-2 Interest Carry Forward Amount, the
Class B-3 Interest Carry Forward Amount, the Class B-4 Interest Carry Forward

                                     - 21 -
<PAGE>

Amount, the Class B-5 Interest Carry Forward Amount or the Class C Interest
Carry Forward Amount, as the case may be.

      Interest Determination Date: With respect to the Class A, Class R, Class M
and Class B Certificates (other than the Class B-4 and Class B-5 Certificates),
(i) for any Accrual Period other than the first Accrual Period, the second LIBOR
Business Day preceding the commencement of such Accrual Period and (ii) for the
first Accrual Period, January 24, 2006.

      Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) all proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment
Period or pursuant to Section 9.01 not later than the related Determination Date
(to the extent that such proceeds relate to interest) less the Servicing Fee and
(6) all Prepayment Charges received with respect to the Mortgage Loans during
the related Prepayment Period, less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable (including without limitation
indemnity payments) to the Servicer and the Trustee pursuant to this Agreement
allocable to interest.

      Latest Possible Maturity Date: The latest maturity date for any Mortgage
Loan in the Trust Fund plus one year.

      LIBOR Business Day: Any day on which banks in the City of London, England,
Chicago, Illinois and New York City, U.S.A. are open and conducting transactions
in foreign currency and exchange.

      Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Servicer has certified (in
accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation
or (b) is delinquent 180 days or longer, as to which the Servicer has certified
in a certificate of an officer of the Servicer delivered to the Trustee that it
does not believe that there is a reasonable likelihood that any further net
proceeds will be received or recovered with respect to such Mortgage Loan.

      Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement 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, less the sum of related unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related to such
Mortgage Loan.

      Losses: Any losses, claims, damages, liabilities or expenses collectively.

      Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.

                                     - 22 -
<PAGE>

      Lower Tier REMIC Interests: Each of the Class LTA Interest, the Class
LTM-1 Interest, the Class LTM-2 Interest, the Class LTB-1 Interest, the Class
LTB-2 Interest, the Class LTB-3 Interest, the Class LTB-4 Interest, the Class
LTB-5 Interest, the Class LTX Interest and the Class LTR Interest.

      Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX Interest.

      Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.

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

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

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

      Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.

      MIN: The loan number for any MERS Loan.

      MLML: Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, or its
successors in interest.

      MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.

      Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.

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

      Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a second lien or a second priority ownership interest
in an estate in fee simple in real property securing a Mortgage Note.

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

      Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.

                                     - 23 -
<PAGE>

      Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Trustee to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund (for
clarification purposes, the Trustee has physical possession of the Mortgage
Files) and from time to time subject to this Agreement, attached hereto as
Exhibit B, setting forth the following information with respect to each Mortgage
Loan:

            (i)   THE LOAN NUMBER;

            (ii)  BORROWER NAME AND ADDRESS;

            (iii) THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE LOANS;

            (iv)  THE INITIAL MORTGAGE RATE;

            (v)   THE ORIGINAL MATURITY DATE AND THE MONTHS REMAINING BEFORE
                  MATURITY DATE;

            (vi)  THE ORIGINAL PRINCIPAL BALANCE;

            (vii) THE CUT-OFF DATE PRINCIPAL BALANCE;

            (viii) THE FIRST PAYMENT DUE DATE OF THE MORTGAGE LOAN;

            (ix)  THE COMBINED LOAN-TO-VALUE RATIO

            (x)   A CODE INDICATING WHETHER THE RESIDENTIAL DWELLING AT THE TIME
                  OF ORIGINATION WAS REPRESENTED TO BE OWNER-OCCUPIED;

            (xi)  A CODE INDICATING THE PROPERTY TYPE;

            (xii) LOCATION OF THE RELATED MORTGAGED PROPERTY;

            (xiii) A CODE INDICATING WHETHER A PREPAYMENT CHARGE IS APPLICABLE
                  AND, IF SO,

                  (A)   THE PERIOD DURING WHICH SUCH PREPAYMENT CHARGE IS IN
                        EFFECT;

                  (B)   THE AMOUNT OF SUCH PREPAYMENT CHARGE;

                  (C)   ANY LIMITATIONS OR OTHER CONDITIONS ON THE
                        ENFORCEABILITY OF SUCH PREPAYMENT CHARGE; AND

                  (D)   ANY OTHER INFORMATION PERTAINING TO THE PREPAYMENT
                        CHARGE SPECIFIED IN THE RELATED MORTGAGE NOTE; AND

            (xiv) THE CREDIT SCORE AND DATE OBTAINED.

      Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.

                                     - 24 -
<PAGE>

      Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.

      Mortgaged Property: The underlying property securing a Mortgage Loan.

      Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.

      Mortgagor: The obligor on a Mortgage Note.

      Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the Servicing Fee Rate.

      Net Rate: With respect to any interest in any REMIC and any Distribution
Date, the product of (x) the weighted average Net Mortgage Rate for the Mortgage
Loans calculated based on the respective Net Mortgage Rates and the Stated
Principal Balances of such Mortgage Loans as of the preceding Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off Date) and (y)
a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days in the related Accrual Period for such interest.

      NIM Notes: The notes to be issued pursuant to the Indenture.

      Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise related to the Mortgage Loans.

      Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.

      Non-Supported Interest Shortfall: As defined in Section 4.02.

      Offered Certificates: The Class A, Class M-1, Class M-2, Class B-1, Class
B-2, Class B-3 and Class R Certificates.

      Officer's Certificate: A certificate (1) 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 of the Depositor, or
Trustee, the Servicer (or any other officer customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with a particular subject) or (2), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor, the Servicer or the Trustee, as the case may
be, as required by this Agreement.

      One-Month LIBOR: With respect to any Accrual Period, the rate determined
by the Trustee on the related Interest Determination Date on the basis of (a)
the offered rates for one-month United States dollar deposits, as such rates
appear on Telerate page 3750, as of 11:00 a.m.

                                     - 25 -
<PAGE>

(London time) on such Interest Determination Date or (b) if such rate does not
appear on Telerate Page 3750 as of 11:00 a.m. (London time), the offered rates
of the Reference Banks for one-month United States dollar deposits, as such
rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on
such Interest Determination Date. If One-Month LIBOR is determined pursuant to
clause (b) above, on each Interest Determination Date, One-Month LIBOR for the
related Accrual Period will be established by the Trustee as follows:

            (i)   IF ON SUCH INTEREST DETERMINATION DATE TWO OR MORE REFERENCE
                  BANKS PROVIDE SUCH OFFERED QUOTATIONS, ONE-MONTH LIBOR FOR THE
                  RELATED ACCRUAL PERIOD SHALL BE THE ARITHMETIC MEAN OF SUCH
                  OFFERED QUOTATIONS (ROUNDED UPWARDS IF NECESSARY TO THE
                  NEAREST WHOLE MULTIPLE OF 0.03125%).

            (ii)  IF ON SUCH INTEREST DETERMINATION DATE FEWER THAN TWO
                  REFERENCE BANKS PROVIDE SUCH OFFERED QUOTATIONS, ONE-MONTH
                  LIBOR FOR THE RELATED ACCRUAL PERIOD SHALL BE THE HIGHER OF
                  (i) ONE-MONTH LIBOR AS DETERMINED ON THE PREVIOUS INTEREST
                  DETERMINATION DATE AND (II) THE RESERVE INTEREST RATE.

      Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor or the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any Affiliate of
either such party, and (3) not be connected with the Depositor or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.

      Optional Termination: The termination of the trust hereunder pursuant to
clause (a) of Section 9.01 hereof.

      Optional Termination Amount: The repurchase price received by the Trustee
in connection with any repurchase of all of the Mortgage Loans pursuant to
Section 9.01.

      Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date preceding
the Distribution Date on which the proceeds of the Optional Termination are
distributed to Certificateholders and the fair market value of any REO Property,
plus accrued interest thereon as of the Distribution Date on which the proceeds
of the Optional Termination are distributed to Certificateholders, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee, (including
any amounts incurred by the Trustee in connection with conducting the Auction),
the Servicer and any unpaid or unreimbursed Servicing Fees, Advances and
Servicing Advances, (C) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to any of
the Mortgage Loans of any predatory or abusive lending law and (D) in the event
an Auction has been conducted, all reasonable fees and expenses incurred by the
Trustee to conduct such Auction.

      OTS: The Office of Thrift Supervision.

                                     - 26 -
<PAGE>

      Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.

      Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.

      Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).

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

      Pass-Through Rate: With respect to the Class A Certificates, the Class A
Pass-Through Rate; with respect to the Class M-1 Certificates, the Class M-1
Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2
Pass-Through Rate; with respect to the Class B-1 Certificates, the Class B-1
Pass-Through Rate; with respect to the Class B-2 Certificates, the Class B-2
Pass-Through Rate; with respect to the Class B-3 Certificates, the Class B-3
Pass-Through Rate; with respect to the Class B-4 Certificates, the Class B-4
Pass-Through Rate; with respect to the Class B-5 Certificates, the Class B-5
Pass-Through Rate; and with respect to the Class R Certificate, the Class R
Pass-Through Rate.

      Percentage Interest: With respect to:

            (i)   ANY CLASS, THE PERCENTAGE INTEREST IN THE UNDIVIDED BENEFICIAL
                  OWNERSHIP INTEREST EVIDENCED BY SUCH CLASS WHICH SHALL BE
                  EQUAL TO THE CERTIFICATE PRINCIPAL BALANCE OF SUCH CLASS
                  DIVIDED BY THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF ALL
                  CLASSES; AND

            (ii)  ANY CERTIFICATE, THE PERCENTAGE INTEREST EVIDENCED THEREBY OF
                  THE RELATED CLASS SHALL EQUAL THE PERCENTAGE OBTAINED BY
                  DIVIDING THE DENOMINATION OF SUCH CERTIFICATE BY THE AGGREGATE
                  OF THE DENOMINATIONS OF ALL CERTIFICATES OF SUCH CLASS; EXCEPT
                  THAT IN THE CASE OF ANY CLASS P CERTIFICATES, THE PERCENTAGE
                  INTEREST WITH RESPECT TO SUCH CERTIFICATE SHOWN ON THE FACE OF
                  SUCH CERTIFICATE.

      Permitted Activities: The primary activities of the trust created pursuant
to this Agreement which shall be:

            (i)   HOLDING MORTGAGE LOANS TRANSFERRED FROM THE DEPOSITOR AND
                  OTHER ASSETS OF THE TRUST FUND, INCLUDING ANY CREDIT
                  ENHANCEMENT AND PASSIVE DERIVATIVE FINANCIAL INSTRUMENTS THAT
                  PERTAIN TO BENEFICIAL INTERESTS ISSUED OR SOLD TO PARTIES
                  OTHER THAN THE DEPOSITOR, ITS AFFILIATES, OR ITS AGENTS;

                                     - 27 -
<PAGE>

            (ii)  ISSUING CERTIFICATES AND OTHER INTERESTS IN THE ASSETS OF THE
                  TRUST FUND;

            (iii) RECEIVING COLLECTIONS ON THE MORTGAGE LOANS AND MAKING
                  PAYMENTS ON SUCH CERTIFICATES AND INTERESTS IN ACCORDANCE WITH
                  THE TERMS OF THIS AGREEMENT; AND

            (iv)  ENGAGING IN OTHER ACTIVITIES THAT ARE NECESSARY OR INCIDENTAL
                  TO ACCOMPLISH THESE LIMITED PURPOSES, WHICH ACTIVITIES CANNOT
                  BE CONTRARY TO THE STATUS OF THE TRUST FUND AS A QUALIFIED
                  SPECIAL PURPOSE ENTITY UNDER EXISTING ACCOUNTING LITERATURE.

      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 THE TIMELY PAYMENT OF SUCH OBLIGATIONS IS 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 RATING THE
                  CERTIFICATES;

            (iii) COMMERCIAL OR FINANCE COMPANY PAPER, OTHER THAN COMMERCIAL OR
                  FINANCE COMPANY PAPER ISSUED BY THE DEPOSITOR, THE TRUSTEE OR
                  ANY OF THEIR AFFILIATES, WHICH IS THEN RECEIVING THE HIGHEST
                  COMMERCIAL OR FINANCE COMPANY PAPER RATING OF EACH SUCH RATING
                  AGENCY;

            (iv)  CERTIFICATES OF DEPOSIT, DEMAND OR TIME DEPOSITS, OR BANKERS'
                  ACCEPTANCES (OTHER THAN BANKER'S ACCEPTANCES ISSUED BY THE
                  TRUSTEE OR ANY OF ITS AFFILIATES) 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 ARE THEN RATED ONE OF THE TWO HIGHEST
                  LONG-TERM AND THE HIGHEST SHORT-TERM RATINGS OF EACH SUCH
                  RATING AGENCY FOR SUCH SECURITIES;

            (v)   DEMAND OR TIME DEPOSITS OR CERTIFICATES OF DEPOSIT ISSUED BY
                  ANY BANK OR TRUST COMPANY OR SAVINGS INSTITUTION TO THE EXTENT
                  THAT SUCH DEPOSITS ARE FULLY INSURED BY THE FDIC;

            (vi)  GUARANTEED REINVESTMENT AGREEMENTS ISSUED BY ANY BANK,
                  INSURANCE COMPANY OR OTHER CORPORATION RATED IN THE TWO
                  HIGHEST LONG-TERM OR THE HIGHEST SHORT-TERM RATINGS OF EACH
                  RATING AGENCY CONTAINING, AT THE TIME OF THE ISSUANCE OF SUCH
                  AGREEMENTS, SUCH TERMS AND CONDITIONS AS WILL NOT RESULT IN
                  THE DOWNGRADING OR WITHDRAWAL OF THE RATING THEN ASSIGNED TO
                  THE CERTIFICATES BY ANY SUCH RATING AGENCY AS EVIDENCED BY A
                  LETTER FROM EACH RATING AGENCY;

                                     - 28 -
<PAGE>

            (vii) 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 (v) ABOVE;

            (viii) 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, OTHER THAN THE TRUSTEE OR ANY OF
                  ITS AFFILIATES, 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 LONG TERM RATINGS OF
                  EACH RATING AGENCY;

            (ix)  INTERESTS IN ANY MONEY MARKET FUND (INCLUDING THOSE MANAGED OR
                  ADVISED BY THE TRUSTEE OR ITS AFFILIATES), 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 LONG TERM RATING BY EACH RATING AGENCY RATING SUCH
                  FUND; AND

            (x)   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, OTHER THAN THE TRUSTEE
                  OR ANY OF ITS AFFILIATES, WHICH ON THE DATE OF ACQUISITION HAS
                  BEEN RATED BY EACH SUCH RATING AGENCY IN THEIR RESPECTIVE
                  HIGHEST APPLICABLE RATING CATEGORY;

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) each such investment must
be a "permitted investment" within the meaning of Section 860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.

      Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and telephone cooperatives described in section

                                     - 29 -
<PAGE>

1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of
the United States, a corporation or partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States or any State
thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or 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 persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI or applicable successor form. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code. A corporation will not be
treated as an instrumentality of the United States or of any State thereof for
these purposes if all of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such government unit.

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

      Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.

      Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Offered Certificates or as described in the Private Placement Memorandum,
relating to the Class B-4 and Class B-5 Certificates.

      Prepayment Charges: Any prepayment premium or charge payable by a
Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note or Mortgage, as applicable.

      Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.

      Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.

                                     - 30 -
<PAGE>

      Prepayment Period: With respect to any Distribution Date, the period
beginning with the opening of business on the 15th day of the calendar month
preceding the month in which such Distribution Date occurs (or in the case of
the first Distribution Date, beginning with the opening of business on the
Cut-off Date) and ending on the close of business on the 14th day of the month
in which such Distribution Date occurs.

      Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.

      Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
in full collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor during the
related Prepayment Period or, in the case of a purchase pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the amount, if
any, by which the aggregate unpaid principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected during
the related Prepayment Period (to the extent such Liquidation Proceeds relate to
principal and represent payment in full), (6) all Subsequent Recoveries received
during the related Due Period and (7) all other collections and recoveries in
respect of principal during the related Due Period, less (A) all Non-Recoverable
Advances relating to principal with respect to the Mortgage Loans and (B) other
amounts reimbursable (including without limitation indemnity payments) to the
Servicer and the Trustee pursuant to this Agreement allocable to principal.

      Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received or recovered in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Servicer in accordance
with the terms of the related Mortgage Note.

      Private Placement Memorandum: The Private Placement Memorandum dated
January 24, 2006 relating to the private placement of the Class B-4 and Class
B-5 Certificates.

      Prospectus Supplement: The Prospectus Supplement dated January 24, 2006,
relating to the public offering of the Offered Certificates.

      PUD: A Planned Unit Development.

      Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the applicable Transferor pursuant to Section 2.02
or 2.03 hereof, an amount equal to the sum of (i) 100% of the unpaid principal
balance of the Mortgage Loan as of the date of such purchase together with any
unreimbursed Servicing Advances, (ii) accrued interest thereon at the applicable
Mortgage Rate from (a) the date through which interest was last paid by the
Mortgagor to (b) the Due Date in the month in which the Purchase Price is to be
distributed to Certificateholders and (iii) any unreimbursed costs, penalties

                                     - 31 -
<PAGE>

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.

      QIB: A "qualified institutional buyer" within the meaning of Rule 144A.

      Rating Agency: Either of S&P or Moody's. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

      Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).

      Record Date: With respect to the first Distribution Date, the Closing
Date. With respect to any other Distribution Date, the close of business on the
last Business Day of the month preceding the month in which the applicable
Distribution Date occurs.

      Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest, N.A.; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, England, (ii) whose quotations appear on the Reuters
Screen LIBO Page on the relevant Interest Determination Date and (iii) which
have been designated as such by the Servicer.

      Regular Certificate: Any one of the Class A, Class M and Class B
Certificates.

      Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.

      Regulation S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
or term contained in, Regulation S means such rule, section, subsection,
definition or term, as the case may be, or any successor thereto, in each case
as the same may be amended from time to time.

      Regulation S Book-Entry Certificates: Certificates sold in offshore
transactions in reliance on Regulation S in the form of one or more permanent
global Certificates in definitive, fully registered form without interest
coupons, which shall be deposited on behalf of the subscribers for such
Certificates

                                     - 32 -
<PAGE>

represented thereby with the Trustee, as custodian for DTC and registered in the
name of a nominee of DTC.

      Related Certificates: With respect to the Class LTA Interest, the Class A
and Class R Certificates. With respect to the Class LTB-1 Interest, the Class
B-1 Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates. With respect to the Class LTB-4 Interest, the Class B-4
Certificates. With respect to the Class LTB-5 Interest, the Class B-5
Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates.

      Relief Act: The Servicemembers Civil Relief Act or any similar state or
local law.

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

      REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of (or, as the context requires, all of) the Lower Tier REMIC and the
Upper Tier REMIC.

      REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."

      REMIC Provisions: 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
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.

      REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C Interest.

      Remittance Report: As defined in Section 4.04(j) hereof.

      REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.

      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 of Exhibit I (1)
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
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Mortgage Loan, have a Mortgage Rate not less than or no more
than 1% per annum higher than the Mortgage Rate of the Deleted Mortgage Loan;
(3) have a similar or higher FICO score or credit grade than that of the Deleted
Mortgage Loan; (4) have a Combined Loan-to-Value Ratio no higher than that of
the Deleted Mortgage Loan; (5) have a remaining term to maturity no greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (6)
provide for a Prepayment Charge on terms substantially similar to those of

                                     - 33 -
<PAGE>

the Prepayment Charge, if any, of the Deleted Mortgage Loan; (7) have the same
lien priority as the Deleted Mortgage Loan; (8) constitute the same occupancy
type as the Deleted Mortgage Loan; and (9) comply with each representation and
warranty set forth in Section 2.03 hereof.

      Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in the form of Exhibit I hereto.

      Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.

      Required Loss Percentage: For any Distribution Date, the applicable
percentage for such Distribution Date set forth in the following table:

<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN         REQUIRED LOSS PERCENTAGE
------------------------------         --------------------------------------------
<S>                                    <C>
February 2009 - January 2010           5.60% with respect to February 2009, plus an
                                       additional 1/12th of 3.10% for each month
                                       thereafter

February 2010 - January 2011           8.70% with respect to February 2010, plus an
                                       additional 1/12th of 2.30% for each month
                                       thereafter

February 2011 - January 2012           11.00% with respect to February 2011, plus an
                                       additional 1/12th of 0.50% for each month
                                       thereafter

February 2012 and thereafter           11.50%
</TABLE>

      Required Percentage: As of any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal
Balance of the most senior Class of Certificates outstanding, prior to giving
effect to distributions to be made on such Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date. As used
herein, on any Distribution Date when any of the Class A and Class R Ce/on such
Mortgage Loan.

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

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

      Seller: MLML.

      Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.

      Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.

      Servicer Remittance Date: With respect to any Distribution Date, the later
of two Business Days after the 15th day of the month in which such Distribution
Date occurs and the 18th day (or if such day is not a Business Day, the next
preceding Business Day) of the month in which such Distribution Date occurs.

                                     - 34 -
<PAGE>

      Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, inspection, restoration and protection of a Mortgaged
Property, including without limitation advances in respect of real estate taxes
and assessments, (2) any collection, enforcement or judicial proceedings,
including without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property, (4)
executing and recording instruments of satisfaction, deeds of reconveyance,
substitutions of trustees on deeds of trust or Assignments of Mortgage to the
extent not otherwise recovered from the related Mortgages or payable under this
Agreement, (5) correcting errors of prior servicers; costs and expenses charged
to the Servicer by the Trustee; tax tracking; title research; flood
certifications; lender paid mortgage insurance, (6) obtaining or correcting any
legal documentation required to be included in the Mortgage Files and reasonably
necessary for the Servicer to perform its obligations under this Agreement and
(7) compliance with the obligations under Sections 3.01 and 3.10.

      Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.

      Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) the Servicing Fee Rate and (y) the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.

      Servicing Fee Rate: 0.50% per annum.

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

      Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under this Agreement, 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 properly
and effectively.

      SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.

      Startup Day: As defined in Section 2.07 hereof.

      Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x)

                                     - 35 -
<PAGE>

due with respect to such Mortgage Loan during each Due Period ending prior to
such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Advance Date prior to
such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

      Stepdown Date: The later to occur of (1) the Distribution Date in February
2009 or (2) the first Distribution Date on which (A) the aggregate Certificate
Principal Balance of the Class A and Class R Certificates (reduced by the
Principal Funds with respect to such Distribution Date) is less than or equal to
(B) 31.40% of the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date.

      Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to 5% or more of the
Mortgage Loans under the direction or authority of a Servicer (measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an Assessment of
Compliance is required to be delivered, multiplied by a fraction, the numerator
of which is the number of months during which such Subcontractor performs such
discrete functions and the denominator of which is 12, or, in the case of the
year in which the Closing Date occurs, the number of months elapsed in such
calendar year).

      Subordinated Certificates: The Class M and Class B Certificates.

      Subsequent Recovery: Any amount received on a Mortgage Loan (net of
amounts reimbursed to the Servicer related to Liquidated Mortgage Loans)
subsequent to such Mortgage Loan being determined to be a Liquidated Mortgage
Loan.

      Sub-Servicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB with respect to 10% or more of the Mortgage Loans under the direction or
authority of the Servicer (measured by aggregate Stated Principal Balance of the
Mortgage Loans, annually at the commencement of the calendar year prior to the
year in which an Assessment of Compliance is required to be delivered,
multiplied by a fraction, the numerator of which is the number of months during
which such Subservicer services the related Mortgage Loans and the denominator
of which is 12, or, in the case of the year in which the Closing Date occurs,
the number of months elapsed in such calendar year). Any subservicer shall meet
the qualifications set forth in Section 3.02.

      Subservicing Agreement: As defined in Section 3.02(a).

      Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).

      Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.

                                     - 36 -
<PAGE>

      Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

      Transfer Agreement: Each document set out on Exhibit J hereto pursuant to
which the Seller acquired any Mortgage Loan from the Transferor of such Mortgage
Loan.

      Transferor: Any originator of a Mortgage Loan.

      Trigger Event: With respect to the Certificates on or after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
measured on a rolling three month basis (including, for the purposes of this
calculation, Mortgage Loans in foreclosure and REO Properties) and (B) the
Stated Principal Balance of the Mortgage Loans as of the preceding Servicer
Remittance Date, equals or exceeds the product of (i) 11.50% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.

      Trust Fund: The corpus of the trust (the "Merrill Lynch Mortgage Investors
Trust, Series 2006-SL1") created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto on and after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof, exclusive of interest not required to be deposited in
the Collection Account; (ii) the Collection Account and the Certificate Account
and all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; and (v)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.

      Trustee: LaSalle Bank National Association, a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, and any corporation or national banking association resulting
from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee as may from time to time be serving as
successor trustee hereunder; it being understood that certain duties of the
Trustee under Sections 2.01, 2.02 and 3.13 with respect to the possession and
administration of the Mortgage Files generally may be carried out by a custodian
engaged by the Trustee. On the Closing Date, the Trustee shall appoint the
Custodian as custodian for that portion of the Mortgage Files that it holds
pursuant to the terms of the Custodial Agreement.

      Uncertificated Class C Interest: An uncertificated interest with an
initial principal amount equal to the initial Overcollateralization Amount and
having (i) the same rights to payments as the Class C Certificates, and (ii) the
rights to the payments treated as distributed to the Class C Certificates under
Section 2.07(d), provided, however, that such interest shall have no obligation
to make any payments treated as paid by the Class C Certificates pursuant to
interest rate cap agreements under Section 2.07(d).

      United States Person: (i) A citizen or resident of the United States, (ii)
a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) a trust if a court within the

                                     - 37 -
<PAGE>

United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.

      Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount,
Class B-4 Realized Loss Amount, Class B-5 Realized Loss Amount and Class C
Unpaid Realized Loss Amount, collectively.

      Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.

      USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.

      Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M-1, Class M-2,
Class R, Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates,
with the allocation among such Certificates to be in proportion to the Class
Certificate Principal Balance of each Class relative to the Class Certificate
Principal Balance of all other Classes and (2) each Class of the Class C and
Class P will be allocated 1% of the Voting Rights Certificates. Voting Rights
will be allocated among the Certificates of each such Class in accordance with
their respective Percentage Interests.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

      Section 2.01. Conveyance of Mortgage Loans.

      The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).

      It is agreed and understood by the Depositor, the Servicer and the Trustee
that it is not intended that any Mortgage Loan be included in the Trust that is,
without limitation, either (i) a "High-Cost Home Loan" as defined in the New
Jersey Home Ownership Act effective November 27, 2003; (ii) a "High-Cost Home
Loan" as defined in the New Mexico Home Loan Protection Act effective January 1,
2004; (iii) a "High-Cost Home Mortgage Loan" as defined in the Massachusetts
Predatory Home Loan Practices Act effective November 7, 2004; (iv) a "High-Cost
Home Loan" as defined by the Indiana High Cost Home Loan Law effective January
1, 2005 or (v) a "High-Cost Home Loan" as defined by the Illinois High Risk Home
Loan Act effective January 1, 2004.

                                     - 38 -
<PAGE>

      In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee, the following documents or instruments with
respect to each Mortgage Loan:

            (A) The original Mortgage Note endorsed in blank or, "Pay to the
      order of LaSalle Bank National Association, as trustee, without recourse"
      together with all riders thereto. The Mortgage Note shall include all
      intervening endorsements showing a complete chain of the title from the
      Transferor to [____________________].

            (B) Except as provided below and for each Mortgage Loan that is not
      a MERS Loan, the original recorded Mortgage together with all riders
      thereto, 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 together with all riders thereto certified to be a true
      copy of the original of the Mortgage that has been delivered for recording
      in the appropriate recording office of the jurisdiction in which the
      Mortgaged Property is located and in the case of each MERS Loan, the
      original Mortgage together with all riders thereto, noting the presence of
      the MIN of the Loan and either language indicating that the Mortgage Loan
      is a MOM Loan or if the Mortgage Loan was not a MOM Loan at origination,
      the original Mortgage and the assignment thereof to MERS, with evidence of
      recording indicated thereon, or a copy of the Mortgage certified by the
      public recording office in which such Mortgage has been recorded.

            (C) In the case of each Mortgage Loan that is not a MERS Loan, the
      original Assignment of each Mortgage in blank or, to "LaSalle Bank
      National Association, as trustee."

            (D) The original policy of title insurance (or a preliminary title
      report, commitment or binder 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 to be a true copy of the original of the assignment
      which has been sent for recording in the appropriate jurisdiction in which
      the Mortgaged Property is located.

            (F) Originals of all assumption and modification agreements, if any.

            (G) If in connection with any Mortgage Loan, the Depositor cannot
      deliver the Mortgage, Assignments of Mortgage or assumption, consolidation
      or modification, as the case may be, with evidence of recording thereon,
      if applicable, concurrently with the execution and delivery of this
      Agreement solely because of a delay caused by the public recording office
      where such Mortgage, Assignments of Mortgage or assumption, consolidation
      or modification, as the case may be, has been delivered for recordation,
      the Depositor shall deliver or cause to be delivered to the Trustee
      written notice stating that such Mortgage or assumption, consolidation or
      modification, as the case may be, has been delivered to the appropriate
      public recording office for recordation. Thereafter, the Depositor shall
      deliver or cause to be delivered to the Trustee such Mortgage, Assignments
      of Mortgage or assumption, consolidation or modification, as the case may
      be, with evidence of recording indicated thereon, if applicable, upon
      receipt thereof from the public recording office. To the extent any
      required endorsement is not contained on a Mortgage

                                     - 39 -
<PAGE>

      Note or an Assignment of Mortgage, the Depositor shall make or cause to be
      made such endorsement.

            (H) With respect to any Mortgage Loan, none of the Depositor, the
      Servicer or the Trustee shall be obligated to cause to be recorded the
      Assignment of Mortgage referred to in this Section 2.01. In the event an
      Assignment of Mortgage is not recorded, the Servicer shall have no
      liability for its failure to receive and act on notices related to such
      Assignment of Mortgage.

      The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee on behalf of the
Certificateholders. Neither the Depositor nor the Servicer shall take any action
inconsistent with such ownership and shall not claim any ownership interest
therein. The Depositor and the Servicer shall respond to any third party
inquiries with respect to ownership of the Mortgage Loans by stating that such
ownership is held by the Trustee on behalf of the Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the Trustee are and
shall be held in trust by the Servicer, for the benefit of the Trustee as the
owner thereof, and the Servicer's possession of the contents of each Mortgage
File so retained is for the sole purpose of servicing the related Mortgage Loan,
and such retention and possession by the Servicer, is in a custodial capacity
only. The Depositor agrees to take no action inconsistent with the Trustee's
ownership of the Mortgage Loans, to promptly indicate to all inquiring parties
that the Mortgage Loans have been sold and to claim no ownership interest in the
Mortgage Loans.

      It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, 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.

      In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement, the rights in
the Transfer Agreements described therein, and the benefit of the repurchase
obligations and the obligation of the Seller contained in the Sale Agreement to
take, at the request of the Depositor or the Trustee, all action on its part
which is reasonably necessary to ensure the enforceability of a Mortgage Loan.
The Trustee hereby accepts such assignment, and shall be entitled to exercise
all rights of the Depositor under the Sale Agreement as if, for such

                                     - 40 -
<PAGE>

purpose, it were the Depositor. The foregoing sale, transfer, assignment,
set-over, deposit and conveyance does not and is not intended to result in
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.

      Section 2.02. Acceptance by the Trustee of the Mortgage Loans.

      Except as set forth in the exception report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.

      The Trustee agrees, for the benefit of Certificateholders, to review each
Mortgage File delivered to it within 60 days after the Closing Date to ascertain
and to certify, within 70 days of the Closing Date, to the Depositor and the
Servicer that all documents required by Section 2.01 (A)-(B), (C) (if
applicable), and (D)-(E), and the documents if actually received by it, under
Section 2.01(F), have been executed and received, and that such documents relate
to the Mortgage Loans identified in Exhibit B that have been conveyed to it. It
is herein acknowledged that, in conducting such review, the Trustee shall not be
under any duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable or appropriate for the represented purpose, that they have actually
been recorded or that they are other than what they purport to be on their face.
If the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee shall promptly (and in any
event within no more than five Business Days) after such finding so notify the
Servicer, the Seller and the Depositor. In addition, the Trustee shall also
notify the Servicer, the Seller and the Depositor if the original Mortgage with
evidence of recording thereon with respect to a Mortgage Loan is not received
within 70 days of the Closing Date; if it has not been received because of a
delay caused by the public recording office where such Mortgage has been
delivered for recordation, the Depositor shall deliver or cause to be delivered
to the Trustee written notice stating that such Mortgage has been delivered to
the appropriate public recording office for recordation and thereafter the
Depositor shall deliver or cause to be delivered such Mortgage with evidence of
recording thereon upon receipt thereof from the public recording office. The
Trustee shall request that the Seller correct or cure such omission, defect or
other irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 2.03(c), within 90 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Seller of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer and deposited by the Servicer in the
Certificate Account or Collection Account, as appropriate, promptly upon
receipt, and the Trustee, upon receipt of a Request for Release and
certification of the Servicer of such required deposit, shall promptly release
to the Seller the related Mortgage File and the Trustee shall execute and
deliver such instruments of transfer or assignment, without recourse, as shall
be requested by the Seller and necessary to vest in the Seller or its designee,
as the case may be, any Mortgage Loan released pursuant hereto, and the Trustee
shall have no further responsibility with regard to such Mortgage Loan.

                                     - 41 -
<PAGE>

It is understood and agreed that the obligation of the Seller to purchase, cure
or substitute any Mortgage Loan as to which a material defect in or omission of
a constituent document exists shall constitute the sole remedy respecting such
defect or omission available to the Trustee on behalf of Certificateholders. The
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee pursuant to the Sale Agreement,
Transfer Agreement or any Bring Down Letter. The Trustee shall be under no duty
or obligation to inspect, review and examine such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable,
recordable, duly authorized, sufficient, legal, valid or appropriate to the
represented purpose, or that they have actually been recorded, or that they are
other than what they purport to be on their face. The Servicer and the Trustee
shall keep confidential the name of each Mortgagor except as required for
performance of this Agreement and the Servicer and the Trustee shall not solicit
any such Mortgagor for the purpose of refinancing the related Mortgage Loan;
notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Trustee or the Servicer
from sources other than the other parties hereto, (ii) disclosure of any and all
information (A) if required to do so by any applicable law, rule or regulation,
(B) to any government agency or regulatory body having or claiming authority to
regulate or oversee any aspects of the business of the Trustee or the Servicer
or that of any Affiliate, (C) pursuant to any subpoena, civil investigation
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Trustee or the Servicer or any Affiliate
or an officer, director, employer or shareholder thereof is a party or (D) to
any Affiliate, independent or internal auditor, agent, employee or attorney of
the Trustee or the Servicer having a need to know the same, provided that the
Trustee or the Servicer, as applicable, advises such recipient of the
confidential nature of the information being disclosed, or (iii) any other
disclosure authorized by the Depositor.

      Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor and the Servicer the Trustee's Certification, substantially in the
form of Exhibit D attached hereto, evidencing the completeness of the Mortgage
Files, with any exceptions noted thereto.

      Section 2.03. Representations, Warranties and Covenants of the Depositor.

            (a) The Depositor hereby represents and warrants to the Servicer and
the Trustee as follows, as of the date hereof:

            (i) The Depositor is duly organized and is validly existing as a
      corporation in good standing under the laws of the State of Delaware and
      has full power and authority (corporate and other) necessary to own or
      hold its properties and to conduct its business as now conducted by it and
      to enter into and perform its obligations under this Agreement and the
      Sale Agreement.

            (ii) The Depositor has the full corporate power and authority to
      execute, deliver and perform, and to enter into and consummate the
      transactions contemplated by, this Agreement and the Sale Agreement and
      has duly authorized, by all necessary corporate action on its part, the
      execution, delivery and performance of this Agreement and the Sale
      Agreement; and this Agreement and the Sale Agreement, assuming the due
      authorization, execution and delivery hereof by the other parties hereto,
      constitutes a legal, valid and binding obligation of the Depositor,
      enforceable against the Depositor in accordance with its terms, subject,
      as to enforceability, to (i) bankruptcy, insolvency, reorganization,
      moratorium and other similar laws affecting creditors' rights generally
      and (ii) general principles of equity, regardless of whether enforcement
      is sought in a proceeding in equity or at law.

                                     - 42 -
<PAGE>

            (iii) The execution and delivery of this Agreement and the Sale
      Agreement by the Depositor, the consummation of the transactions
      contemplated by this Agreement and the Sale Agreement, and the fulfillment
      of or compliance with the terms hereof are in the ordinary course of
      business of the Depositor and will not (A) result in a material breach of
      any term or provision of the charter or by-laws of the Depositor or (B)
      materially conflict with, result in a violation or acceleration of, or
      result in a material default under, the terms of any other material
      agreement or instrument to which the Depositor is a party or by which it
      may be bound or (C) constitute a material violation of any statute, order
      or regulation applicable to the Depositor of any court, regulatory body,
      administrative agency or governmental body having jurisdiction over the
      Depositor; and the Depositor is not in breach or violation of any material
      indenture or other material agreement or instrument, or in violation of
      any statute, order or regulation of any court, regulatory body,
      administrative agency or governmental body having jurisdiction over it
      which breach or violation may materially impair the Depositor's ability to
      perform or meet any of its obligations under this Agreement.

            (iv) No litigation is pending, or, to the best of the Depositor's
      knowledge, threatened, against the Depositor that would materially and
      adversely affect the execution, delivery or enforceability of this
      Agreement and the Sale Agreement or the ability of the Depositor to
      perform its obligations under this Agreement and the Sale Agreement in
      accordance with the terms hereof.

            (v) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Depositor of, or compliance by the Depositor with, this
      Agreement and the Sale Agreement or the consummation of the transactions
      contemplated hereby, or if any such consent, approval, authorization or
      order is required, the Depositor has obtained the same. The Depositor
      hereby represents and warrants to the Trustee with respect to each
      Mortgage Loan as of the Closing Date, and following the transfer of the
      Mortgage Loans to it by the Seller, the Depositor had good title to the
      Mortgage Loans and the Mortgage Notes were subject to no offsets, claims,
      liens, mortgage, pledge, charge, security interest, defenses or
      counterclaims.

            (b) The representations and warranties of each Transferor with
respect to the related Mortgage Loans in the applicable Transfer Agreement,
which have been assigned to the Trustee hereunder, were made as of the date
specified in the applicable Transfer Agreement and brought forward to the
Closing Date pursuant to the related Bring Down Letter, except as otherwise
noted on Exhibit J. The representations and warranties of each Transferor with
respect to the Mortgage Loans contained in the Bring Down Letter were made as of
the Closing Date, except as otherwise noted on Exhibit J. The representations
and warranties of the Seller with respect to the Mortgage Loans contained in the
Sale Agreement were made as of the Closing Date. To the extent that any fact,
condition or event with respect to a Mortgage Loan constitutes a breach of both
(i) a representation or warranty of the applicable Transferor under the
applicable Transfer Agreement and (ii) a representation or warranty of the
Seller under the Sale Agreement, the obligations of the Seller under the Sale
Agreement shall be enforced against the Transferor or the Seller, as applicable,
as set forth in the Sale Agreement. The Trustee acknowledges that the Seller
shall have no obligation or liability with respect to any breach of a
representation or warranty made by it with respect to any related Mortgage
Loans, except as otherwise set forth in the Sale Agreement, if the fact,
condition or event constituting such breach also constitutes a breach of a
representation or warranty made by the related Transferor in the related
Transfer Agreement, without regard to whether the related Transferor fulfills
its contractual obligations in respect of such

                                     - 43 -
<PAGE>

representation or warranty. The Trustee also acknowledges that the Seller shall
have no obligation or liability with respect to any breach of a representation
or warranty made solely by the Transferors with respect to the Mortgage Loans,
without regard to whether the related Transferor fulfills its contractual
obligations in respect of such representation or warranty. The Trustee further
acknowledges that the Depositor shall have no obligation or liability with
respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under any
circumstances.

      In addition to the representations and warranties of the Transferors in
the Transfer Agreements that were brought forward to the Closing Date pursuant
to the Bring Down Letter, with respect to each Mortgage Loan, each Transferor
made certain additional covenants regarding such Mortgage Loan, as set forth in
the related Transfer Agreement. With respect to any breach of such additional
covenants that materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the Seller shall (1) use reasonable
efforts to enforce such covenant against the related Transferor and (2) if the
Seller successfully enforces any obligation of the related Transferor to
repurchase such Mortgage Loan, the Seller shall repurchase such Mortgage Loan in
accordance with this Section 2.03. If the Seller does not successfully enforce
the obligation, if any, of the Transferor to repurchase a Mortgage Loan with
respect to any breach of any such additional covenants, the Seller shall have no
obligation or right to repurchase or cure such Mortgage Loan.

            (c) Upon discovery by any of the Depositor, the Servicer or the
Trustee of a breach of any of such representations and warranties that adversely
and materially affects the value of the related Mortgage Loan, Prepayment
Charges or the interests of the Certificateholders, the party discovering such
breach shall give prompt written notice to the other parties. Within 90 days of
the discovery of such breach of any representation or warranty, the applicable
Transferor or the Seller, as applicable, shall either (a) cure such breach in
all material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Trustee at the Purchase Price or (c) within
the two year period following the Closing Date, substitute a Replacement
Mortgage Loan for the affected Mortgage Loan. In the event of discovery of a
breach of any representation and warranty of any Transferor or the Seller, the
Trustee's rights shall be enforced under the applicable Transfer Agreement and
the Sale Agreement for the benefit of Certificateholders. If a breach of the
representations and warranties set forth in the Transfer Agreement hereof exists
solely due to the unenforceability of a Prepayment Charge, the Trustee or the
other party having notice thereof shall notify the Servicer thereof and not seek
to enforce the repurchase remedy provided for herein unless such Mortgage Loan
is not current. In the event of a breach of the representations and warranties
with respect to the Mortgage Loans set forth in a Transfer Agreement, the
Trustee shall enforce the right of the Trust Fund to be indemnified for such
breach of representation and warranty. In the event that such breach relates
solely to the unenforceability of a Prepayment Charge, amounts received in
respect of such indemnity up to the amount of such Prepayment Charge shall be
distributed pursuant to Section 4.04(b)(i). As provided in the Sale Agreement,
if the Seller substitutes for a Mortgage Loan for which there is a breach of any
representations and warranties in the related Transfer Agreement which adversely
and materially affects the value of such Mortgage Loan and such substitute
mortgage loan is not a Replacement Mortgage Loan, under the terms of the Sale
Agreement, the Seller will, in exchange for such substitute Mortgage Loan, (i)
provide the applicable Purchase Price for the affected Mortgage Loan or (ii)
within two years of the Closing Date, substitute such affected Mortgage Loan
with a Replacement Mortgage Loan. Any such substitution shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit I and shall not be effected unless it is
within two years of the Startup Day. 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,

                                     - 44 -
<PAGE>

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 the Seller relating to a repurchase of a Mortgage Loan other than
in compliance with the terms of this Section 2.03 and the Sale Agreement, to the
extent that any such action causes (i) any federal or state tax to be imposed on
the Trust Fund or any REMIC provided for herein, including without limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup day" under Section 860G(d)(1) of
the Code, or (ii) any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificate is outstanding. In furtherance of the foregoing,
if the Transferor or the Seller, as applicable, is not a member of MERS and
repurchases a Mortgage Loan which is registered on the MERS System, the
Transferor or the Seller, as applicable, at its own expense and without any
right of reimbursement, shall cause MERS to execute and deliver an assignment of
the Mortgage in recordable form to transfer the Mortgage from MERS to the
Transferor or the Seller, as applicable, and shall cause such Mortgage to be
removed from registration on the MERS System in accordance with MERS' rules and
regulations.

      With respect to any Mortgage Loan repurchased by the Seller pursuant to
the Sale Agreement or by any Transferor pursuant to the applicable Transfer
Agreement, the principal portion of the funds received by the Servicer in
respect of such repurchase of a Mortgage Loan will be considered a Principal
Prepayment and shall be deposited in the Certificate Account pursuant to Section
3.05. Upon receipt by the Trustee of notice from the Servicer of receipt by the
Servicer of the full amount of the Purchase Price for a Deleted Mortgage Loan,
and upon receipt by the Trustee of the Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan and a Request for Release, the
Trustee shall release and reassign to the Seller or the applicable Transferor,
as applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Depositor, the Seller or the related Transferor, and the Trustee
shall have no further responsibility with respect to the Mortgage File relating
to such Deleted Mortgage Loan.

      With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the applicable Transferor or the Seller, as applicable, must
deliver to the Trustee the Mortgage File for the Replacement Mortgage Loan
containing the documents set forth in Section 2.01 along with a written
certification certifying as to the Mortgage Loan satisfying all requirements
under the definition of Replacement Mortgage Loan and the delivery of such
Mortgage File and containing the granting language set forth in Section 2.01;
and (ii) the Depositor will be deemed to have made, with respect to such
Replacement Mortgage Loan, each of the representations and warranties made by it
with respect to the related Deleted Mortgage Loan. The Trustee (or its
custodian) shall review the Mortgage File with respect to each Replacement
Mortgage Loan and certify to the Depositor that all documents required by
Section 2.01(A)-(B), (C) (if applicable), and (D)-(E) have been executed and
received.

      For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
Prepayment Charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
Prepayment Charges of all such Deleted Mortgage Loans. An amount equal

                                     - 45 -
<PAGE>

to the aggregate of the deficiencies described in the preceding sentence (such
amount, the "Substitution Adjustment Amount") plus an amount equal to any
unreimbursed costs, penalties and/or damages incurred by the Trust Fund in
connection with any violation relating to such Deleted Mortgage Loan of any
predatory or abusive lending law shall be remitted by the Seller to the Trustee
for deposit into the Certificate Account by the Seller on the Determination Date
for the Distribution Date relating to the Prepayment Period during which the
related Mortgage Loan became required to be purchased or replaced hereunder.

      Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.

      The Depositor shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Replacement Mortgage Loan or Replacement Mortgage Loans.
Upon such substitution by the Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall
be subject in all respects to the terms of this Agreement and the applicable
Sale Agreement, including all applicable representations and warranties thereof
included in the applicable Sale Agreement as of the date of substitution.

            (d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the Seller and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.

            (e) The Depositor shall deliver a copy of the Mortgage Loan Schedule
to the Servicer on the Closing Date.

            (f) The Depositor shall notify the Servicer and the Trustee when any
NIM Notes are issued and when such NIM Notes are no longer outstanding.

      Section 2.04. Representations and Warranties of the Servicer.

            (a) The Servicer hereby represents and warrants to the Depositor and
the Trustee as follows, as of the date hereof:

            (i) The Servicer is duly organized and is validly existing as a
      corporation in good standing under the laws of the State of Nevada and is
      duly authorized and qualified to transact any and all business
      contemplated by this Agreement to be conducted by the Servicer in any
      state in which a Mortgaged Property is located or is otherwise not
      required under applicable law to effect such qualification and, in any
      event, is in compliance with the doing business laws of any

                                     - 46 -
<PAGE>

      such state, to the extent necessary to ensure its ability to enforce each
      Mortgage Loan, to service the Mortgage Loans in accordance with the terms
      of this Agreement and to perform any of its other obligations under this
      Agreement in accordance with the terms hereof.

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

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

            (iv) The Servicer is an approved servicer of mortgage loans for
      Fannie Mae and is an approved servicer of mortgage loans for Freddie Mac.

            (v) No litigation is pending or, to the best of the Servicer's
      knowledge, threatened, against the Servicer that would materially and
      adversely affect the execution, delivery or enforceability of this
      Agreement or the ability of the Servicer to service the Mortgage Loans or
      to perform any of its other obligations under this Agreement in accordance
      with the terms hereof.

            (vi) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Servicer of, or compliance by the Servicer with, this
      Agreement or the consummation of the transactions contemplated hereby, or
      if any such consent, approval, authorization or order is required, the
      Servicer has obtained the same.

            (vii) The Servicer has fully furnished and will fully furnish (for
      the period it serviced the Mortgage Loans), in accordance with the Fair
      Credit Reporting Act and its implementing regulations, accurate and
      complete information (e.g., favorable and unfavorable) on its borrower

                                     - 47 -
<PAGE>

      credit files to Equifax, Experian and Trans Union Credit Information
      Company on a monthly basis.

      Section 2.05. Substitutions and Repurchases of Mortgage Loans that are not
"Qualified Mortgages".

      Upon discovery by 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 promptly
(and in any event within five Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee, upon the written direction of the Depositor, shall reconvey to the
Depositor 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 contained in Section 2.03.

      Section 2.06. Authentication and Delivery of Certificates.

      The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the
Authenticating Agent in authorized denominations evidencing ownership of the
entire Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform its duties set forth in this Agreement in
accordance with the provisions hereof.

      Section 2.07. REMIC Elections.

            (a) The Depositor hereby instructs and authorizes the Trustee to
make an appropriate election to treat each of the Upper Tier REMIC and the Lower
Tier REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns that are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.

            (b) The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Day" for purposes of the REMIC Provisions shall be
the Closing Date. Each REMIC's fiscal year shall be the calendar year.

      The Lower Tier REMIC shall consist of all of the assets of the Trust Fund
(other than (i) amounts distributable to the Class P Certificates pursuant to
Section 4.04(b)(i) hereof, (ii) the interests issued by the Lower Tier REMIC and
(iii) the grantor trusts described in Section 2.07 hereof. The Lower Tier REMIC
shall issue the Class LTA Interest, Class LTB-1 Interest, Class LTB-2 Interest,
Class LTB-3 Interest, Class LTB-4 Interest, Class LTB-5 Interest, Class LTM-1
Interest, Class LTM-2 Interest and Class LTX Interest which shall be designated
as regular interests of such REMIC and shall issue the Class

                                     - 48 -
<PAGE>

LTR Interest that shall be designated as the sole class of residual interest in
the Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have
the characteristics set forth in its definition.

      The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate on each REMIC Regular Interest (other
than the Uncertificated Class C Interest) and on the sole class of residual
interest in the Upper Tier REMIC shall be subject to a cap equal to the Net
Rate.

      The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.

            (c) The "tax matters person" with respect to each REMIC for purposes
of the REMIC Provisions shall be the beneficial owner of the Class R
Certificate; provided, however, that the Holder of a Class R Certificate, by its
acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each REMIC for
purposes of the REMIC Provisions. If there is more than one beneficial owner of
the Class R Certificate, the "tax matters person" shall be the Person with the
greatest percentage interest in the Class R Certificate and, if there is more
than one such Person, shall be determined under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.

            (d) It is intended that the rights of each Class of the Class A,
Class R, Class M and Class B Certificates to receive payments in respect of
Excess Interest shall be treated as a right in interest rate cap contracts
written by the Class C Certificateholders in favor of the holders of each Class
of the Class A, Class R, Class M and Class B Certificates and such shall be
accounted for as property held separate and apart from the regular interests in
the Upper Tier REMIC held by the holders of the Class A, Class M and Class B
Certificates and the residual interest in the Upper Tier REMIC held by the
holder of the Class R Certificate. For information reporting requirements, the
rights of the Class A, Class R, Class M and Class B Certificates to receive
payments in respect of Excess Interest shall be assumed to have zero value or a
de minimis value. This provision is intended to satisfy the requirements of
Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A, Class R, Class M and Class B Certificates receive payments
of Excess Interest, such amounts will be treated as distributed by the
Upper-Tier REMIC to the Class C Certificates pro rata in payment of the amounts
specified in Section 4.04(g) and then paid to the relevant Class of Certificates
pursuant to the related interest rate cap agreement.

            (e) The parties intend that the portion of the Trust Fund consisting
of the Uncertificated Class C Interest and the obligation of the holders of the
Class C Certificates to pay amounts of Excess Interest to the holders of the
Class A, Class R, Class M and Class B Certificates shall be treated as a
"grantor trust" under the Code, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the Trustee
shall (i) furnish or cause to be furnished to the holders of the Class C
Certificates information regarding their allocable share, if any, of the income
with respect to such grantor trust, (ii) file or cause to be filed with the
Internal Revenue Service Form 1041 (together with any necessary attachments) and
such other forms as may be applicable and (iii) comply with such information
reporting obligations with respect to payments from such grantor trust to

                                     - 49 -
<PAGE>

the holders of Class A, Class R, Class M, Class B and Class C Certificates as
may be applicable under the Code.

            (f) The parties intend that the portion of the Trust Fund consisting
of the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the Code, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class P Certificates information
regarding their allocable share of the income with respect to such grantor trust
and (ii) file or cause to be filed with the Internal Revenue Service Form 1041
(together with any necessary attachments) and such other forms as may be
applicable.

            (g) [RESERVED]

            (h) All payments of principal and interest at the Net Mortgage Rate
on each of the Mortgage Loans (other than payments distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received from the Mortgage
Loans shall be paid to the Lower Tier REMIC Regular Interests until the
principal balance of all such interests have been reduced to zero and any losses
allocated to such interests have been reimbursed. Any excess amounts shall be
distributed to the Class LTR Interest. On each Distribution Date, an amount
equal to 50% of the increase in the Overcollateralization Amount shall be
payable as a reduction of the principal amounts of the Lower Tier REMIC Marker
Classes (with such amount allocated among the Lower Tier REMIC Marker Classes so
that each Lower Tier REMIC Marker Class will have its principal reduced by an
amount equal to 50% of any increase in the Overcollateralization Amount that
results in a reduction in the principal balance of its Related Certificates) and
will be accrued and added to the principal balance of the Class LTX Interest.
All payments of scheduled principal and prepayments of principal on the Mortgage
Loans shall be allocated 50% to the Class LTX Interest and 50% to the Lower Tier
REMIC Marker Classes (with principal payments allocated to each of the Lower
Tier REMIC Marker Classes in an amount equal to 50% of the principal amounts
distributed to the Related Certificates in reduction of their principal
amounts). Notwithstanding the preceding sentence, an amount equal to the
principal payments that result in a reduction in the Overcollateralization
Amount shall be treated as payable entirely to the Class LTX Interest. Realized
Losses that are allocated to the Certificates shall be applied to the Lower Tier
REMIC Marker Classes and the Class LTX Interest so that after all distributions
have been made on each Distribution Date (i) the principal balance of each of
the Lower Tier REMIC Marker Classes is equal to 50% of the principal balance of
the Related Certificates and (ii) the principal balance of the Class LTX
Interest is equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralization Amount.
Each Lower Tier REMIC Marker Class shall be entitled to receive an amount equal
to 50% of all amounts distributed to the Related Certificates in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.

      If on any Distribution Date the Certificate Principal Balance of any Class
of Certificates is increased pursuant to the last sentence of the definition of
"Certificate Principal Balance", then there shall be an equivalent increase in
the principal amounts of the Lower Tier REMIC Regular Interests, with such
increase allocated (before the making of distributions and the allocation of
losses on the Lower Tier REMIC Regular Interests on such Distribution Date)
among the Lower Tier REMIC Regular Interests so that (i) each of the Lower Tier
Marker Classes has a principal balance equal to 50% of the principal balance of
the Related Certificates, (ii) the Class LTX Interest has a principal balance
equal to the sum of

                                     - 50 -
<PAGE>

(x) 50% of the aggregate Stated Principal Balance of the Mortgage Loans and (y)
50% of the Overcollateralization Amount.

            (i) In the event that any REMIC provided for herein 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 Servicer of its duties
and obligations set forth herein, the Servicer shall indemnify the Trustee and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of a Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of such Class R Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Servicer 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, (2)
for any Losses other than those arising out of a negligent performance by the
Servicer of its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders (in addition to payment of
principal and interest on the Certificates).

            (j) In the event that any REMIC provided for herein 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 Servicer and
the Trust Fund against any and all 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 Servicer, the Depositor, the
Trustee or the Holder of a Class R Certificate, as applicable, nor for any such
Losses resulting from misinformation provided by the Holder of such Class R
Certificate on which the Trustee has relied. The foregoing shall not be deemed
to limit or restrict the rights and remedies of the Holder of such Class R
Certificate now or hereafter existing at law or in equity. 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, (2) for any Losses other than those arising out of a negligent
performance by the Trustee of its duties and obligations set forth herein, and
(3) for any special or consequential damages to Certificateholders (in addition
to payment of principal and interest on the Certificates).

      Section 2.08. [RESERVED]

      Section 2.09. Covenants of the Servicer.

      The Servicer hereby covenants to each of the other parties to this
Agreement as follows:

            (a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;

            (b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor or the
Trustee, any Affiliate of the Depositor or the Trustee and prepared by the
Servicer pursuant to this Agreement will be inaccurate in any material respect,
provided,

                                     - 51 -
<PAGE>

however, that the Servicer shall not be responsible for inaccurate information
provided to it by third parties.

      Section 2.10. [RESERVED]

      Section 2.11. Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the Permitted Activities.

      Section 2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust Fund shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 or SFAS 140.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

      Section 3.01. Servicer to Service Mortgage Loans.

      For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with the Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. Notwithstanding anything in this Agreement to the contrary, the Servicer
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan which would cause any of the REMICs provided for herein to
fail to qualify as a REMIC or result in the imposition of any tax under Section
860G(a) or 860G(d) of the Code. The Servicer shall represent and protect the
interest of the Trust Fund in the same manner as it currently protects its own
interest in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan, but in any case not in any manner that is
a lesser standard than that provided in the first sentence of this Section 3.01.
Without limiting the generality of the foregoing, the Servicer, in its own name
or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, subordinations and all other comparable instruments, with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the

                                     - 52 -
<PAGE>

Depositor and/or the Trustee such documents requiring execution and delivery by
any or all of them as are necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans, to the extent that the Servicer is
not permitted to execute and deliver such documents pursuant to the preceding
sentence. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer. For purposes of this
Section 3.01, the Trustee hereby grants to the Servicer a limited power of
attorney to execute and file any and all documents necessary to fulfill the
obligations of the Servicer under this Section 3.01.

      Upon request of the Servicer, the Trustee shall furnish the Servicer with
any powers of attorney and other documents in form as provided to it necessary
or appropriate to enable the Servicer to service and administer the Mortgage
Loans. The Trustee shall not be responsible for and the Servicer shall indemnify
the Trustee for any action taken by the Servicer pursuant to the application of
any power of attorney. Notwithstanding anything contained herein to the
contrary, the Servicer shall not without the Trustee's written consent, hire or
procure counsel to represent the Trustee without indicating its representative
capacity.

      The Servicer shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.

      The Servicer shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.

      The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.

      The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any reasonable expenses incurred in connection with the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS System,
shall be subject to withdrawal by the Servicer from the Collection Account.

      With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:

            (a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan
is no higher than the Combined Loan-to-Value Ratio prior to such refinancing;

            (b) the interest rate for the loan evidencing the refinanced senior
lien is no more than 2.0% higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such refinancing; and

                                     - 53 -
<PAGE>

            (c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.

      Section 3.02. Servicing and Subservicing; Enforcement of the Obligations
of Servicer.

            (a) The Servicer may arrange for the subservicing of any Mortgage
Loan by a subservicer, which may be an Affiliate (each, a "subservicer")
pursuant to a subservicing agreement (each, a "Subservicing Agreement")
including, at the Servicer's option, if requested to do so by the Holder of the
Class C Certificate; provided, however, that (i) such subservicing arrangement
and the terms of the related subservicing agreement must provide for the
servicing of such Mortgage Loans in a manner consistent with the servicing
arrangements contemplated hereunder and (ii) that such agreement would not
result in a withdrawal or downgrading by any Rating Agency of the ratings of any
Certificates evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the Servicer shall remain obligated
and liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
the each subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer. The Servicer shall deliver to the Trustee
copies of all subservicing agreements. The Trustee shall have no obligations,
duties or liabilities with respect to a subservicer, including without
limitation, any obligation, duty or liability to monitor such subservicer or to
pay a subservicer's fees and expenses.

            (b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
related Mortgage Loans that are received by a subservicer regardless of whether
such payments are remitted by the subservicer to the Servicer.

            (c) The Servicer shall not permit a Subservicer to perform any
servicing responsibilities hereunder with respect to the Mortgage Loans unless
that Subservicer first agrees in writing with the Servicer to deliver an
Assessment of Compliance and an Accountant's Attestation in such manner and at
such times that permits that Servicer to comply with Section 3.17 of this
Agreement.

      Section 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.

      Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.

      Section 3.04. Trustee to Act as Servicer.

      Subject to Sections 6.04 and 7.02, in the event that the Servicer shall
for any reason no longer be the servicer hereunder (including by reason of an
Event of Default), the Trustee or its designee shall,

                                     - 54 -
<PAGE>

within a period of time not to exceed ninety (90) days from the date of notice
of termination or resignation, thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses arising out of any acts or omissions
of the predecessor servicer hereunder, (ii) obligated to make Advances or
Servicing Advances if it is prohibited from doing so by applicable law, (iii)
obligated to effectuate repurchases or substitutions of Mortgage Loans
hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv) responsible
for any expenses of the Servicer pursuant to Section 2.03 or (v) deemed to have
made any representations and warranties hereunder, including pursuant to Section
2.04 or the first paragraph of Section 6.02 hereof; provided, however that the
Trustee (subject to clause (ii) above) or its designee, in its capacity as the
successor servicer, shall immediately assume the terminated or resigning
Servicer's obligation to make Advances and Servicing Advances). No such
termination or resignation shall affect any obligation of the Servicer to pay
amounts owed under this Agreement and to perform its duties under this Agreement
until its successor assumes all of its rights and obligations hereunder. If the
Servicer shall for any reason no longer be a servicer (including by reason of
any Event of Default), the Trustee (or any other successor servicer) may, at its
option, succeed to any rights and obligations of the Servicer under any
subservicing agreement in accordance with the terms thereof; provided, however,
that the Trustee (or any other successor servicer) shall not incur any liability
or have any obligations in its capacity as servicer under a subservicing
agreement arising prior to the date of such succession unless it expressly
elects to succeed to the rights and obligations of the Servicer thereunder; and
the Servicer shall not thereby be relieved of any liability or obligations under
the subservicing agreement arising prior to the date of such succession. To the
extent any costs or expenses, including without limitation, Servicing Transfer
Costs incurred by the Trustee in connection with this Section 3.04 or Section
7.02, are not paid by the Servicer pursuant to this Agreement within 30 days of
the date of the Trustee's invoice thereof, such amounts shall be payable out of
the Certificate Account; provided that if the Servicer has been terminated by
reason of an Event of Default, the terminated servicer shall reimburse the Trust
Fund for any such expense incurred by the Trust Fund upon receipt of a
reasonably detailed invoice evidencing such expenses. If the Trustee is
unwilling or unable to act as servicer, the Trustee shall seek to appoint a
successor servicer that is eligible in accordance with the criteria specified in
this Agreement.

      The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer if the Servicer has been terminated by reason of an Event of Default,
deliver to the assuming party all documents and records relating to each
subservicing agreement and the Mortgage Loans then being serviced and otherwise
use its best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the assuming party.

      Section 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.

            (a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) subject to Section 3.01, extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 4.01, the Servicer
shall make any Advances on the related Mortgage Loan during the scheduled period
in accordance with the

                                     - 55 -
<PAGE>

amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards
set forth in Section 3.01, may also waive, modify or vary any term of such
Mortgage Loan (including modifications that would change the Mortgage Rate,
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as "forbearance"), provided,
however, that in determining which course of action permitted by this sentence
it shall pursue, the Servicer shall adhere to the standards of Section 3.01. The
Servicer's analysis supporting any forbearance and the conclusion that any
forbearance meets the standards of Section 3.01 shall be reflected in writing in
the Mortgage File.

            (b) The Servicer will not waive any Prepayment Charge or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership or other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to collect the Prepayment
Charge, or (iv) in the Servicer's reasonable judgment as described in Section
3.01 hereof, (x) such waiver relates to a default or a reasonably foreseeable
default, (y) such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and related Mortgage Loan and (z)
doing so is standard and customary in servicing similar Mortgage Loans
(including any waiver of a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is related to a default or a reasonably foreseeable
default), or (v) the collection of the Prepayment Charge or of a similar type of
prepayment premium would be considered "predatory" or "illegal" pursuant to
written guidance published by any applicable federal, state or local regulatory
authority having jurisdiction over such matters or has been challenged by any
such authority, or (vi) only to the extent that the Depositor has notified the
Servicer that there are no NIM Notes outstanding, there is a certified class
action in which a similar type of prepayment premium is being challenged. Except
as provided in the preceding sentence, in no event will the Servicer waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default. If the Servicer
waives or does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Servicer, other than as provided above, the Servicer shall deposit the amount of
such Prepayment Charge (or such portion thereof as had been waived for deposit)
into the Collection Account for distribution in accordance with the terms of
this Agreement.

            (c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.

            (d) The Servicer shall establish and initially maintain, on behalf
of the Certificateholders, a Collection Account. The Servicer shall deposit into
such Collection Account daily,

                                     - 56 -
<PAGE>

within two Business Days of receipt thereof, in immediately available funds, the
following payments and collections received or made by it on and after the
Cut-off Date with respect to the Mortgage Loans:

            (i) all payments on account of principal, including Principal
      Prepayments, on the Mortgage Loans, other than principal due on the
      Mortgage Loans on or prior to the Cut-off Date;

            (ii) all payments on account of interest on the Mortgage Loans net
      of the Servicing Fee permitted under Section 3.15, other than (x) interest
      due on the Mortgage Loans on or prior to the Cut-off Date and (y)
      Prepayment Interest Excess;

            (iii) all Liquidation Proceeds, other than proceeds to be applied to
      the restoration or repair of the Mortgaged Property or released to the
      Mortgagor in accordance with the Servicer's normal servicing procedures;

            (iv) all Subsequent Recoveries;

            (v) all Compensating Interest;

            (vi) any amount required to be deposited by the Servicer pursuant to
      Section 3.05(g) in connection with any losses on Permitted Investments;

            (vii) any amounts required to be deposited by the Servicer pursuant
      to Section 3.10 hereof;

            (viii) all Advances made by the Servicer pursuant to Section 4.01;

            (ix) all Prepayment Charges; and

            (x) any other amounts required to be deposited hereunder.

      The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Charges) if collected, and any Prepayment Interest Excess need not be
remitted by the Servicer. Rather, such fees and charges may be retained by the
Servicer as additional servicing compensation. In the event that the Servicer
shall remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 3.08 hereof, it may at any time withdraw or
direct the Trustee, or such other institution maintaining the Collection
Account, to withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds
deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.

      The Servicer shall give notice to the Trustee of the location of the
Collection Account maintained by it when established and prior to any change
thereof. Not later than twenty days after each Distribution Date, the Servicer
shall forward to the Trustee and the Depositor the most current available bank

                                     - 57 -
<PAGE>

statement for the Collection Account. Copies of such statement shall be provided
by the Trustee to any Certificateholder and to any Person identified to the
Trustee as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trustee.

            (e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:

            (i) the aggregate amount withdrawn by the Servicer from the
      Collection Account for deposit in the Certificate Account;

            (ii) the Purchase Price and any Substitution Adjustment Amount;

            (iii) any amount required to be deposited by the Trustee pursuant to
      Section 3.05(g) in connection with any losses on Permitted Investments;
      and

            (iv) the Optional Termination Amount paid by the winning bidder at
      the Auction or by the Servicer pursuant to Section 9.01.

      Any amounts received by the Trustee prior to 1:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee) which are required to be deposited in the Certificate Account by
the Servicer may be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. If the Servicer fails to remit any funds due by the time designated
herein, the Servicer shall pay to the Trustee, for its own account, interest
accrued on such funds at the prime rate as set forth in The Wall Street Journal
from and including the applicable due date, to but excluding the day such funds
are paid to the Trustee. In the event that the Servicer shall remit any amount
not required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time withdraw such amount from the
Certificate Account, any provision herein to the contrary notwithstanding. All
funds deposited in the Certificate Account shall be held by the Trustee in trust
for the Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer. The Trustee shall give notice to the Servicer of the location of the
Certificate Account maintained by it when established and prior to any change
thereof.

            (f) Each institution that maintains the Collection Account shall,
and each institution that maintains the Certificate Account may but shall not be
required to, invest the funds in each such account, as directed by the Servicer
or the Trustee, as applicable, in writing, in Permitted Investments, which shall
mature not later than (i) in the case of the Collection Account the Business Day
preceding the Servicer Remittance Date (except that if such Permitted Investment
is an obligation of the institution that maintains such Collection Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than the Servicer Remittance Date) and (ii) in the case of the Certificate
Account, the Business Day immediately preceding the first Distribution Date that
follows the date of such investment (except that if such Permitted Investment is
an obligation of the institution that maintains such Certificate Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its

                                     - 58 -
<PAGE>

maturity. All such Permitted Investments shall be made in the name of the
Trustee for the benefit of the Certificateholders. All income and gain net of
any losses realized from amounts on deposit in the Collection Account shall be
for the benefit of the Servicer as servicing compensation and shall be remitted
to it monthly as provided herein. The amount of any losses incurred in the
Collection Account in respect of any such investments shall be deposited by the
Servicer in the Collection Account out of the Servicer's own funds immediately
as realized. All income and gain net of any losses realized from amounts on
deposit in the Certificate Account shall be for the benefit of the Trustee and
shall be remitted to or withdrawn by it monthly as provided herein. The amount
of any losses incurred in the Certificate Account in respect of any such
investments shall be deposited by the Trustee in the Certificate Account out of
the Trustee's own funds immediately as realized.

      Section 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

      To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.

      Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in
the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 9.01 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.

      Section 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.

      Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.

      The Servicer may from time to time provide the Depositor, and any Person
designated by the Depositor, with reports and information regarding the Mortgage
Loans, including without limitation, information requested by the Depositor or
an originator of the Mortgage Loans for required institutional risk control.

                                     - 59 -
<PAGE>

      Section 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.

            (a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:

            (i) to pay to the Servicer (to the extent not previously paid to or
      withheld by the Servicer), as servicing compensation in accordance with
      Section 3.15, that portion of any payment of interest that equals the
      Servicing Fee for the period with respect to which such interest payment
      was made, and, as additional servicing compensation, those other amounts
      set forth in Section 3.15;

            (ii) to reimburse the Servicer (or the Trustee as successor
      servicer) for Advances made by it (or to reimburse the Advance Financing
      Person for Advances made by it) with respect to the Mortgage Loans, such
      right of reimbursement pursuant to this subclause (ii) being limited to
      amounts received on particular Mortgage Loan(s) (including, for this
      purpose, Liquidation Proceeds) that represent late recoveries of payments
      of principal and/or interest on such particular Mortgage Loan(s) in
      respect of which any such Advance was made;

            (iii) to reimburse the Servicer for any Non-Recoverable Advance
      previously made and any Non-Recoverable Servicing Advances previously made
      to the extent that, in the case of Non-Recoverable Servicing Advances,
      reimbursement therefor constitutes "unanticipated expenses" within the
      meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii);

            (iv) to pay to the Servicer earnings on or investment income with
      respect to funds in or credited to the Collection Account;

            (v) to reimburse the Servicer from Insurance Proceeds for Insured
      Expenses covered by the related Insurance Policy;

            (vi) [reserved];

            (vii) to pay the Servicer (or the Trustee as successor servicer) any
      unpaid Servicing Fees and to reimburse it for any unreimbursed Servicing
      Advances (to the extent that reimbursement for Servicing Advances would
      constitute an "unanticipated expense" within the meaning of Treasury
      Regulation Section 1.860-1(b)(3)(ii)), the Servicer's right to
      reimbursement of Servicing Advances pursuant to this subclause (vi) with
      respect to any Mortgage Loan being limited to amounts received on
      particular Mortgage Loan(s)(including, for this purpose, Liquidation
      Proceeds and purchase and repurchase proceeds) that represent late
      recoveries of the payments for which such advances were made pursuant to
      Section 3.01 or Section 3.06;

            (viii) to pay to the Depositor or the Servicer, as applicable, with
      respect to each Mortgage Loan or property acquired in respect thereof that
      has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
      received thereon and not taken into account in determining the related
      Stated Principal Balance of such repurchased Mortgage Loan;

            (ix) to reimburse the Servicer, the Trustee or the Depositor for
      expenses incurred by any of them in connection with the Mortgage Loans or
      Certificates and reimbursable pursuant to Section 3.04, Section 3.25 or
      Section 6.03 hereof provided that reimbursement therefor would

                                     - 60 -
<PAGE>

      constitute "unanticipated" expenses within the meaning of Treasury
      Regulation Section 1.860G-1(b)(3)(ii);

            (x) to reimburse the Trustee for enforcement expenses reasonably
      incurred in respect of a breach or defect giving rise to the purchase
      obligation in Section 2.03 that were incurred in the Purchase Price of the
      Mortgage Loans including any expenses arising out of the enforcement of
      the purchase obligation; provided that any such expenses will be
      reimbursable under this subclause (x) only to the extent that such
      expenses would constitute "unanticipated expenses" within the meaning of
      Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
      REMICs provided for herein;

            (xi) to pay the Servicer any unpaid Servicing Fees for any Mortgage
      Loan upon such Mortgage Loan being charged off and upon termination of the
      obligations of the Servicer;

            (xii) to withdraw pursuant to Section 3.05 any amount deposited in
      the Collection Account and not required to be deposited therein; and

            (xiii) to clear and terminate the Collection Account upon
      termination of this Agreement pursuant to Section 9.01 hereof.

      In addition, the Servicer will use commercially reasonable efforts to
cause to be withdrawn from the Collection Account no later than 2:30 p.m.
Eastern Time, but in any case no later than 4:00 p.m. Eastern Time on the
Servicer Remittance Date, the Interest Funds and the Principal Funds (other than
amounts payable to the Trustee), to the extent on deposit, and such amount shall
be deposited in the Certificate Account; provided, however, if the Trustee does
not receive such Interest Funds and Principal Funds on the Servicer Remittance
Date, the Servicer shall pay, out of its own funds, interest on such amount at a
rate equal to the "prime rate" as published by The Wall Street Journal at such
time for each date or part thereof.

      The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.

      The Servicer shall provide written notification to the Trustee on or prior
to the next succeeding Servicer Remittance Date upon making any withdrawals from
the Collection Account pursuant to subclauses (iii) and (vii) above.

      Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.

            (b) The Trustee shall withdraw funds from the Certificate Account
for distribution to the Certificateholders in the manner specified in this
Agreement (and shall withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to this Agreement). In addition,
the Trustee may from time to time make withdrawals from the Certificate Account
for the following purposes:

            (i) to withdraw pursuant to Section 3.05 any amount deposited in the
      Certificate Account and not required to be deposited therein;

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<PAGE>

            (ii) to clear and terminate the Certificate Account upon termination
      of the Agreement pursuant to Section 9.01 hereof (after paying all amounts
      necessary to the Trustee or the Servicer in connection with any such
      termination);

            (iii) to pay to the Trustee (or any custodian) for any fees,
      expenses and indemnification reimbursable pursuant to this Agreement,
      including without limitation Sections 3.04, 6.03, 8.05 and 8.06 hereof;
      and

            (iv) to pay to the Trustee earnings on or investment income with
      respect to funds in or credited to the Certificate Account.

      Section 3.09. [RESERVED]

      Section 3.10. [RESERVED]

      Section 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.

      When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause that would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law. In such event, the Servicer shall make
reasonable efforts to enter into an assumption and modification agreement with
the Person to whom such property has been or is about to be conveyed, pursuant
to which such Person becomes liable under the Mortgage Note and, unless
prohibited by applicable law or the Mortgage, the Mortgagor remains liable
thereon. If the foregoing is not permitted under applicable law, the Servicer is
authorized to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note. In
addition to the foregoing, the Servicer shall not be required to enforce any
"due-on-sale" clause if in the reasonable judgment of the Servicer, entering
into an assumption and modification agreement with a Person to whom such
property shall be conveyed and releasing the original Mortgagor from liability
would be in the best interests of the Certificateholders. The Mortgage Loan, as
assumed, shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement
(indicating the Mortgage File to which it relates), which copy shall be added by
the Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the Monthly
Payment on the related Mortgage Loan shall not be changed but shall remain as in
effect immediately prior to the assumption or substitution, the stated maturity
or outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be

                                     - 62 -
<PAGE>

deferred or forgiven. Any fee collected by the Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement shall
be retained by or paid to the Servicer as additional servicing compensation.

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

      Section 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds; Special Loss Mitigation.

            (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that it is contemplating
acquiring in foreclosure or by deed-in-lieu of foreclosure is located within a
one-mile radius of any site with environmental or hazardous waste risks known to
the Servicer, the Servicer will, prior to acquiring the Mortgaged Property,
consider such risks and only take action in accordance with Accepted Servicing
Practices.

      With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of itself and the Certificateholders for the period
prior to the sale of such REO Property. The Servicer or an Affiliate thereof may
receive usual and customary real estate referral fees for real estate brokers in
connection with the listing and disposition of REO Property. The Servicer shall
prepare a statement with respect to each REO Property that has been rented
showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Servicer to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections

                                     - 63 -
<PAGE>

1445, 6050J and 6050P of the Code by preparing and filing such tax and
information returns, as may be required.

      In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, obtain, in accordance with
applicable procedures for obtaining an automatic extension of the grace period,
more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee shall have been supplied with an Opinion of Counsel (such Opinion of
Counsel not to be an expense of the Trustee), to the effect that the holding by
the Trust Fund of such Mortgaged Property subsequent to such three-year period
or extension will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be held, rented (or allowed to continue to be
rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged 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 or any
REMIC provided for herein to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged under section 860G(c) of
the Code or otherwise, unless the Servicer or the Depositor has agreed to
indemnify and hold harmless the Trustee and the Trust Fund with respect to the
imposition of any such taxes.

      The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.

      The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.

      The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing

                                     - 64 -
<PAGE>

Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse
the Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or
this Section 3.12; third, to any Prepayment Charges and then to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on the
Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fourth, as a recovery of principal of the Mortgage Loan.

            (b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.

            (c) [RESERVED]

            (d) With respect to such of the Mortgage Loans as come into and
continue in default, the Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 3.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (provided that the Servicer has
determined that no net recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property), (iii) take a deed in lieu
of foreclosure, (iv) accept a short sale or short refinance; (v) arrange for a
repayment plan, or (vi) agree to a modification of such Mortgage Loan. As to any
Mortgage Loan that becomes 120 days delinquent, the Servicer shall have obtained
or shall obtain a broker's price opinion, the cost of which will be reimbursable
as a Servicing Advance. After obtaining the broker's price opinion, the Servicer
will determine, in its reasonable business judgment, whether a net recovery is
possible through foreclosure proceedings or other liquidation of the related
Mortgage Property. If the Servicer determines that no such recovery is possible,
it must charge off the related Mortgage Loan at the time it becomes 180 days
delinquent. Once a Mortgage Loan has been charged off, the Servicer will
discontinue making Advances, the Servicer will not be entitled to Servicing Fees
(except as provided below) with respect to such Mortgage Loan, and the Mortgage
Loan will be treated as a Liquidated Mortgage Loan. If the Servicer determines
that such net recovery is possible through foreclosure proceedings or other
liquidation of the related Mortgaged Property on a Mortgage Loan that becomes
180 days delinquent, the Servicer may continue making Advances, and the Servicer
will be required to notify the Trustee of such decision.

            (e) Any Mortgage Loan that is charged off, pursuant to (d) above,
may continue to be serviced by the Servicer for the Certificateholders using
specialized collection procedures (including foreclosure, if appropriate). The
Servicer will be entitled to Servicing Fees and reimbursement of expenses in
connection with such Mortgage Loans after the date of charge off, only to the
extent of funds available from any recoveries on any such Mortgage Loans. Any
such Mortgage Loans serviced in accordance with the specialized collection
procedures shall be serviced for approximately six months. Any net recoveries
received on such Mortgage Loans during such six month period will be treated as
Subsequent Recoveries. On the date which is six months after the date on which
the Servicer begins servicing such Mortgage Loans using the specialized
collection procedures, unless specific net recoveries are anticipated by the
Servicer on a particular Mortgage Loan, such charged off loan will be released
to the majority holder of the Class C Certificates and thereafter, (i) the
majority holder of the Class C Certificates, as identified with contact
information in writing to the Servicer by the Depositor, will be entitled to any
amounts subsequently received in respect of any such released loans, subject to
the Servicer's fees described below, (ii) the majority holder of the Class C
Certificates may designate any servicer to service any such released loan, (iii)
the majority holder of the Class C Certificates may sell any such released loan
to a third party and (iv) to the extent the servicing of such charged off loan
is not

                                     - 65 -
<PAGE>

transferred from the Servicer, the servicing of such charged off loan and
the fees therefore shall be governed by the most current servicing agreement
between the Servicer and the Seller.

      Section 3.13. Trustee to Cooperate; Release of Mortgage Files.

      Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its custodian by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its custodian
shall promptly release the related Mortgage File to the Servicer, the cost of
which may be charged to the Servicer by the Trustee, and the Servicer is
authorized to cause the removal from the registration on the MERS System of any
such Mortgage if applicable, and the Servicer, on behalf of the Trustee shall
execute and deliver the request for reconveyance, deed of reconveyance or
release or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage together with the Mortgage Note with written evidence of cancellation
thereon. Expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be chargeable to the Mortgagor to the extent
permitted by law, and otherwise to the Trust Fund to the extent such expenses
constitute "unanticipated expenses" within the meaning of Treasury Regulations
Section 1.860G-(1)(b)(3)(ii). From time to time and as shall be appropriate for
the servicing or foreclosure of any Mortgage Loan, including for collection
under any policy of flood insurance, any fidelity bond or errors or omissions
policy, or for the purposes of effecting a partial release of any Mortgaged
Property from the lien of the Mortgage or the making of any corrections to the
Mortgage Note or the Mortgage or any of the other documents included in the
Mortgage File, the Trustee or its custodian shall, upon delivery to the Trustee
or its custodian of a Request for Release in the form of Exhibit I signed by a
Servicing Officer, release the Mortgage File to the Servicer, and the cost of
delivery of the Mortgage File may be charged to the Servicer by the Trustee.
Subject to the further limitations set forth below, the Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee or its
custodian when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account.

      Each Request for Release may be delivered to the Trustee or its custodian
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its custodian shall mutually agree. The Trustee or
its custodian shall release the related Mortgage File(s) within four Business
Days of receipt of a properly completed Request for Release pursuant to clauses
(i), (ii) or (iii) above. Receipt of a properly completed Request for Release
shall be authorization to the Trustee or its custodian to release such Mortgage
Files, provided the Trustee or its custodian has determined that such Request
for Release has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an authorized Servicing Officer
of the Servicer, and so long as the Trustee or its custodian complies with its
duties and obligations under this Agreement. If the Trustee or its custodian is
unable to release the Mortgage Files within the period previously specified, the
Trustee or its custodian shall immediately notify the Servicer indicating the
reason for such delay. The Servicer shall not pay penalties or damages due to
the Trustee's or its designee's negligent failure to release the related
Mortgage File or the Trustee's or its designee's negligent failure to execute
and release documents in a timely manner, and such amounts shall be Servicer
Advances.

      On each day that the Servicer remits to the Trustee or its custodian
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its custodian a

                                     - 66 -
<PAGE>

summary of the total number of such Requests for Releases requested on such day
by the same method as described in such clauses (ii) and (iii) above.

      If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
may deliver or cause to be delivered to the Trustee or its custodian, for
signature, as appropriate or on behalf of the Trustee, execute any court
pleadings, requests for trustee's sale or other documents necessary to
effectuate such foreclosure or any legal action brought to obtain judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a
deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or its custodian to be returned to the Trustee or its custodian promptly
after possession thereof shall have been released by the Trustee or its
custodian unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account, and the Servicer shall have delivered to the Trustee or its custodian a
Request for Release in the form of Exhibit I or (ii) the Mortgage File or
document shall have been delivered to an attorney or to a public trustee or
other public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
and the Servicer shall have delivered to the Trustee or its custodian an
Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.

      Section 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.

      All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trust Fund, subject to the applicable provisions
of this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or in any Escrow Account, or any funds that otherwise are or may become
due or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage Loan, except, however, that the Servicer shall be entitled to set off
against and deduct from any such funds any amounts that are properly due and
payable to the Servicer under this Agreement.

      Section 3.15. Servicing Compensation.

      As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.

      Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property) and similar fees
payable by the Mortgagor, Prepayment Interest Excess, and all

                                     - 67 -
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income and gain net of any losses realized from Permitted Investments in the
Collection Account shall be retained by the Servicer to the extent not required
to be deposited in the Collection Account pursuant to Sections 3.05, or 3.12(a)
hereof. 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 in this Agreement. In no
event shall the Trustee be liable for any Servicing Fee or for any differential
between the Servicing Fee and the amount necessary to induce a successor
servicer to act as successor servicer under this Agreement.

      Section 3.16. Access to Certain Documentation.

      The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, as
applicable, access to the documentation regarding the Mortgage Loans required by
applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices of the Servicer designated by it provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access. Nothing in this Section shall limit the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.

      Section 3.17. Annual Statement as to Compliance.

      Not later than (a) March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 3.20 on behalf of the Trust, by April 15 of each calendar
year (or if such day is not a Business Day, the immediately succeeding Business
Day), the Servicer shall deliver to the Trustee and the Depositor, an Officers'
Certificate in the form attached hereto as Exhibit S stating, as to each
signatory thereof, that (i) a review of the activities of such Servicer during
the preceding calendar year and of the performance of such Servicer 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, such Servicer has fulfilled
all its obligations under this Agreement in all material respects throughout
such year or a portion thereof, or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof. With respect to any Subservicer
that meets the criteria of Item 1108(a)(2)(i) through (iii) of Regulation AB,
the related Servicer shall deliver, on behalf of that Subservicer, the Officer's
Certificate set forth in this Section 3.17 as and when required with respect to
such Subservicer.

      Section 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.

            (a) Not later than (i) March 12 of each calendar year (other than
the calendar year during which the Closing Date occurs) or (ii) with respect to
any calendar year during which an annual report on Form 10-K is not required to
be filed pursuant to Section 3.20 on behalf of the Trust, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall deliver to the Trustee
and the Depositor an officer's assessment of its compliance with the Servicing
Criteria during the preceding calendar year as required by

                                     - 68 -
<PAGE>

Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB (the
"Assessment of Compliance"), which assessment shall be substantially in the form
of Exhibit P hereto.

            (b) Not later than (i) March 12 of each calendar year (other than
the calendar year during which the Closing Date occurs) or (ii) with respect to
any calendar year during which an annual report on Form 10-K is not required to
be filed pursuant to Section 3.20 on behalf of the Trust, April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall cause a nationally or
regionally recognized firm of independent registered public accountants (who may
also render other services to any Servicer, the Seller or any affiliate thereof)
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee and the Depositor that attests to and reports
on the assessment of compliance provided by such Servicer pursuant to Section
3.18(a) (the "Accountant's Attestation"). Such Accountant's Attestation shall be
in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act.

            (c) The Servicer shall deliver on behalf of any Subservicer and each
Subcontractor (unless, in the case of any Subcontractor, the Depositor has
notified the Servicer and the Trustee in writing that such compliance statement
is not required) not later than March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) with respect to any calendar
year during which the Trust's annual report on Form 10-K is required to be filed
in accordance with the Exchange Act and the rules and regulations of the
Commission, to the Trustee and the Depositor an Assessment of Compliance, which
assessment shall be substantially in the form of Exhibit P hereto. The Servicer
shall deliver on behalf of any Subservicer (other than the calendar year during
which the Closing Date occurs) with respect to any calendar year during which
the Trust's annual report on Form 10-K is not required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, by April
15 of each calendar year (or, in each case, if such day is not a Business Day,
the immediately succeeding Business Day) to the Trustee and the Depositor an
Assessment of Compliance, which assessment shall be substantially in the form of
Exhibit P hereto.

            (d) Not later than March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) with respect to any calendar
year during which the Trust s annual report on Form 10-K is required to be filed
in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer shall cause each Subservicer and each Subcontractor
(unless, in the case of any Subcontractor, the Depositor has notified the
Trustee and Servicer in writing that such compliance statement is not required)
to deliver to the Trustee and the Depositor an Accountant s Attestation by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance pursuant to Section 3.18(c) above.  Other than the
calendar year during which the Closing Date occurs, with respect to any calendar
year during which the Trust s annual report on Form 10-K is not required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, not later than April 15 of each calendar year (or, in each case, if
such day is not a Business Day, the immediately succeeding Business Day), the
Servicer shall cause each Subservicer to deliver to the Trustee and the
Depositor an Accountant s Attestation by a registered public accounting firm
that attests to, and reports on, the Assessment of Compliance pursuant to
Section 3.18(c) above.

            (e) Not later than, with respect to any calendar year during which
the Trust's annual report on Form 10K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, 15 calendar
days before the date on which the Trust's annual report on Form 10-K with
respect to the transactions contemplated by this Agreement is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission (or, in each case, if such day is not a Business Day, the immediately
preceding Business Day), the Trustee shall deliver to the Depositor and the
Servicer an Assessment of Compliance with regard to the Servicing Criteria
applicable to the Trustee during the preceding calendar year, which assessment
shall be substantially in the form of Exhibit P hereto.

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<PAGE>

            (f) Not later than, with respect to any calendar year during which
the Trust's annual report on Form 10K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, 15 calendar
days before the date on which the Trust's annual report on Form 10-K with
respect to the transactions contemplated by this Agreement is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission (or, in each case, if such day is not a Business Day, the immediately
preceding Business Day), the Trustee shall deliver to the Depositor and the
Servicer an Accountant's Attestation by a registered public accounting firm that
attests to, and reports on, the Assessment of Compliance pursuant to Section
3.18(e) above.

            (g) Not later than, with respect to any calendar year during which
the Trust's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, 15
calendar days before the date on which the Trust's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission (or, in each case, if such day is not a Business
Day, the immediately preceding Business Day), the Depositor shall cause each
custodian, including the Custodian, to deliver to the Depositor, the Servicer
and the Trustee an Assessment of Compliance with regard to the Servicing
Criteria applicable to such custodian during the preceding calendar year, which
assessment shall be substantially in the form of Exhibit P hereto.

            (h) Not later than March 12 (or, in each case, if such day is not a
Business Day, the immediately succeeding Business Day), of any calendar year
(other than the calendar year during which the Closing Date occurs) during which
the Trust's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the
Depositor shall cause each Custodian to deliver to the Depositor, the Servicer
and the Trustee an Accountant's Attestation by a registered public accounting
firm that attests to, and reports on, the Assessment of Compliance pursuant to
Section 3.18(g) above.

            (i) The Servicer agrees to indemnify and hold harmless each of the
Depositor and the Trustee and each Person, if any, who "controls" the Depositor
or the Trustee within the meaning of the Securities Act and their respective
officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of such Servicer or
any related Subservicer or Subcontractor to deliver or cause to be delivered
when required any Assessment of Compliance or Accountant's Attestation required
of it pursuant to Section 3.18, as applicable, or (ii) any material misstatement
or omission contained in any Assessment of Compliance provided on its behalf
pursuant to Section 3.18, as applicable.

            (j) The Trustee agrees to indemnify and hold harmless the Depositor
and the Servicer and each Person, if any, who "controls" the Depositor or the
Servicer within the meaning of the Securities Act and its officers, directors
and affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses that such Person may sustain arising out of third
party claims based on (i) the failure of the Trustee to deliver when required
any Assessment of Compliance required of it pursuant to Section 3.18 or (ii) any
material misstatement or omission contained in any Assessment of Compliance
provided on its behalf pursuant to Section 3.18; provided, however, that the
failure of the Trustee to deliver an Accountant's Attestation when required
under Section 3.18(f), will be deemed to be an event of default and may subject
the Trustee to removal pursuant to Section 8.08.

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<PAGE>

            (k) Copies of such Assessments of Compliance and Accountant's
Attestations shall be available on the Trustee's website www.etrustee.net to any
Certificateholder, provided such statement is delivered to the Trustee. The
initial Assessments of Compliance and Accountant's Attestations required
pursuant to this Section 3.18 shall be delivered to the Trustee, and the
Depositor, as applicable, by each party no later than March 12, 2007.

            (l) Each of the parties hereto acknowledges and agrees that the
purpose of this Section 3.18 is to facilitate compliance by the Seller and the
Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that the
parties' obligations hereunder will be supplemented and modified as necessary to
be consistent with any such amendments, interpretive advice or guidance,
convention or consensus among active participants in the asset-backed securities
markets, advice of counsel, or otherwise in respect of the requirements of
Regulation AB and the parties shall comply with requests made by the Seller or
the Depositor for delivery of additional or different information as the Seller
or the Depositor may determine in good faith is necessary to comply with the
provisions of Regulation AB, provided that such information is available to such
party without unreasonable effort or expense and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made in
accordance with Section 10.01 without the consent of the Certificateholders, and
may result in a change in the reports filed by the Trustee on behalf of the
Trust under the Exchange Act.

      Section 3.19. [RESERVED]

      Section 3.20. Periodic Filings.

      As set forth on Schedule X hereto, for so long as the Trust is subject to
the Exchange Act reporting requirements, no later than the end of business on
the 2nd Business Day after the occurrence of an event requiring disclosure on
Form 8K (a "reportable event") (i) the Depositor, the Seller or the Servicer
shall have timely notified the Trustee of an item reportable on a Form 8-K
(unless such item is specific to the Trustee, in which case the Trustee will be
deemed to have notice) and (ii) shall have delivered to the Trustee no later
than two Business Days prior to the filing deadline for such Form 8-K, all
information, signatures, data, and exhibits required to be provided or filed
with such Form 8-K in a word format agreed upon by the Trustee and Depositor,
Seller or Servicer. The Trustee shall not be responsible for determining what
information is required to be filed on a Form 8-K in connection with the
transactions contemplated by this Agreement (unless such information is specific
to the Trustee, in which case the Trustee will be responsible for consulting
with the Depositor [or Servicer] in making such a determination) or what events
shall cause a Form 8-K to be required to be filed (unless such event is specific
to the Trustee, in which case the Trustee will be responsible for consulting
with the Depositor [or Servicer] before causing such Form 8-K to be filed) and
shall not be liable for any late filing of a Form 8-K in the event that it does
not receive all information, data, signatures and exhibits required to be
provided or filed on or prior to the second Business Day prior to the applicable
filing deadline. After preparing the Form 8-K on behalf of the Depositor, the
Trustee shall, if required, forward electronically a draft copy of the Form 8-K
to the Depositor and the Servicer for review. No later than the end of business
on the 3rd business day after the event requiring the filing of Form 8-K, a duly
authorized representative of the Servicer shall sign the Form 8-K and return an
electronic or fax copy of such signed Form 8-K (with an original executed hard
copy to follow by overnight mail) to the Trustee and the Trustee shall file such
Form 8-K within two business days . If a Form 8-K cannot be filed on time or if
a previously filed Form 8-K needs to be amended, the Trustee will follow the
procedures set forth in this Agreement. After filing with the Commission, the
Trustee will, pursuant to this Agreement, make available on its internet

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<PAGE>

website a final executed copy of each Form 8-K. The Trustee will have no
obligation to prepare, execute or file such Form 8-K or any liability with
respect to any failure to properly prepare, execute or file such Form 8-K
resulting from the Trustee's inability or failure to obtain or receive any
information needed to prepare, arrange for execution or file such Form 8-K
within the time frames required by this paragraph, not resulting from its own
negligence, bad faith or willful misconduct.

      Within 15 days after each Distribution Date, the Trustee shall, on behalf
of the Trust and 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 10-D with (1) a copy of the report to the
Certificateholders for such Distribution Date as an exhibit thereto. Any other
information provided to the Trustee by the Servicer or Depositor to be included
in Form 10-D shall be determined and prepared by and at the direction of the
Depositor pursuant to the following paragraph and the Trustee will have no duty
or liability for any failure hereunder to determine or prepare any additional
information on Form 10-D ("Additional Form 10-D Disclosure") as set forth in the
next paragraph.

      As set forth in Schedule Y hereto, within 5 calendar days after the
related Distribution Date (i) the parties hereto, as applicable, will be
required to provide to the Depositor and the Servicer, to the extent known to
such party, any Additional Form 10-D Disclosure (including any breaches of pool
asset representations and warranties or transaction covenants of which the party
has written notice and which has not been included on the monthly distribution
report for the period), if applicable, and (ii) the Depositor, to the extent it
deems necessary, forward to the Trustee in EDGAR-compatible form, or in such
other form as otherwise agreed upon by the Trustee and the Depositor, the form
and substance of the Additional Form 10-D Disclosure by the 8th calendar day
after the distribution date. The Depositor will be responsible for any
reasonable fees and expenses incurred by the Trustee in connection with
including any Additional Form 10-D Disclosure on Form 10-D pursuant to this
paragraph.

      After preparing the Form 10-D at the direction of the Depositor, the
Trustee will forward electronically a draft copy of the Form 10-D to the
Depositor for review by the 9th calendar day after the Distribution Date. No
later than 2 business days after receipt of such draft copy after the related
Distribution Date, unless the servicer receives a notice from the Trustee as
described below, a duly authorized representative of the Servicer shall sign the
Form 10-D and return an electronic or fax copy of such Form 10-D (with an
original executed hard copy to follow by overnight mail) to the Trustee and the
Trustee shall file such Form 10-D within two business days. Unless the Servicer
shall have received notice from the Trustee to the contrary, the Trustee will be
deemed to have represented to the Servicer that the monthly statement has been
properly prepared by the Trustee and the Servicer may rely upon the accuracy
thereof in it execution of the Form 10-D. If a Form 10-D cannot be filed on time
(because of notice from the Trustee per the previous sentence or otherwise) or
if a previously filed Form 10-D needs to be amended, the Trustee will follow the
procedures set forth in this Agreement. After filing with the Commission, the
Trustee will make available on its internet website a final executed copy of
each Form 10-D. the Trustee will have no liability with respect to any failure
to properly prepare, execute or file such Form 10-D resulting from the Trustee's
inability or failure to obtain or receive any information needed to prepare,
arrange for execution or file such Form 10-D on a timely basis.

      Prior to March 30, 2007 (and, if applicable, prior to the 90th calendar
day after the end of the fiscal year for the trust), the Trustee shall, on
behalf of the Trust and in accordance with industry standards, prepare and file
with the Commission via EDGAR a Form 10 -K with respect to the Trust Fund. Such
Form 10-K shall include the following items, in each case to the extent they
have been delivered to the Trustee within the applicable time frames set forth
in this Agreement, (i) an annual

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<PAGE>
compliance statement for the Servicer and each Subservicer, as described in
Section 3.17 of the Agreement, (ii)(A) the annual reports on assessment of
compliance with servicing criteria for each Servicer, Subservicer and
Subcontractor (unless the Depositor has determined that such compliance
statement is not required by Regulation AB), as described in Section 3.18 of the
Agreement, and (B) if any Reporting Servicer's report on assessment of
compliance with servicing criteria described in Section 3.18 identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any report on assessment of compliance with servicing
criteria described in Section 3.18 of the Agreement is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included, (iii)(A) the registered public
accounting firm attestation report for the Servicer and each Subservicer, as
described in Section 3.18 of the Agreement, and (B) if any registered public
accounting firm attestation report described in the Section 3.18 of the
Agreement identifies any material instance of noncompliance, disclosure
identifying such instance of noncompliance, or if any such registered public
accounting firm attestation report is not included as an exhibit to such Form
10-K, disclosure that such report is not included and an explanation why such
report is not included, and (iv) a Sarbanes-Oxley Certification in the form
attached hereto as Exhibit R, executed by the senior officer in charge of
securitizations of the Servicer. Any disclosure or information in addition to
(i) through (iv) above that is required to be included on Form 10-K ("Additional
Form 10-K Disclosure") shall be determined and prepared by and at the direction
of the Depositor pursuant to the following paragraph and the Trustee will have
no duty or liability for any failure hereunder to determine or prepare any
Additional Form 10-K Disclosure, except as set forth in the next paragraph.

      As set forth in Schedule Z hereto, no later than March 12 of each year
that the Trust is subject to the Exchange Act reporting requirements, commencing
in 2007, (i) certain parties to the transaction shall be required to provide to
the Depositor and the Servicer, to the extent known, any Additional Form 10-K
Disclosure, if applicable, and (ii) the Depositor shall, to the extent it deems
necessary, forward to the Trustee in EDGAR-compatible form, or in such other
form as otherwise agreed upon by the Trustee and the Depositor, the form and
substance of the Additional Form 10-K Disclosure by March 15. The Depositor will
be responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-K Disclosure on Form 10-K
pursuant to this paragraph.

      After preparing the Form 10-K, the Trustee shall forward electronically a
draft copy of the Form 10-K to the Depositor and the Servicer for review. No
later than 5:00pm EST on the 3rd Business Day following receipt thereof, a
senior officer of the Servicer shall sign the Form 10-K and return an electronic
or fax copy of such signed Form 10-K (with an original executed hard copy to
follow by overnight mail) to the Trustee and the Trustee shall file such Form
10-K by March 20th. If a Form 10-K cannot be filed on time or if a previously
filed Form 10-K needs to be amended, the Trustee will follow the procedures set
forth in the Agreement. After filing with the Commission, the Trustee will,
pursuant to the Agreement, make available on its internet website a final
executed copy of each Form 10-K. the Trustee shall have no liability with
respect to any failure to properly prepare, execute or file such Form 10-K
resulting from the Trustee's inability or failure to obtain or receive any
information needed to prepare, arrange for execution or file such Form 10-K on a
timely basis.

      Each Form 10-K shall include a certification (the "Sarbanes-Oxley
Certification") which shall be in the form attached hereto as Exhibit R. The
Servicer will cause its senior officer in charge of securitization to execute
the Sarbanes-Oxley Certification required pursuant to Rule 13a -14 under the
Securities Exchange Act of 1934, as amended, and to deliver the original
executed Certification to the Trustee by March 12 of each year in which the
Trust is subject to the reporting requirements of the Exchange Act. In
connection therewith, each of the Trustee and the Servicer shall sign a
certification (in

                                     - 73 -
<PAGE>

the form attached hereto as Exhibit K and Exhibit L, respectively) for the
benefit of the Servicer and its officers, directors and affiliates regarding
certain aspects of the Form 10-K Certification. To the extent any information or
exhibits required to be included in the Form 10 -K are not timely received by
the Trustee prior to March 30, the Trustee shall, on behalf of the Trust, file a
Form 12B-25 and one or more amended Form 10-Ks, to the extent such amendments
are accepted by the Exchange Act, to include such missing information or
exhibits promptly after receipt thereof by the Trustee.

      Promptly following the first date legally permissible under applicable
regulations and interpretations of the Commission, the Trustee shall, on behalf
of the Trust and in accordance with industry standards, file with the Commission
via EDGAR a Form 15 Suspension Notification with respect to the Trust Fund, if
applicable.

      The Servicer agrees to furnish to the Trustee promptly, 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 is reasonably
necessary to prepare and file all necessary reports with the Commission. The
Trustee shall have no responsibility to file any items with the Commission other
than those specified in this section and the Servicer shall execute any and all
form 8-Ks and 10-Ks required hereunder.

      If the Commission issues additional interpretative guidance or promulgates
additional rules or regulations with respect to Regulation AB or otherwise, or
if other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.20, to be conducted differently than as described,
the Depositor, the Servicer, and the Trustee will reasonably cooperate to amend
the provisions of this Section 3.20 in order to comply with such amended
reporting requirements and such amendment of this Section 3.20. Any such
amendment shall be made in accordance with Section 10.01 without the consent of
the Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Trust under the Exchange Act. Notwithstanding the
foregoing, the Depositor, the Servicer, and the Trustee shall not be obligated
to enter into any amendment pursuant to this Section 3.20 that adversely affects
its obligations and immunities under this Agreement.

      The Depositor, the Servicer and the Trustee agree to use their good faith
efforts to cooperate in complying with the requirements of this Section 3.20.

      Section 3.21. Annual Certificate by Trustee.

      The Trustee shall indemnify and hold harmless the Depositor, the Servicer
and their respective 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 Section 3.17 through Section 3.20, any
material misstatement or omission in the Officer's Certificate required
thereunder or the negligence, bad faith or willful misconduct of the Trustee in
connection therewith. If the indemnification provided for herein is unavailable
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 hand
and of the Depositor on the other in connection with a breach of the Trustee's
obligations under Section 3.17 through Section 3.20, 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.

                                     - 74 -
<PAGE>

      Section 3.22. Annual Certificate by Servicer.

      The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective 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 Section 3.17 through Section 3.20, any
material misstatement or omission in the Officer's Certificate required
thereunder 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 and the Trustee, 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 Depositor on the one hand and the Servicer on the other in connection with a
breach of the Servicer's obligations under Section 3.17 through Section 3.20,
any material misstatement or omission in the Officer's Certificate required
under this Section or the Servicer's negligence, bad faith or willful misconduct
in connection therewith.

      Section 3.23. Prepayment Charge Reporting Requirements.

      Promptly after each Distribution Date, the Servicer shall provide to the
Depositor and the Trustee the following information with regard to each Mortgage
Loan that has prepaid during the related Prepayment Period:

            (i)   loan number;

            (ii)  current Mortgage Rate;

            (iii) current principal balance;

            (iv)  original principal balance;

            (v)   Prepayment Charge amount due; and

            (vi)  Prepayment Charge amount collected.

      Section 3.24. Information to the Trustee.

      Two Business Days after the 15th day of each month, but not later than the
18th day of each month, the Servicer shall furnish to the Trustee in electronic
format (1) the Remittance Report pursuant to Section 4.03 and (ii) a delinquency
report in such form or forms as the Trustee and the Servicer may from time to
time agree for the period ending on the last Business Day of the preceding month
(and with respect to prepayments in full, for the period ending on the 14th day
of the month in which such report is to be furnished); provided, however, that
in the event the 18th day is not a Business Day, the aforementioned reports
shall be furnished by the Servicer to the Trustee on the next Business Day; and
provided, further, that in the event there are three non-Business Days preceding
the 18th day, the Servicer will (a) furnish to the Trustee, on or before the
18th day of the month, the aforementioned reports, which will not include
information arising from the related Prepayment Period, and (b) furnish to the
Trustee, by 3:00 P.M., EST on the next succeeding Business Day after the 18th
day, a cumulative version of the aforementioned reports which includes such
information arising from the related Prepayment Period.

                                     - 75 -
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      Section 3.25. Indemnification.

      The Servicer shall indemnify the Seller, the Trust Fund, the Trustee (in
its individual capacity and in its capacity as trustee), the Depositor and their
officers, directors, employees and agents and hold each of them harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that any of such parties may sustain in any way related to the
failure of the Servicer to perform its duties and service the related Mortgage
Loans in compliance with the terms of this agreement by reason of negligence,
willful misfeasance or bad faith in the performance of its duties or by reason
of reckless disregard of obligations and duties hereunder. The Servicer
immediately shall notify the Seller, the Trustee and the Depositor or any other
relevant party if a claim is made by a third party with respect to such party
and this Agreement or the related Mortgage Loans and, if subject to this
indemnification obligation, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any reasonable written instructions received
from the Trustee in connection with such claim, it being understood that the
Trustee shall have no duty to monitor or give instructions with respect to such
claims, and the Servicer will not have any liability for following such
instructions. The Servicer shall provide the Depositor and the Trustee with a
written report of all expenses and advances incurred by the Servicer pursuant to
this Section 3.25(a), and the Servicer shall promptly reimburse itself from the
assets of the Trust Fund in the Collection Account for all amounts advanced by
it pursuant to the preceding sentence except when the claim in any way relates
to the gross negligence, bad faith or willful misconduct of the Servicer. The
provisions of this paragraph shall survive the termination of this Agreement and
the payment of the outstanding Certificates.

      Section 3.26. Nonsolicitation.

      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 or its Affiliates or agents 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 3.26.

      Section 3.27. High Cost Mortgage Loans.

      In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan", "high cost home", "covered", "high cost",
"high risk home", "predatory" or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor, the Seller
and the Trustee thereof; the Servicer may terminate its servicing thereof; and
such determination shall be deemed to materially and adversely affect the
interests of the Certificateholders in such Mortgage Loan and the related
Transferor, or the Seller, in event the Transferor does not do so, will
repurchase the Mortgage Loan within a 30 day period from the date of the notice
in the manner described in Section 2.05.

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                                   ARTICLE IV

                                  DISTRIBUTIONS

      Section 4.01. Advances.

            (a) Subject to the conditions of this Article IV, the Servicer, as
required below, shall make an Advance and deposit such Advance in the Collection
Account. The Servicer shall use commercially reasonable efforts to remit each
such Advance no later than 2:30 p.m. Eastern time, but in any case no later than
4:00 p.m. Eastern time, on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders, funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, each Rating Agency and
the Trustee an Officer's Certificate setting forth the basis for such
determination. The Servicer may, in its sole discretion, make an Advance with
respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that
nothing in this sentence shall affect the Servicer's obligation under this
Section 4.01 to Advance the interest portion of the final Scheduled Payment with
respect to a Balloon Loan as if such Balloon Loan were a fully amortizing
Mortgage Loan. If a Mortgagor does not pay its final Scheduled Payment on a
Balloon Loan when due, the Servicer shall Advance (unless it determines in its
good faith judgment that such amounts would constitute a Non-Recoverable
Advance) a full month of interest (net of the Servicing Fee) on the Stated
Principal Balance thereof each month until its Stated Principal Balance is
reduced to zero.

      In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until the earlier of
(i) such Mortgage Loan is paid in full, (ii) the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01, (iii) the Servicer determines in its good faith judgment that such
amounts would constitute a Non-Recoverable Advance as provided in the preceding
paragraph or (iv) the date on which such Mortgage Loan becomes 150 days
delinquent as set forth below.

            (b) Notwithstanding anything in this Agreement to the contrary
(including, but not limited to, Sections 3.01 and 4.01(a) hereof), no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer
(including for the avoidance of doubt, the Trustee as successor servicer) if
such Advance or Servicing Advance would, if made, constitute a Non-Recoverable
Advance or a Non-

                                     - 77 -
<PAGE>

Recoverable Servicing Advance. The determination by the Servicer that it has
made a Non-Recoverable Advance or a Non-Recoverable Servicing Advance or that
any proposed Advance or Servicing Advance, if made, would constitute a
Non-Recoverable Advance or a Non-Recoverable Servicing Advance, respectively,
shall be evidenced by an Officer's Certificate of the Servicer delivered to the
Depositor and the Trustee. In addition, the Servicer shall not be required to
advance any Relief Act Shortfalls.

            (c) Notwithstanding the foregoing, the Servicer shall not be
required to make any Advances for any Mortgage Loan after such Mortgage Loan
becomes 150 days delinquent. The Servicer shall identify such delinquent
Mortgage Loans in the Servicer Statement referenced in Section 3.24. In
addition, the Servicer shall provide the Trustee with an Officer's Certificate
listing such delinquent Mortgage Loans and certifying that such loans are 150
days or more delinquent.

      Section 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

      In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing
Fee for such Distribution Date, deposit into the Collection Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
Servicer Advance Date immediately preceding such Distribution Date, an amount up
to the Prepayment Interest Shortfall. In case of such deposit, the Servicer
shall not be entitled to any recovery or reimbursement from the Depositor, the
Trustee, the Trust Fund or the Certificateholders. With respect to any
Distribution Date, to the extent that the Prepayment Interest Shortfall exceeds
Compensating Interest (such excess, a "Non-Supported Interest Shortfall"), such
Non-Supported Interest Shortfall shall reduce the Current Interest with respect
to each Class of Certificates, pro rata based upon the amount of interest each
such Class would otherwise be entitled to receive on such Distribution Date.

      Section 4.03. Distributions on the REMIC Interests.

      On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in the Lower Tier REMIC in an amount sufficient to make the
distributions on the respective Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.

      Section 4.04. Distributions.

            (a) Reserved.

            (b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:

            (i) to the Class P Certificates, an amount equal to any Prepayment
      Charges collected on the Mortgage Loans during the related Prepayment
      Period and all amounts paid by the Servicer, the Seller or the Transferor
      in respect of Prepayment Charges pursuant to this Agreement or the
      Transfer Agreement, as applicable, and all amounts received in respect of
      any indemnification paid as a result of a Prepayment Charge being
      unenforceable in breach of the representations and warranties set forth in
      the Sale Agreement or the related Transfer Agreement, in each case for the
      related Prepayment Period;

                                     - 78 -
<PAGE>

            (ii) to each of the Class A Certificates and Class R Certificate,
      the Current Interest and any Interest Carry Forward Amount with respect to
      such Class; provided, however, if such amount is not sufficient to make a
      full distribution of the Current Interest and any Interest Carry Forward
      Amount with respect to the Class A Certificates and the Class R
      Certificate, such amount will be distributed pro rata among the Class A
      Certificates and the Class R Certificate based on the ratio of (x) the
      Current Interest and Interest Carry Forward Amount for each of the Class A
      Certificates and the Class R Certificate to (y) the total amount of
      Current Interest and any Interest Carry Forward Amount for the Class A
      Certificates and the Class R Certificate in the aggregate;

            (iii) to the Class M-1 Certificates, the Class M-1 Current Interest
      and any Class M-1 Interest Carry Forward Amount;

            (iv) to the Class M-2 Certificates, the Class M-2 Current Interest
      and any Class M-2 Interest Carry Forward Amount;

            (v) to the Class B-1 Certificates, the Class B-1 Current Interest
      and any Class B-1 Interest Carry Forward Amount;

            (vi) to the Class B-2 Certificates, the Class B-2 Current Interest
      and any Class B-2 Interest Carry Forward Amount;

            (vii) to the Class B-3 Certificates, the Class B-3 Current Interest
      and any Class B-3 Interest Carry Forward Amount;

            (viii) to the Class B-4 Certificates, the Class B-4 Current Interest
      and any Class B-4 Interest Carry Forward Amount;

            (ix) to the Class B-5 Certificates, the Class B-5 Current Interest
      and any Class B-5 Interest Carry Forward Amount; and

            (x) any remainder pursuant to Section 4.04(f) hereof.

            (c) [Reserved]

            (d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:

            (i) with respect to the Class A Certificates and the Class R
      Certificate, the Class A Principal Distribution Amount will be distributed
      sequentially to the Class R and Class A Certificates until the Certificate
      Principal Balance of each such class has been reduced to zero;

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

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

                                     - 79 -
<PAGE>

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

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

            (vi) to the Class B-3 Certificates, the Class B-3 Principal
      Distribution Amount;

            (vii) to the Class B-4 Certificates, the Class B-4 Principal
      Distribution Amount;

            (viii) to the Class B-5 Certificates, the Class B-5 Principal
      Distribution Amount; and

            (ix) any remainder pursuant to Section 4.04(f) hereof.

            (e) [Reserved].

            (f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(x) and (d)(ix) hereof and each such
distribution shall be made only after all distributions pursuant to Sections
4.04(b) and (d) above shall have been made until such remainders shall have been
fully distributed for such Distribution Date:

            (i) for distribution as part of the Principal Distribution Amount,
      the Extra Principal Distribution Amount;

            (ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
      Loss Amount;

            (iii) to the Class M-2 Certificates, the Class M-2 Unpaid Realized
      Loss Amount;

            (iv) to the Class B-1 Certificates, the Class B-1 Unpaid Realized
      Loss Amount;

            (v) to the Class B-2 Certificates, the Class B-2 Unpaid Realized
      Loss Amount;

            (vi) to the Class B-3 Certificates, the Class B-3 Unpaid Realized
      Loss Amount;

            (vii) to the Class B-4 Certificates, the Class B-4 Unpaid Realized
      Loss Amount;

            (viii) to the Class B-5 Certificates, the Class B-5 Unpaid Realized
      Loss Amount;

            (ix) to the Class A, Class R, Class M and Class B Certificates, on a
      pro rata basis, based upon outstanding Floating Rate Certificate Carryover
      for each such Class, the Floating Rate Certificate Carryover for each
      Class; and

            (x) the remainder pursuant to Section 4.04(g) hereof.

            (g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(x) as follows:

            (i) to the Class C Certificates in the following order of priority,
      (I) the Class C Current Interest, (II) the Class C Interest Carry Forward
      Amount, (III) as principal on the Class C

                                     - 80 -
<PAGE>

      Certificate until the Certificate Principal Balance of the Class C
      Certificates has been reduced to zero and (IV) the Class C Unpaid Realized
      Loss Amount; and

            (ii) the remainder pursuant to Section 4.04(h) hereof.

            (h) On each Distribution Date, the Trustee shall allocate the
remainder pursuant to Section 4.04(g)(ii) hereof to the Class R Certificate and
such distributions shall be made only after all preceding distributions shall
have been made until such remainder shall have been fully distributed.

            (i) On each Distribution Date, after giving effect to distributions
on such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C Certificates and the Subordinated Certificates in the following order of
priority:

            (i) to the Class C Certificates, until the Class C Certificate
      Principal Balance is reduced to zero;

            (ii) to the Class B-5 Certificates until the Class B-5 Certificate
      Principal Balance is reduced to zero;

            (iii) to the Class B-4 Certificates until the Class B-4 Certificate
      Principal Balance is reduced to zero;

            (iv) to the Class B-3 Certificates until the Class B-3 Certificate
      Principal Balance is reduced to zero;

            (v) to the Class B-2 Certificate until the Class B-2 Principal
      Balance is reduced to zero;

            (vi) to the Class B-1 Certificate until the Class B-1 Principal
      Balance is reduced to zero;

            (vii) to the Class M-2 Certificates until the Class M-2 Certificate
      Principal Balance is reduced to zero; and

            (viii) to the Class M-1 Certificates until the Class M-1 Certificate
      Principal Balance is reduced to zero.

            (j) Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date or, if not, by check mailed by first class mail to such Certificateholder
at the address of such holder appearing in the Certificate Register.
Notwithstanding the foregoing, but subject to Section 9.02 hereof respecting the
final distribution, distributions with respect to Certificates registered in the
name of a Depository shall be made to such Depository in immediately available
funds.

                                     - 81 -
<PAGE>

      In accordance with Section 3.24 hereof, the Servicer shall prepare and
deliver an electronic report (the "Remittance Report") to the Trustee (or by
such other means as the Servicer and the Trustee may agree from time to time)
containing such data and information as to permit the Trustee to prepare the
Monthly Statement to Certificateholders and make the required distributions for
the related Distribution Date. The Trustee will prepare the Monthly Report based
solely upon the information received from the Servicer.

      Section 4.05. Monthly Statements to Certificateholders.

            (a) Not later than each Distribution Date based solely on
information provided by the Servicer, the Trustee shall prepare and make
available on its website located at www.etrustee.net to each Holder of a Class
of Certificates of the Trust Fund, the Servicer, the Trustee, the Rating
Agencies and the Depositor a statement setting forth for the Certificates the
following information; provided, however, that, with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed with
the Commission on behalf of the Trust, the information set forth in items (xxii)
through (xxxi) below are not required to be included in such statement during
any calendar year:

            (i) the amount of the related distribution to Holders of each Class
      allocable to principal, separately identifying (A) the aggregate amount of
      any Principal Prepayments included therein, (B) the aggregate of all
      scheduled payments of principal included therein, (C) the Extra Principal
      Distribution Amount, if any, and (D) the aggregate amount of Prepayment
      Charges, if any;

            (ii) the amount of such distribution to Holders of each Class
      allocable to interest, together with any Non-Supported Interest Shortfalls
      allocated to each Class;

            (iii) any Interest Carryforward Amount for each Class of the Class
      A, Class R, Class M and Class B Certificates;

            (iv) the Class Certificate Principal Balance of each Class after
      giving effect (i) to all distributions allocable to principal on such
      Distribution Date and (ii) the allocation of any Applied Realized Loss
      Amounts for such Distribution Date;

            (v) the Pool Stated Principal Balance for such Distribution Date;

            (vi) the amount of the Servicing Fees paid to or retained by the
      Servicer and any amounts constituting reimbursement or indemnification of
      the Servicer or Trustee;

            (vii) the Pass-Through Rate for each Class of Certificates for such
      Distribution Date;

            (viii) the amount of Advances included in the distribution on such
      Distribution Date;

            (ix) the cumulative amount of (A) Realized Losses and (B) Applied
      Realized Loss Amounts to date;

            (x) the amount of (A) Realized Losses and (B) Applied Realized Loss
      Amounts with respect to such Distribution Date;

                                     - 82 -
<PAGE>

            (xi) the number and aggregate principal amounts of Mortgage Loans
      (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60
      days, (2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure
      and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
      days, in each case as of the close of business on the last day of the
      calendar month preceding such Distribution Date;

            (xii) the total number and principal balance of any REO Properties
      as of the close of business on the last day of the calendar month
      preceding such Distribution Date;

            (xiii) the aggregate Stated Principal Balance of all Liquidated
      Loans as of the preceding Distribution Date;

            (xiv) whether a Trigger Event has occurred;

            (xv) with respect to each Class of Certificates, any Interest Carry
      Forward Amount with respect to such Distribution Date for each such Class,
      any Interest Carry Forward Amount paid for each such Class and any
      remaining Interest Carry Forward Amount for each such Class;

            (xvi) with respect to each Class of Certificates, any Floating Rate
      Certificate Carryover with respect to such Distribution Date for each such
      Class, any Floating Rate Certificate Carryover paid for each such Class
      and any remaining Floating Rate Certificate Carryover for each such Class;

            (xvii) the number and Stated Principal Balance (as of the preceding
      Distribution Date) of any Mortgage Loans which were purchased or
      repurchased during the preceding Due Period and since the Cut-off Date;

            (xviii) the number of Mortgage Loans for which Prepayment Charges
      were received during the related Prepayment Period and, for each such
      Mortgage Loan, the amount of Prepayment Charges received during the
      related Prepayment Period and in the aggregate of such amounts for all
      such Mortgage Loans since the Cut-off Date;

            (xix) [RESERVED];

            (xx) the amount and purpose of any withdrawal from the Collection
      Account pursuant to Section 3.08(a)(v);

            (xxi) the amount of any payments to each Class of Certificates that
      are treated as payments received in respect of a REMIC Regular Interest or
      REMIC "residual interest" and the amount of any payments to each Class of
      Certificates that are not treated as payments received in respect of a
      REMIC Regular Interest or REMIC "residual interest";

            (xxii) the aggregate amount of all Advances recovered during the
      related Due Period;

            (xxiii) the allocation to each Class of Certificate of any Realized
      Losses during the related Due Period;

            (xxiv) with respect to each Class of Certificates, the amount of any
      Non-Supported Interest Shortfalls on such Distribution Date;

                                     - 83 -
<PAGE>

            (xxv) the number and amount of pool assets at the beginning and
      ending of each period, and updated pool composition information;

            (xxvi) any material changes to methodology regarding calculations of
      delinquencies and charge-offs;

            (xxvii) information on the amount, terms and general purpose of any
      advances made or reimbursed during the period, including the general use
      of funds advanced and the general source of funds for reimbursements;

            (xxviii) any material modifications, extensions or waivers to pool
      asset terms, fees, penalties or payments during the distribution period or
      that have cumulatively become material over time;

            (xxix) material breaches of pool asset representations or warranties
      or transaction covenants;

            (xxx) information on ratio, coverage or other tests used for
      determining any early amortization, liquidation or other performance
      trigger and whether the trigger was met; and

            (xxxi) information regarding any pool asset changes (other than in
      connection with a pool asset converting into cash in accordance with its
      terms), such as additions or removals in connection with a prefunding or
      revolving period and pool asset substitutions and repurchases (and
      purchase rates, if applicable), and cash flows available for future
      purchases, such as the balances of any prefunding or revolving accounts,
      if applicable.

            (b) The Trustee will make the Monthly Statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at "www.etrustee.net". Assistance in
using the website can be obtained by calling the Trustee's customer service desk
at (312) 904-6299. Parties that are unable to use the website are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way the monthly statements to Certificateholders are distributed in order to
make such distribution more convenient and/or more accessible to the above
parties and the Trustee shall provide timely and adequate notification to all
above parties regarding any such changes.

      The Trustee shall also be entitled to rely on but shall not be responsible
for the content or accuracy of any information provided by third parties for
purposes of preparing the monthly statement and may affix thereto any disclaimer
it deems appropriate in its reasonable discretion (without suggesting liability
on the part of any other party hereto).

      As a condition to access the Trustee's internet website, the Trustee may
require registration and the acceptance of a disclaimer. The Trustee will not be
liable for the dissemination of information in accordance with this Agreement.

            (c) If so requested in writing within a reasonable period of time
after the end of each calendar year, the Trustee shall make available on its
website or cause to be furnished to each Person who

                                     - 84 -
<PAGE>

at any time during the calendar year was a Certificateholder of record, a
statement containing the information set forth in clauses (a)(i) and (a)(ii) of
this Section 4.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as are from time to time in effect.

            (d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate the Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of Class R Certificate with respect to the
following matters:

            (i) The original projected principal and interest cash flows on the
      Closing Date on each Class of regular and residual interests created
      hereunder and on the Mortgage Loans, based on the Prepayment Assumption;

            (ii) The projected remaining principal and interest cash flows as of
      the end of any calendar quarter with respect to each Class of regular and
      residual interests created hereunder and the Mortgage Loans, based on the
      Prepayment Assumption;

            (iii) The Prepayment Assumption and any interest rate assumptions
      used in determining the projected principal and interest cash flows
      described above;

            (iv) The original issue discount (or, in the case of the Mortgage
      Loans, market discount) or premium accrued or amortized through the end of
      such calendar quarter with respect to each Class of regular or residual
      interests created hereunder and to the Mortgage Loans, together with each
      constant yield to maturity used in computing the same;

            (v) The treatment of losses realized with respect to the Mortgage
      Loans or the regular interests created hereunder, including the timing and
      amount of any cancellation of indebtedness income of the REMICs with
      respect to such regular interests or bad debt deductions claimed with
      respect to the Mortgage Loans;

            (vi) The amount and timing of any non-interest expenses of the
      REMICs; and

            (vii) Any taxes (including penalties and interest) imposed on the
      REMICs, including, without limitation, taxes on "prohibited transactions,"
      "contributions" or "net income from foreclosure property" or state or
      local income or franchise taxes.

      The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.12.

                                    ARTICLE V

                                THE CERTIFICATES

      Section 5.01. The Certificates.

                                     - 85 -
<PAGE>

      The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:

<TABLE>
<CAPTION>
                                                     Original Certificate
            Minimum        Integral Multiples in     Principal Balance or
Class     Denomination       Excess of Minimum         Notional Amount
         --------------    ----------------------    --------------------
<S>      <C>               <C>                       <C>
A        $    25,000.00    $                 1.00    $        276,882,000
M-1      $    25,000.00    $                 1.00    $         32,302,000
M-2      $    25,000.00    $                 1.00    $         27,286,000
B-1      $    25,000.00    $                 1.00    $         16,653,000
B-2      $    25,000.00    $                 1.00    $          7,624,000
B-3      $    25,000.00    $                 1.00    $          6,420,000
B-4      $    25,000.00    $                 1.00    $          7,423,000
B-5      $    25,000.00    $                 1.00    $          7,022,000
C                    (1)                       (1)                    100%
P                    (2)                       (2)                     (2)
R        $       100.00             N/A              $             100.00
</TABLE>

----------
      (1) The Class C Certificates shall not have minimum dollar denominations
or certificate notional amount and shall be issued in a minimum percentage
interest of 25%.

      (2) The Class P Certificates shall not have minimum dollar denominations
or Certificate Principal Balances and shall be issued in a minimum percentage
interest of 100%.

      The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. 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 set forth as attached
hereto executed by the Authenticating Agent by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication. On the Closing Date, the Authenticating Agent shall authenticate
the Certificates to be issued at the written direction of the Depositor, or any
Affiliate thereof.

      The Class B-4 and Class B-5 Certificates sold in offshore transactions in
reliance on Regulation S 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 hereto added
to the form of each such Certificate (each, a "Regulation S Book-Entry
Certificate"), which shall be deposited on behalf of the Holders of such
Certificates represented thereby with the Trustee, as custodian for DTC and
registered in the name of a nominee of DTC, duly executed and authenticated by
the Trustee and the Authenticating Agent as hereinafter provided. The aggregate
principal amounts of the Regulation

                                     - 86 -
<PAGE>

S Book-Entry Certificates may from time to time be increased or decreased by
adjustments made on the records of the Trustee or DTC or its nominee, as the
case may be, as hereinafter provided.

      The Class B-4 and Class B-5 Certificates sold in reliance on Rule 144A
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 hereto added to the form of each
such Certificate (each, a "Rule 144A Book-Entry Certificate"), which shall be
deposited on behalf of the Holders of such Certificates represented thereby with
the Trustee, as custodian for DTC and registered in the name of a nominee of
DTC, duly executed and authenticated by the Trustee and the Authenticating Agent
as hereinafter provided. The aggregate principal amounts of the Rule 144A
Book-Entry Certificates may from time to time be increased or decreased by
adjustments made on the records of the Trustee or DTC or its nominee, as the
case may be, as hereinafter provided.

      Section 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.

            (a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class and of like aggregate Percentage Interest.

      At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute and the Authenticating
Agent shall authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of Transfer or exchange shall be accompanied by a
written instrument of Transfer in form satisfactory to the Trustee duly executed
by the holder thereof or his attorney duly authorized in writing.

      No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.

      No Transfer of a Class B-4, Class B-5, Class C or Class P Certificate
shall be made unless such Transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws or
is exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a Transfer is to be made in reliance
upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring
to effect such Transfer and such Certificateholder's prospective transferee
shall (except with respect to the initial transfer of a Class B-4, Class B-5,
Class C or Class P Certificate by Merrill Lynch & Co.) each certify to the
Trustee in writing the facts surrounding the Transfer in substantially the form
set forth in Exhibit F (the "Transferor Certificate") and (i) deliver a letter
in substantially the form of either Exhibit G (the "Investment Letter") or
Exhibit H (the "Rule 144A

                                     - 87 -
<PAGE>

Letter") or (ii) there shall be delivered to the Trustee an Opinion of Counsel
that such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor or the
Trustee. The Depositor shall provide to any Holder of a Class B-4, Class B-5,
Class C or Class P Certificate and any prospective transferee designated by any
such Holder, information regarding the related Certificates and the Mortgage
Loans and such other information as shall be necessary to satisfy the condition
to eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information in the
possession of the Trustee regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class B-4,
Class B-5, Class C or Class P Certificate desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Depositor and the Trustee against
any liability that may result if the Transfer is not so exempt or is not made in
accordance with such federal and state laws.

      By acceptance of a Regulation S Global Security, 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 only transfer such a Certificate as provided herein. In
addition, each Holder of a Regulation S Global Security shall be deemed to have
represented and warranted to the Depositor, the Trustee and any of their
respective successors that: (i) such Person is not a "U.S. person" within the
meaning of Regulation S and was, at the time the buy order was originated,
outside the United States and (ii) such Person understands that such
Certificates have not been registered under the Securities Act and that (x)
until the expiration of the 40-day distribution compliance period (within the
meaning of Regulation S), no offer, sale, pledge or other transfer of such
Certificates or any interest therein shall be made in the United States or to or
for the account or benefit of a U.S. person (each as defined in Regulation S),
(y) if in the future it decides to offer, resell, pledge or otherwise transfer
such Certificates, such Certificates may be offered, resold, pledged or
otherwise transferred only (A) to a person which the seller reasonably believes
is a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act, that is purchasing such Certificates for its own account or for
the account of a qualified institutional buyer to which notice is given that the
transfer is being made in reliance on Rule 144A or (B) in an offshore
transaction (as defined in Regulation S) in compliance with the provisions of
Regulation S, in each case in compliance with the requirements of this
Agreement; and it will notify such transferee of the transfer restrictions
specified in this Section.

      No transfer of an ERISA Restricted Certificate or a Class R Certificate
shall be registered unless the Trustee has received (A) a representation to the
effect that such transferee is not an employee benefit plan subject to Title I
of ERISA, a plan subject to Section 4975 of the Code or a plan subject to any
state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law"), and is not directly
or indirectly acquiring the ERISA Restricted Certificate or the Class R
Certificate by, on behalf of, or with any assets of any such plan (collectively,
"Plan"), or (B) solely in the case of ERISA Restricted Certificates, (I) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, a
representation to the effect that such transferee is an insurance company that
is acquiring the Certificate with assets of 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 (II) solely in the case of
an ERISA Restricted Certificate that is a Definitive Certificate, an Opinion of
Counsel satisfactory to the Trustee, and upon which the Trustee shall be
entitled to rely, to the effect that

                                     - 88 -
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the acquisition and holding of such Certificate will not constitute or result in
a nonexempt prohibited transaction under Title I of ERISA or Section 4975 of the
Code, or a violation of Similar Law, and will not subject the Trustee, 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 Servicer or the Depositor.

      Except in the case of a Definitive Certificate, the representations set
forth in the two immediately preceding paragraph of this Subsection 5.02(a),
other than clause (II)(B) in the immediately preceding paragraph, shall be
deemed to have been made to the Trustee by the transferee's acceptance of an
ERISA Restricted Certificate or a Class R Certificate (or the acceptance by a
Certificate Owner of the beneficial interest in any Class of ERISA Restricted
Certificates or a Class R Certificate).

      Notwithstanding any other provision herein to the contrary, any purported
transfer of an ERISA Restricted Certificate or a Class R Certificate to or on
behalf of a Plan without the delivery to the Trustee of a representation or an
Opinion of Counsel satisfactory to the Trustee as described above shall be void
and of no effect. The Trustee shall not be under any liability to any Person for
any registration or transfer of any ERISA Restricted Certificate or a Class R
Certificate that is in fact not permitted by this Section 5.02(a), nor shall the
Trustee 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 Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate or a Class R Certificate that was in fact a Plan and that held such
Certificate in violation of this Section 5.02(a) all payments made on such ERISA
Restricted Certificate or a Class R Certificate at and after 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.

            (b) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:

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

            (ii) No Ownership Interest in a Class R Certificate may be
      purchased, transferred or sold, directly or indirectly, except in
      accordance with the provisions hereof. No Ownership Interest in a Class R
      Certificate may be registered on the Closing Date or thereafter
      transferred, and the Trustee shall not register the Transfer of any Class
      R Certificate unless, in addition to the certificates required to be
      delivered to the Trustee under subparagraph (a) above, the Trustee shall
      have been furnished with an affidavit (a "Transfer Affidavit") of the
      initial owner or the proposed transferee in the form attached hereto as
      Exhibit E-1 and an affidavit of the proposed transferor in the form
      attached hereto as Exhibit E-2. In the absence of a contrary instruction
      from the transferor of a Class R Certificate, declaration (11) in Appendix
      A of the Transfer Affidavit may be left blank. If the transferor requests
      by written notice to the Trustee prior to the date of the proposed
      transfer that one of the two other forms of declaration (11) in Appendix A
      of the Transfer Affidavit be used, then the requirements of this Section
      5.02(b)(ii) shall not have been satisfied unless the Transfer Affidavit
      includes such other form of declaration.

                                     - 89 -
<PAGE>

            (iii) Each Person holding or acquiring any Ownership Interest in a
      Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
      any other Person to whom such Person attempts to Transfer its Ownership
      Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
      any Person for whom such Person is acting as nominee, trustee or agent in
      connection with any Transfer of a Class R Certificate and (C) not to
      Transfer its Ownership Interest in a Class R Certificate or to cause the
      Transfer of an Ownership Interest in a Class R Certificate to any other
      Person if it has actual knowledge that such Person is not a Permitted
      Transferee. Further, no transfer, sale or other disposition of any
      Ownership Interest in a Class R Certificate may be made to a person who is
      not a U.S. Person (within the meaning of section 7701 of the Code) unless
      such person furnishes the transferor and the Trustee with a duly completed
      and effective Internal Revenue Service Form W-8ECI (or any successor
      thereto) and the Trustee consents to such transfer, sale or other
      disposition in writing.

            (iv) Any attempted or purported Transfer of any Ownership Interest
      in a Class R Certificate in violation of the provisions of this Section
      5.02(b) shall be absolutely null and void and shall vest no rights in the
      purported Transferee. If any purported transferee shall become a Holder of
      a Class R Certificate in violation of the provisions of this Section
      5.02(b), then the last preceding Permitted Transferee shall be restored to
      all rights as Holder thereof retroactive to the date of registration of
      Transfer of such Class R Certificate. The Trustee shall be under no
      liability to any Person for any registration of Transfer of a Class R
      Certificate that is in fact not permitted by Section 5.02(a) and this
      Section 5.02(b) or for making any payments due on such Certificate to the
      Holder thereof or taking any other action with respect to such Holder
      under the provisions of this Agreement so long as the Transfer was
      registered after receipt of the related Transfer Affidavit. The Trustee
      shall be entitled but not obligated to recover from any Holder of a Class
      R Certificate that was in fact not a Permitted Transferee at the time it
      became a Holder or, at such subsequent time as it became other than a
      Permitted Transferee, all payments made on such Class R Certificate at and
      after either such time. Any such payments so recovered by the Trustee
      shall be paid and delivered by the Trustee to the last preceding Permitted
      Transferee of such Certificate.

            (v) At the option of the Holder of the Class R Certificate, the
      Class LTR Interest and the residual interest in the Upper Tier REMIC may
      be severed and represented by separate certificates (with the separate
      certificate that represents the Residual Interest also representing all
      rights of the Class R Certificate to distributions attributable to an
      interest rate on the Class R Certificate in excess of the Net Rate);
      provided, however, that such separate certification may not occur until
      the Trustee receives an Opinion of Counsel to the effect that separate
      certification in the form and manner proposed would not result in the
      imposition of federal tax upon the Trust Fund or any of the REMICs
      provided for herein or cause any of the REMICs provided for herein to fail
      to qualify as a REMIC; and provided further, that the provisions of
      Sections 5.02(a) and (b) will apply to each such separate certificate as
      if the separate certificate were a Class R Certificate. If, as evidenced
      by an Opinion of Counsel, it is necessary to preserve the REMIC status of
      any of the REMICs provided for herein, the Class LTR Interest and the
      Residual Interest in the Upper Tier REMIC shall be severed and represented
      by separate certificates (with the separate certificate that represents
      the Residual Interest also representing all rights of the Class R
      Certificate to distributions attributable to an interest rate on the Class
      R Certificate in excess of the Net Rate).

                                     - 90 -
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      The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(b) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor, to the effect that the
elimination of such restrictions will not cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, any REMIC
provided for herein, a Certificateholder or another Person. Each Person holding
or acquiring any Ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Class R Certificate that is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.

            (c) The transferor of the Class R Certificate shall notify the
Trustee in writing upon the transfer of the Class R Certificate.

            (d) Additional Restrictions on Class B-4 and Class B-5 Certificates.

      The Class B-4 and Class B-5 Certificates may not be offered or sold except
to (i) QIBs in reliance on the exemption from the registration requirements of
the Securities Act provided by Rule 144A that are "United States Persons" for
purposes of the Code, (ii) Institutional Accredited Investors, that are United
States Persons (as defined by Regulation S) for purposes of the Code or (iii)
outside the United States, persons who are not U.S. persons (as defined by
Regulation S) in offshore transactions in compliance with Regulation S.

      To permit compliance with the foregoing in connection with any proposed
transfer of the Class B-4 and Class B-5 Certificates, the Trustee shall
cooperate with the Depositor in furnishing, upon the request of any
Certificateholder, to such Certificateholder or Certificate Owner and a
prospective transferee designated by such Certificateholder, the information
required to be delivered under Rule 144A(d)(4).

      Each Certificateholder, by its acceptance of a Class B-4 or Class B-5
Certificate, will be deemed to have represented and agreed as follows (terms
used in this section that are defined in Rule 144A are used herein as defined
therein):

                  (1) It (A)(i) is a QIB, (ii) is aware that the sale of the
            Class B-4 or Class B-5 Certificates, as applicable, is being made in
            reliance on Rule 144A and (iii) is acquiring such Certificates for
            its own account or for the account of a QIB, as the case may be,
            (B)(i) is an Institutional Accredited Investor, (ii) is purchasing
            the Class B-4 or Class B-5 Certificates being sold to it for its own
            account or for certain qualified institutional accounts and (iii) is
            not acquiring such Class B-4 or Class B-5 Certificates with a view
            to any resale or distribution thereof other than in accordance with
            the restrictions set forth below or (C) (i) is not a U.S. person (as
            defined by Regulation S), (ii) was at the time the buy order was
            originated outside the United States and (iii) until the expiration
            of the 40-day distribution compliance period (within the meaning of
            Regulation S), no offer, sale, pledge or other transfer of such
            Certificates or any interest thereon shall be made in the

                                     - 91 -
<PAGE>

            United States or to or for the account or benefit of a U.S. person
            (as defined by Regulation S).

                  (2) It understands that the Class B-4 and Class B-5
            Certificates have not been and will not be registered under the
            Securities Act and may not be reoffered, resold, pledged or
            otherwise transferred except (A)(i) to a Person whom it reasonably
            believes is a QIB in a transaction meeting the requirements of Rule
            144A, (ii) to an Institutional Accredited Investor in a transaction
            exempt from the registration requirements of the Securities Act, or
            (iii) outside the United States, to Persons who are not U.S. persons
            (as defined by Regulation S) in offshore transactions in compliance
            with Regulation S and (B) in accordance with all applicable
            securities laws of the states of the United States.

                  (3) It understands that any Class B-4 or Class B-5
            Certificates acquired by it pursuant to clause (1)(B) above will be
            in the form of definitive physical certificates ("Certificates")
            bearing the legend set forth in paragraph (4) below.

                  (4) The Class B-4 and Class B-5 Certificates will bear a
            legend to the following effect:

                  THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY
                  ACT OF 1940, AS AMENDED (THE "1940 ACT") OR ANY STATE
                  SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR
                  INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR
                  SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION
                  UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
                  SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
                  PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
                  AGREEMENT. IF THE CERTIFICATE IS A DEFINITIVE CERTIFICATE, NO
                  TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE
                  SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE
                  TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE
                  INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
                  REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

                  THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES
                  TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A)
                  PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
                  EFFECTIVE UNDER THE ACT, (B) TO A PERSON IT REASONABLY
                  BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
                  RULE 144A UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
                  FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
                  NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
                  RULE 144A, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR AS
                  DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D, OR
                  (D) OUTSIDE THE UNITED STATES TO A PERSON WHO IS NOT A U.S.

                                     - 92 -
<PAGE>

                  PERSON (AS DEFINED BY REGULATION S OF THE ACT ("REGULATION
                  S")) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
                  S, AND IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
                  SECURITIES LAWS OF THE UNITED STATES AND SUBJECT TO THE
                  TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO
                  REQUIRE THE DELIVERY OF A CERTIFICATE OF TRANSFER IN THE FORM
                  APPEARING IN THE POOLING AND SERVICING AGREEMENT.

                  Any Class B-4 or Class B-5 Certificate acquired pursuant to
            Regulation S will bear the following two legends in replacement of
            the legends above:

                  THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
                  LAWS. NEITHER THIS CERTIFICATE NOR ANY INTEREST OR
                  PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
                  WITHIN THE UNITED STATES (AS DEFINED IN RULES 901 THROUGH 905
                  OF THE ACT ("REGULATION S")) OR TO, OR FOR THE ACCOUNT OR
                  BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), IN THE
                  ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS
                  EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

                  THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES
                  (A) THAT, UNTIL THE EXPIRATION OF THE APPLICABLE "DISTRIBUTION
                  COMPLIANCE PERIOD" WITHIN THE MEANING OF REGULATION S, ANY
                  OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE
                  SHALL NOT BE MADE IN THE UNITED STATES OR TO, OR FOR THE
                  ACCOUNT OR BENEFIT OF, ANY U.S. PERSON (EACH AS DEFINED IN
                  REGULATION S) AND (B) TO OFFER, SELL, PLEDGE OR OTHERWISE
                  TRANSFER THIS CERTIFICATE WITHIN THE UNITED STATES OR TO, OR
                  FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (EACH AS DEFINED
                  IN REGULATION S) ONLY (1) PURSUANT TO A REGISTRATION STATEMENT
                  WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE ACT, (2) TO A
                  PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
                  BUYER" AS DEFINED IN RULE 144A UNDER THE ACT THAT PURCHASES
                  FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
                  INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
                  IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN
                  INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN RULE
                  501(A)(1), (2), (3) OR (7) OF REGULATION D, OR (4) OUTSIDE THE
                  UNITED STATES TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
                  BY REGULATION S OF THE ACT ("REGULATION S")) IN AN OFFSHORE
                  TRANSACTION IN COMPLIANCE WITH REGULATION S, AND IN EACH CASE
                  IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
                  UNITED STATES AND SUBJECT TO THE TRUSTEE'S RIGHT PRIOR TO

                                     - 93 -
<PAGE>

                  ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
                  CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING
                  AND SERVICING AGREEMENT.

                  (5) Any information the purchaser desires concerning the Class
            B-4 or Class B-5 Certificates or any other matter relevant to its
            decision to purchase the Class B-4 or Class B-5 Certificates is or
            has been made available to it.

      The transferor of a Class B-4 or Class B-5 Certificate or a beneficial
interest in a Class B-4 or Class B-5 Certificate (except in the case of the
transfer of (i) a beneficial interest in a Rule 144A Book-Entry Certificate for
a beneficial interest in a Rule 144A Book-Entry Certificate or (ii) a beneficial
interest in a Regulation S Book-Entry Certificate for a beneficial interest in a
Regulation S Book-Entry Certificate) shall be required to provide to the Trustee
(i) in the case of a transferor holding a Definitive Certificate or a beneficial
interest in a Regulation S Book-Entry Certificate and wishing to transfer to a
Person in the form of a beneficial interest in a Rule 144A Book-Entry
Certificate, a transferor letter substantially in the form attached as Exhibit O
and a transferee letter substantially in the form attached as Exhibit H or (ii)
in the case of a transferor holding a Definitive Certificate or a beneficial
interest in a Rule 144A Book-Entry Certificate and wishing to transfer to a
Person in the form of a beneficial interest in a Regulation S Book-Entry
Certificate, a transferor letter substantially in the form attached as Exhibit
N.

      No transfer of a Certificate to a transferee in the form of a Definitive
Certificate shall be registered unless such transfer is (i) to a QIB and a
transferor letter substantially in the form attached as Exhibit O and a
transferee letter substantially in the form attached as Exhibit H are delivered
to the Trustee, (ii) outside the United States, to a person who is not a U.S.
person (as defined by Regulation S) in an offshore transaction in compliance
with Regulation S and a transferor letter substantially in the form attached as
Exhibit N is delivered to the Trustee or (iii) to an "accredited investor" under
Rule 501(a)(1), (2), (3) or (7) under the Securities Act and a transferor letter
substantially in the form attached as Exhibit F and a transferor letter
substantially in the form attached as Exhibit G are delivered to the Trustee.

      The Trustee may conclusively rely on any such transferor letter and
representation letter as sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and other applicable laws.

            (e) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.

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

      If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be

                                     - 94 -
<PAGE>

imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and its counsel) connected therewith. Any replacement
Certificate issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Trustee under the terms of this
Section 5.03 shall be canceled and destroyed by the Trustee in accordance with
its standard procedures without liability on its part.

      Section 5.04. Persons Deemed Owners.

      The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by any notice to the contrary.

      Section 5.05. Access to List of Certificateholders' Names and Addresses.

      If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

      Section 5.06. Book-Entry Certificates.

      The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class C, Class P and Class R Certificates shall be definitive
certificates. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08(a):

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

            (b) the Depositor and the Trustee may deal with the Depository and
the Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of the Book-Entry Certificates;

            (c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;

                                     - 95 -
<PAGE>

            (d) the rights of the respective Certificate Owners of the
Book-Entry Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of the Book-Entry Certificates and the Depository
and/or the Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Certificates are issued pursuant to Section 5.08, the
Depository will make book-entry transfers among the Depository Participants and
receive and transmit distributions of principal and interest on the related
Certificates to such Depository Participants;

            (e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;

            (f) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants; and

            (g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.

      For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.

      In the event that Definitive Certificates are issued pursuant to Section
5.08(b), clauses (a) through (g) of this Section 5.06 shall continue to be
applicable with respect to all remaining Book-Entry Certificates.

      Section 5.07. Notices to Depository.

      Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.

      Section 5.08. Definitive Certificates.

            (a) If, after Book-Entry Certificates have been issued with respect
to any Certificates, (a) the Depository or the Depositor advises the Trustee
that the Depository is no longer willing, qualified or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Certificates and the Trustee or the Depositor is unable to locate a
qualified successor, (b) the Depositor notifies the Trustee and the Depository
of its intent to terminate the book-entry system through the Depository and,
upon receipt of notice of such intent from the Depository, the Certificate
Owners of the Book-Entry Certificates agree to initiate such termination or (c)
after the occurrence and continuation of an Event of Default, Certificate Owners
of such Book-Entry Certificates having not less than 51% of the Voting Rights
evidenced by any Class of Book-Entry Certificates advise the Trustee and the
Depository in writing through the Depository Participants that the continuation
of a book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Trustee shall notify all Certificate
Owners of

                                     - 96 -
<PAGE>

such Book-Entry Certificates, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners of such Class requesting the same. The Depositor shall provide the
Trustee with an adequate inventory of certificates to facilitate the issuance
and transfer of Definitive Certificates. Upon surrender to the Trustee of any
such Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Authenticating Agent shall
authenticate and the Trustee shall deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

            (b) Any Class B-4 or Class B-5 Certificates sold to an "accredited
investor" under Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall
be issued in the form of one or more Definitive Certificates. The Trustee will
effect such transfer in accordance with its customary procedures.

      Section 5.09. Maintenance of Office or Agency.

      The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at 135 South LaSalle Street, Chicago, Illinois 60603, Attention: MLMI
2006-SL1 as offices for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.

      Section 5.10. Authenticating Agents.

            (a) One or more Authenticating Agents (each, an "Authenticating
Agent") may be appointed hereunder each of which shall be authorized to act on
behalf of the Trustee in authenticating the Certificates. Wherever reference is
made in this Agreement to the authentication of Certificates by 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 Agent. Each Authenticating Agent must be an entity organized and
doing business under the laws of the United States of America or any state
thereof, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to operate a trust business and subject to
supervision or examination by federal or state authorities. If the
Authenticating Agent is a party other than the Trustee, the Trustee shall have
no liability in connection with the performance or failure of performance of the
Authenticating Agent. LaSalle Bank National Association is hereby appointed as
the initial Authenticating Agent. The Trustee shall be the Authenticating Agent
during any such time as no other Authenticating Agent has been appointed and has
not resigned.

            (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.

                                     - 97 -
<PAGE>
            (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. Except with respect to the initial Authenticating Agent, LaSalle Bank
National Association, which shall be the Authenticating Agent for so long as it
is 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 within the provisions of this Section 5.10, 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 5.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

      Section 6.01. Respective Liabilities of the Depositor and the Servicer.

      The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.

      Section 6.02. Merger or Consolidation of the Depositor or the Servicer.

      Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

      Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding (except for the
execution of an assumption agreement where such succession is not effected by
operation of law); provided, however, that the successor or surviving Person to
the Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, Fannie Mae or Freddie Mac.

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

      None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer

                                     - 98 -
<PAGE>

or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Servicer or any such Person from any
liability that would otherwise be imposed by reasons of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor or the Servicer and
any director, officer, employee or agent of the Depositor or the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense, incurred in connection with the performance of
their duties under this Agreement or 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, other than
(i) 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 or (ii) which does not
constitute an "unanticipated expense" within the meaning of Treasury Regulation
Section 1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that any either of
the Depositor or the Servicer in its discretion may 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 the 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 Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.

      Section 6.04. Limitation on Resignation of Servicer.

      The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer reasonably acceptable to the Trustee
is appointed and has assumed the Servicer's responsibilities, duties,
liabilities and obligations hereunder. Any such resignation shall not relieve
the Servicer of any of the obligations specified in Section 7.01 and 7.02 as
obligations that survive the resignation or termination of the Servicer.

      Section 6.05. Errors and Omissions Insurance; Fidelity Bonds.

      The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for Persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
The Servicer shall provide the Trustee, upon request, with copies of such
policies and fidelity bond or a certification from the insurance provider
evidencing such policies and fidelity bond. In the event that any such policy or
bond ceases to be in effect, the Servicer shall use its reasonable best efforts
to obtain a comparable replacement policy or bond from an insurer or issuer
meeting the requirements set forth above as of the date of such replacement. Any
such policy or fidelity bond shall by its terms not be cancelable without thirty
days' prior written notice to the Trustee.

                                     - 99 -
<PAGE>

      Section 6.06. Special Servicing Agreements.

      The Servicer may enter into a special servicing advisory agreement with an
unaffiliated holder of the Class R Certificate and/or one or more other class of
subordinated certificates and/or an advisor designated by the holder of the
Class R Certificate. Pursuant to such agreement, the Servicer may provide such
holder, in its capacity as special servicing advisor, with loan-level
information with respect to the Mortgage Loans, and the holder of the Class R
Certificate or the special servicing advisor designated by the holder of the
Class R Certificate may advise the Servicer with respect to the commencement of
foreclosure proceedings or other actions to liquidate such delinquent Mortgage
Loans and/or any other efforts to maximize recoveries with respect to such
delinquent Mortgage Loans.

                                   ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

      Section 7.01. Events of Default.

      "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 Collection Account or the Certificate Account or remit to the Trustee
      any payment (excluding a payment required to be made under Section 4.01
      hereof) required to be made under the terms of this Agreement, which
      failure shall continue unremedied for three Business Days and, with
      respect to a payment required to be made under Section 4.01 hereof, for
      one Business Day, after the date on which written notice of such failure
      shall have been given to the Servicer by the Trustee or the Depositor, or
      to the Trustee, the Depositor and the Servicer by the Holders of
      Certificates evidencing greater than 50% of the Voting Rights evidenced by
      the Certificates; or

            (ii) any failure by the Servicer to observe or perform in any
      material respect any other of the covenants or agreements on the part of
      the Servicer contained in this Agreement or any representation or warranty
      shall prove to be untrue, which failure or breach shall continue
      unremedied for a period of 60 days after the date on which written notice
      of such failure shall have been given to the Servicer, the Trustee and the
      Depositor by the Trustee or the Depositor, or to the Servicer, the Trustee
      and the Depositor by the Holders of Certificates evidencing greater than
      50% of the Voting Rights evidenced by the Certificates; or

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

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

            (v) admission by the Servicer in writing of its inability to pay its
      debts generally as they become due, file a petition to take advantage of,
      or commence a voluntary case under, any

                                    - 100 -
<PAGE>

      applicable insolvency or reorganization statute, make an assignment for
      the benefit of its creditors, or voluntarily suspend payment of its
      obligations; or

            (vi) any failure by the Servicer to duly perform, within the
      required time period, its obligations under Sections 3.17, 3.18 and 3.22
      of this Agreement, which failure continues unremedied for a period of ten
      (10) days after the date on which written notice of such failure,
      requiring the same to be remedied, shall have been given to the Servicer
      by the Trustee or any other party to this Agreement.

      If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, the Trustee may, or at the
direction of the Holders of Certificates evidencing greater than 50% of the
Voting Rights evidenced by the Certificates, shall, by notice in writing to the
Servicer (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Servicer under this Agreement and in and to the related
Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer hereunder, whether with
respect to the related Mortgage Loans or otherwise, shall pass to and be vested
in the Trustee. To the extent the Event of Default resulted from the failure of
the Servicer to make a required Advance, the Trustee shall thereupon make any
Advance described in Section 4.01 hereof subject to Section 3.04 hereof. The
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and 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. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee of
all cash amounts which shall at the time be credited to the Collection Account,
or thereafter be received with respect to the Mortgage Loans. The Servicer and
the Trustee shall promptly notify the Rating Agencies of the occurrence of an
Event of Default, such notice to be provided in any event within two Business
Days of such occurrence.

      Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a), and any other amounts payable
to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder. Notwithstanding anything herein to the
contrary, upon termination of the Servicer hereunder, any liabilities of the
Servicer which accrued prior to such termination shall survive such termination.

      Section 7.02. Trustee to Act; Appointment of Successor.

      On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to

                                    - 101 -
<PAGE>

Section 4.01. As compensation therefor, subject to the last paragraph of Section
7.01, the Trustee shall be entitled to all fees, compensation and reimbursement
for costs and expenses that the Servicer would have been entitled to hereunder
if the Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Servicer in accordance with
Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4.01 hereof or if it is otherwise unable to so act, appoint, or petition
a court of competent jurisdiction to appoint, any established mortgage loan
servicing institution provided the appointment of such successor shall not
adversely affect the then current rating of the Certificates by each Rating
Agency as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any successor servicer shall be an institution that is a Fannie Mae
and Freddie Mac approved seller/servicer in good standing, that has a net worth
of at least $15,000,000, and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
terminated Servicer (other than liabilities of the Servicer under Section 6.03
hereof incurred prior to termination of the Servicer under Section 7.01), with
like effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the Certificates
in effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. No
appointment of a successor to the Servicer hereunder shall be effective until
the Trustee shall have consented thereto and written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder.
The Trustee shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. 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 or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.

      Any successor to the Servicer as servicer shall give notice to the related
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

      Section 7.03. Notification to Certificateholders.

            (a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Depositor and to each Rating Agency.

            (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the Rating Agencies
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                    - 102 -
<PAGE>

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

        Section 8.01.     Duties of the Trustee.

         The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, 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. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee
shall, at the written direction of the majority of the Certificateholders, or
may, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel and subject
to the foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.

      The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they conform on their
face to the requirements of this Agreement. If any such instrument is found not
to conform on its face to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance, and if the instrument is not corrected to the its satisfaction,
the Trustee will provide notice thereof to the Certificateholders and take such
further action as directed by the Certificateholders.

      No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:

            (i) prior to the occurrence of an Event of Default, and after the
      curing of all such Events of Default that may have occurred, the duties
      and obligations of the Trustee shall be determined solely by the express
      provisions of this Agreement, the Trustee shall not be liable,
      individually or as Trustee, except for the performance of such duties and
      obligations as are specifically set forth in this Agreement, no implied
      covenants or obligations shall be read into this Agreement against the
      Trustee and, the Trustee may conclusively rely, as to the truth of the
      statements and the correctness of the opinions expressed therein, upon any
      certificates or opinions furnished to the Trustee and conforming to the
      requirements of this Agreement that it reasonably believed in good faith
      to be genuine and to have been duly executed by the proper authorities
      respecting any matters arising hereunder;

                                    - 103 -
<PAGE>

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

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

      Section 8.02. Certain Matters Affecting the Trustee.

      (a) Except as otherwise provided in Section 8.01:

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

            (ii) the Trustee may consult with counsel of its choice and any
      advice 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 Opinion of Counsel;

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

            (iv) prior to the occurrence of an Event of Default hereunder and
      after the curing of all Events of Default that may have occurred, the
      Trustee shall not be bound to make any investigation into the facts or
      matters stated in any resolution, certificate, statement, instrument,
      opinion, report, notice, request, consent, order, approval, bond or other
      paper or document, unless requested in writing so to do by the Holders of
      each Class of Certificates evidencing not less than 25% of the Voting
      Rights of such Class;

            (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, accountants or attorneys or independent contractors and the
      Trustee will not be responsible for any misconduct or negligence on the
      part of any agent, custodian, accountant, attorney or independent
      contractor appointed with due care by it hereunder;

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

                                    - 104 -
<PAGE>

            (vii) the Trustee shall not be liable, individually or as Trustee,
      for any loss on any investment of funds pursuant to this Agreement (other
      than as issuer of the investment security);

            (viii) the Trustee shall not be deemed to have knowledge of an Event
      of Default until a Responsible Officer of the Trustee shall have received
      written notice thereof;

            (ix) the Trustee shall be under no obligation to exercise any of the
      trusts or powers vested in it by this Agreement or to make any
      investigation of matters arising hereunder or to institute, conduct or
      defend any litigation hereunder or in relation hereto at the request,
      order or direction of any of the Certificateholders, pursuant to the
      provisions of this Agreement, unless such Certificateholders shall have
      offered to the Trustee security or indemnity satisfactory to it against
      the costs, expenses and liabilities that may be incurred therein or
      thereby;

            (x) if requested by the Servicer, the Trustee may appoint the
      Servicer as the Trustee's attorney-in-fact in order to carry out and
      perform certain activities that are necessary or appropriate for the
      servicing and administration of the Mortgage Loans pursuant to this
      Agreement. Such appointment shall be evidenced by a power of attorney in
      such form as may be agreed to by the Trustee and the Servicer. The Trustee
      shall have no liability for any action or inaction of the Servicer in
      connection with such power of attorney and the Trustee shall be
      indemnified by the Servicer for all liabilities, costs and expenses
      incurred by the Trustee in connection with the Servicer's use or misuse of
      such powers of attorney; and

            (xi) in order to comply with its duties under the U.S.A. Patriot
      Act, the Trustee shall obtain and verify certain information and
      documentation from the other parties hereto, including but not limited to,
      such party's name, address and other identifying information.

            (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement. The Trustee shall have no 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 rerecording, refiling or
redepositing, as applicable, thereof, (B) to see to any insurance or (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.

      Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.

      The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, or any
related document other than with respect to the execution and authentication of
the Certificates, if it so executed or authorized the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor or the
Servicer of any funds paid to the Depositor or the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account or the
Certificate Account by the Depositor or the Servicer.

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      Section 8.04.     Trustee May Own Certificates.

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

      Section 8.05. Trustee's Fees and Expenses.

      The Trustee and any custodian shall be entitled to, such compensation as
shall be agreed to in writing by the Trustee and the Depositor (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee.

      Section 8.06. Indemnification and Expenses of Trustee.

            (a) LaSalle Bank National Association (as Trustee and in its
individual corporate capacity) and its directors, officers, employees and agents
shall be entitled to indemnification from the Trust Fund for any loss, liability
or expense incurred in connection with (i) any audit, controversy or judicial
proceeding relating to a governmental authority or any legal proceeding incurred
without negligence or willful misconduct on their part, arising out of, or in
connection with the acceptance or administration of the trusts created hereunder
and (ii) the performance of their duties hereunder, including any applicable
fees and expenses payable hereunder, and 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; provided that failure to so notify shall not relieve
      the Trust Fund of the obligation to indemnify the Trustee; however, any
      reasonable delay by the Trustee to provide written notice to the Depositor
      and the Holders promptly after the Trustee shall have obtained knowledge
      of a claim shall not relieve the Trust Fund of the obligation to indemnify
      the Trustee under this Section 8.06;

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

            (iii) notwithstanding anything to the contrary in this Section 8.06,
      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 or delayed; and

            (iv) indemnification therefor would constitute "unanticipated
      expenses" within the meaning of Treasury Regulation Section
      1.860G-1(b)(3)(ii).

      Any indemnification payments to the Trustee (or a custodian) pursuant to
this Section 8.06(a) shall be allocated first to principal and then, to the
extent remaining, to interest.

      The provisions of this Section 8.06 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.

                                    - 106 -
<PAGE>

            (b) The Trustee and any custodian shall be entitled to reimbursement
by the Trust Fund of all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with this Agreement (including
fees and expenses of its counsel and all persons not regularly in its
employment), except any such expenses, disbursements and advances that either
(i) arise from its negligence, bad faith or willful misconduct or (ii) do not
constitute "unanticipated expenses" within the meaning of Treasury Regulations
Section 1.860G-1(b)(3)(ii).

      Section 8.07. Eligibility Requirements for Trustee.

      The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a long-term deposit rating of
at least "A2" by Moody's and "A" by S&P. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and its Affiliates; provided, however,
that such corporation cannot be an Affiliate of the Servicer.

      Section 8.08. Resignation and Removal of Trustee.

      The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor by
mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register and
each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.09, such resignation is to take effect, and
(2) acceptance of appointment by a successor trustee in accordance with Section
8.09 and meeting the qualifications set forth in Section 8.07. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.

      If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and shall promptly appoint a successor trustee
by written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee and one copy of which shall be delivered to the
successor trustee.

      The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates may at any time remove the Trustee and the Depositor shall appoint
a successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered by the successor trustee to the Trustee so
removed and one

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<PAGE>

complete set to the successor so appointed. Notice of any removal of the Trustee
shall be given to each Rating Agency by the successor trustee.

      Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.

      Section 8.09. Successor Trustee.

      Any successor trustee appointed as provided in Section 8.08 hereof 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 herein.

      No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.

      Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.

      Section 8.10. Merger or Consolidation of Trustee.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).

      Section 8.11. Appointment of Co-Trustee or Separate Trustee.

      Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.11, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be compensated by the Trust Fund and
subject to the written approval of the Servicer. The

                                    - 108 -
<PAGE>

Trustee shall not be liable for the actions of any co-trustee appointed with due
care; provided that the appointment of a co-trustee shall not relieve the
Trustee of its obligations hereunder. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request to do so,
or in the case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.07 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 8.09.

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

            (i) All rights, powers, duties and obligations conferred or imposed
      upon the Trustee shall be conferred or imposed upon and exercised or
      performed by the Trustee and such separate trustee or co-trustee jointly
      (it being understood that such separate trustee or co-trustee is not
      authorized to act separately without the Trustee joining in such act),
      except to the extent that under any law of any jurisdiction in which any
      particular act or acts are to be performed (whether as Trustee hereunder
      or as successor to the Servicer hereunder), the Trustee shall be
      incompetent or unqualified to perform such act or acts, in which event
      such rights, powers, duties and obligations (including the holding of
      title to the Trust Fund or any portion thereof in any such jurisdiction)
      shall be exercised and performed singly by such separate trustee or
      co-trustee, but solely at the direction of the Trustee;

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

            (iii) The Trustee may at any time accept the resignation of or
      remove any separate trustee or co-trustee.

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

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

      Section 8.12. Tax Matters.

                                    - 109 -
<PAGE>

            (a) It is intended that each of the REMICs provided for herein REMIC
shall constitute, and that the affairs of the Trust Fund shall be conducted so
as to allow each such REMIC to qualify as, a "real estate mortgage investment
conduit" as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) on behalf of
each of the REMICs provided for herein and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely manner, a U.S.
Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any
successor form adopted by the Internal Revenue Service) and prepare and file or
cause to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to each of the REMICs provided for herein, containing
such information and at the times and in the manner as may be required by the
Code or state or local tax laws, regulations, or rules, and furnish or cause to
be furnished to Certificateholders the schedules, statements or information at
such times and in such manner as may be required thereby; (b) within thirty days
of the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for each of
the REMICs provided for herein; (c) make or cause to be made elections, on
behalf of each of the REMICs provided for herein to be treated as a REMIC on the
federal tax return of such REMICs for their first taxable years (and, if
necessary, under applicable state law); (d) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) provide information necessary for
the computation of tax imposed on the transfer of a Class R Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
provided for herein at all times that any Certificates are outstanding so as to
maintain the status of each of the REMICs provided for herein as a REMIC under
the REMIC Provisions; (g) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of any
of the REMICs provided for herein or result in the imposition of tax upon any
such REMIC; (h) pay, from the sources specified in the last paragraph of this
Section 8.12, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on each of the REMICs
provided for herein prior to the termination of the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); (i) sign or
cause to be signed federal, state or local income tax or information returns;
(j) maintain records relating to each of the REMICs provided for herein,
including but not limited to the income, expenses, assets and liabilities of
each of the REMICs provided for herein, and the fair market value and adjusted
basis of the Trust Fund property determined at such intervals as may be required
by the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (k) as and when necessary and appropriate,
represent each of the REMICs provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any

                                    - 110 -
<PAGE>

governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs provided for herein in relation to any tax matter
involving any of such REMICs or any controversy involving the Trust Fund.

      In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.

      In the event that any tax is imposed on "prohibited transactions" of any
of the REMICs provided for herein as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement or as a result of
the location of the Trustee, (ii) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or as a result of the
location of such other party (except for the Trustee) or (iii) in all other
cases, or in the event that any liable party here fails to honor its obligations
under the preceding clauses (i) or (ii), any such tax will be paid first with
amounts otherwise to be distributed to the Class R Certificateholders (pro rata)
pursuant to Section 4.04, and second with amounts otherwise to be distributed to
all other Certificateholders in the following order of priority: first, to the
Class C Certificates (pro rata), second, to the Class B-5 Certificates (pro
rata), third, to the Class B-4 Certificates (pro rata), fourth, to the Class B-3
Certificates (pro rata), fifth, to the Class B-2 Certificates (pro rata), sixth,
to the Class B-1 Certificates (pro rata), seventh, to the Class M-2 Certificates
(pro rata), eighth, to the Class M-1 Certificates (pro rata) and ninth, to the
Class A Certificates (pro rata). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificate, the Trustee is hereby authorized pursuant to such instruction to
retain on any Distribution Date, from the Holders of the Class R Certificate
(and, if necessary, from the Holders of all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. The Trustee agrees to promptly
notify in writing the party liable for any such tax of the amount thereof and
the due date for the payment thereof.

            (b) Each of the Depositor, the Servicer and the Trustee agrees not
to knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any of the REMICs provided
for herein or result in the imposition of a tax upon any of the REMICs provided
for herein.

                                   ARTICLE IX

                                   TERMINATION

                                    - 111 -
<PAGE>

      Section 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.

            (a) Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Servicer and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) an Optional Termination and
(b) the later of (i) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) 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 and (ii) the Latest
Possible Maturity Date.

            (b) On or before the Determination Date following the Initial
Optional Termination Date, the Trustee shall attempt to terminate the Trust Fund
by conducting an auction of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of which shall be a
nationally recognized participant in mortgage finance (the "Auction"). In
addition, the Trustee will also solicit a bid from each Holder of a Class C
Certificate. The Depositor and the Trustee agree to work in good faith to
develop bid procedures in advance of the Initial Optional Termination Date to
govern the operation of the Auction. The Trustee shall be entitled to retain an
investment banking firm and/or other agents in connection with the Auction, the
cost of which shall be included in the Optional Termination Price (unless an
Optional Termination does not occur in which case such costs shall be an expense
of the Trust Fund). The Trustee shall accept the highest bid received at the
Auction; provided that the amount of such bid equals or exceeds the Optional
Termination Price. The Trustee shall determine the Optional Termination Price
based upon information provided by (i) the Servicer with respect to the amounts
described in clauses (A) and (B) of the definition of "Optional Termination
Price", (ii) the Depositor with respect to the information described in clause
(C) of the definition of "Optional Termination Price." The Trustee may
conclusively rely upon the information provided to it in accordance with the
immediately preceding sentence and shall not have any liability for the failure
of any party to provide such information.

      If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the Servicer may, on any
Distribution Date following such Auction, at its option, terminate the Trust
Fund by purchasing all of the Mortgage Loans and REO Properties at a price equal
to the Optional Termination Price. In connection with such termination, the
Optional Termination Price shall be delivered to the Trustee no later than two
Business Days immediately preceding the related Distribution Date.
Notwithstanding anything to the contrary herein, the Optional Termination Amount
paid to the Trustee by the winning bidder at the Auction or by the Servicer
shall be deposited by the Trustee directly into the Certificate Account
immediately upon receipt. Upon any termination as a result of an Auction, the
Trustee shall, out of the Optional Termination Amount deposited into the
Certificate Account, (x) reimburse the Trustee for its costs and expenses
necessary to conduct the Auction and any other unreimbursed amounts owing to it
and (y) pay to the Servicer, the aggregate amount of any unreimbursed
out-of-pocket costs and expenses owed to the Servicer and any unpaid or
unreimbursed Servicing Fees, Advances and Servicing Advances.

            (c) Notwithstanding anything to the contrary in clause (b) above, in
the event that the Trustee receives the written opinion of a nationally
recognized participant in mortgage finance acceptable to the Seller that the
Mortgage Loans and REO Properties to be included in the Auction will not be
saleable at a price sufficient to achieve the Optional Termination Price, the
Trustee need not conduct the

                                    - 112 -
<PAGE>

Auction. In such event, the Servicer shall have the option to purchase the
Mortgage Loans and REO Properties at the Optional Termination Price as of the
Initial Optional Termination Date.

      Section 9.02. Final Distribution on the Certificates.

      If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders as
soon as practicable after such Determination Date that the final distribution in
retirement of such Class of Certificates is scheduled to be made on the
immediately following Distribution Date. Any final distribution made pursuant to
the immediately preceding sentence will be made only upon presentation and
surrender of the Certificates at the office of the Trustee specified in such
notice.

      Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed no later than the last calendar day of
the month immediately preceding the month of such final distribution (or with
respect to an Auction, mailed no later than one Business Day following
completion of such Auction). Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to each Rating Agency at the time such notice
is given to Certificateholders.

      In the event such notice is given, the Servicer shall remit all funds in
the Collection Account to the Trustee for deposit in the Certificate Account on
the Servicer Remittance Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit and the receipt by the
Trustee of a Request for Release therefor, the Trustee shall promptly release to
the Mortgage Files for the Mortgage Loans.

      Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

      In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class

                                    - 113 -
<PAGE>

R Certificateholders of such funds and assets, the Trustee shall not have any
further duties or obligations with respect thereto.

      Section 9.03. Additional Termination Requirements.

            (a) In the event the Trustee or the Servicer completes an Optional
Termination as provided in Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the Servicer to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of any of the REMICs provided for herein as defined in section
860F of the Code, or (ii) cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

            (i) The Depositor shall establish a 90-day liquidation period and
      notify the Trustee thereof, and the Trustee shall in turn specify the
      first day of such period in a statement attached to the final tax returns
      of each of the REMICs provided for herein pursuant to Treasury Regulation
      Section 1.860F-1. The Depositor shall satisfy all the requirements of a
      qualified liquidation under Section 860F of the Code and any regulations
      thereunder, as evidenced by an Opinion of Counsel obtained at the expense
      of the Servicer;

            (ii) During such 90-day liquidation period, and at or prior to the
      time of making the final payment on the Certificates, the Depositor as
      agent of the Trustee shall sell all of the assets of the Trust Fund for
      cash; and

            (iii) At the time of the making of the final payment on the
      Certificates, the Trustee shall distribute or credit, or cause to be
      distributed or credited, to the Class R Certificateholders all cash on
      hand (other than cash retained to meet outstanding claims), and the Trust
      Fund shall terminate at that time, whereupon the Trustee shall have no
      further duties or obligations with respect to sums distributed or credited
      to the Class R Certificateholders.

            (b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Depositor to specify the 90-day liquidation period for the
Trust Fund, which authorization shall be binding upon all successor
Certificateholders.

            (c) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation prepared and delivered to it by
Depositor upon the written request of the Depositor, and the receipt of the
Opinion of Counsel referred to in Section 9.03(a) and to take such other action
in connection therewith as may be reasonably requested by the Depositor.

            (d) Notwithstanding any other terms of this Agreement, prior to any
termination of the Trust Fund, the Servicer may prepare a reconciliation of all
Advances and Servicing Advances made by it for which it has not been reimbursed
and a reasonable estimate of all additional Servicing Advances and other costs
for which it would be entitled to be reimbursed if the Trust Fund were not being
terminated, including without limitation, any Servicing Advances and other costs
arising under Section 6.03 (Limitation on Liability of the Depositor, the
Servicer and Others), and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing

                                    - 114 -
<PAGE>

Advances and other costs constitutes "unanticipated expenses" within the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii)).

            (e) (e) Notwithstanding any other terms of this Agreement, unless
the Servicer previously has notified the Trustee that it has entered into a
servicing agreement for the servicing after the termination date of the Trust
Fund assets, at least 20 days prior to any termination of the Trust Fund, the
Trustee or the Depositor shall notify the Servicer in writing to transfer the
assets of the Trust Fund as of the termination date to the person specified in
the notice, or if such person is not then known, to continue servicing the
assets until the date that is 20 days after the termination date and on the
termination date, the Trustee or the Depositor shall notify the Servicer of the
person to whom the assets should be transferred on that date. In the latter
event the Servicer shall be entitled to recover its servicing fee and any
advances made for the interim servicing period from the collections on the
assets which have been purchased from the Trust and the new owner of the assets,
and the agreements for the new owner to obtain ownership of the assets of the
Trust Fund shall so provide.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

            Section 10.01. Amendment.

      This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee without the consent of any of the Certificateholders
to,

            (i) to cure any ambiguity or correct any mistake,

            (ii) to correct, modify or supplement any provision herein which may
      be inconsistent with the Prospectus Supplement or any other provision
      herein,

            (iii) to add any other provisions with respect to matters or
      questions arising under this Agreement, or

            (iv) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in this Agreement, provided, however, that, in the
      case of clauses (iii) and (iv), such amendment will not, as evidenced by
      an Opinion of Counsel to such effect, adversely affect in any material
      respect the interests of any Holder; provided, further, however, that such
      amendment will be deemed to not adversely affect in any material respect
      the interest of any Holder if the Person requesting such amendment obtains
      a letter from each Rating Agency stating that such amendment will not
      result in a reduction or withdrawal of its rating of any Class of the
      Certificates, it being understood and agreed that any such letter in and
      of itself will not represent a determination as to the materiality of any
      such amendment and will represent a determination only as to the credit
      issues affecting any such rating. In addition, this Agreement may be
      amended from time to time by the Depositor, the Servicer and the Trustee
      without the consent of any of the Certificateholders and without delivery
      of an opinion of counsel to comply with the provisions of Regulation AB.

      Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify,

                                    - 115 -
<PAGE>

eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of any of the REMICs provided for
herein as REMICs under the Code or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund or any of the REMICs provided for herein
pursuant to the Code that would be a claim against the Trust Fund at any time
prior to the final redemption of the Certificates, provided that the Trustee
shall have been provided an Opinion of Counsel, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.

      This Agreement may also be amended from time to time by the Depositor, the
Trustee, the Servicer, the Trustee and the Holders of the Certificates affected
thereby evidencing not less than 66 2/3% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing 66
2/3% or more of the Voting Rights of such Class or (iii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to any
such amendment without the consent of the Holders of all such Certificates then
outstanding.

      Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding.

      Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.

      It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.

      Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.

      The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.

                                    - 116 -
<PAGE>

      Section 10.02. Counterparts.

      This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.

      Section 10.03. Governing Law.

      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

      Section 10.04. Intention of Parties.

      It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.

      The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, 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 the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.

      Section 10.05. Notices.

            (a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:

            (i) Any material change or amendment to this Agreement;

            (ii) The occurrence of any Event of Default that has not been cured;

                                    - 117 -
<PAGE>

            (iii) The resignation or termination of the Trustee or the Servicer
      and the appointment of any successor;

            (iv) The repurchase or substitution of Mortgage Loans pursuant to
      Sections 2.02 and 2.03;

            (v) The final payment to Certificateholders; and

            (vi) Any change in the location of the Certificate Account.

            (b) The Trustee shall promptly furnish or make available to each
Rating Agency copies of the following:

            (i) Each report to Certificateholders described in Section 4.05;

            (ii) Each annual statement as to compliance described in Section
      3.17; and

            (iii) Each annual independent public accountants' servicing report
      described in Section 3.18.

All directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered to (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, Attention: Asset-Backed
Finance; (b) in the case of the Rating Agencies, (i) Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041; (ii) Moody's Investors Service, Inc., 99 Church Street,
4th Floor, New York, New York 10007; and (iii) Fitch, One State Street Plaza,
30th Floor, New York, New York 10004, Attention: Surveillance Group; (c) in the
case of the Servicer, Wilshire Credit Corporation, 14523 S.W. Millikan Way,
Suite 200, Beaverton, Oregon 97005, Attention: Heidi Peterson; (d) in the case
of the Trustee, LaSalle Bank National Association, 135 South LaSalle Street,
Suite 1625, Chicago, Illinois 60603, and in the case of any of the foregoing
persons, such other addresses as may hereafter be furnished by any such persons
to the other parties to this Agreement. Notices to Certificateholders shall be
deemed given when mailed, first class postage prepaid, to their respective
addresses appearing in the Certificate Register.

      Section 10.06. Severability of Provisions.

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

      Section 10.07. Assignment.

      Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor;
provided, however, the Servicer is hereby authorized to enter into an Advance
Facility under which (l) the Servicer sells, assigns or pledges to an Advancing
Person the Servicer's rights

                                    - 118 -
<PAGE>

under this Agreement to be reimbursed for any Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all Advances or Servicing
Advances required to be made by the Servicer pursuant to this Agreement. No
consent of the Trustee, Certificateholders or any other party is required before
the Servicer may enter into an Advance Facility. Notwithstanding the existence
of any Advance Facility under which an Advancing Person agrees to fund Advances
and/or Servicing Advances on the Servicer's behalf, the Servicer shall remain
obligated pursuant to this Agreement to make Advances and Servicing Advances
pursuant to and as required by this Agreement, and shall not be relieved of such
obligations by virtue of such Advance Facility.

      Reimbursement amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related Advance(s) and/or
Servicing Advance(s).

      The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan by loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.

      An Advancing Person who purchases or receives an assignment or pledge of
the rights to be reimbursed for Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
Subservicer set forth in this Agreement.

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

      Any amendment to this Section 10.07 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee and the Servicer, without the consent of any Certificateholder
notwithstanding anything to the contrary in this Agreement, upon receipt by the
Trustee of an Opinion of Counsel that such amendment has no material adverse
effect on the Certificateholders or written confirmation from the Rating
Agencies that such amendment will not adversely affect the ratings on the
Certificates. Prior to entering into an Advance Facility, the Servicer shall
notify the lender under such facility in writing that: (a) the Advances financed
by and/or pledged to the lender are obligations owed to the Servicer on a non
recourse basis payable only from the cash flows and proceeds received under this
Agreement for reimbursement of Advances only to the extent provided herein, and
the Trustee and the Trust Fund are not otherwise obligated or liable to repay
any Advances financed by the lender; (b) the Servicer will be responsible for

                                    - 119 -
<PAGE>

remitting to the lender the applicable amounts collected by it as reimbursement
for Advances funded by the lender, subject to the restrictions and priorities
created in this Agreement; and (c) the Trustee shall not have any responsibility
to track or monitor the administration of the financing arrangement between the
Servicer and the lender.

      Limitation on Rights of Certificateholders.

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

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

      No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such indemnity satisfactory to it as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

      Section 10.08. Inspection and Audit Rights.

      The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the Depositor or the Trustee during the Servicer's normal
business hours, to examine all the books of account, records, reports and other
papers of the Servicer relating to the Mortgage Loans to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees, agents, counsel and independent public accountants (and by this
provision the Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any

                                    - 120 -
<PAGE>

out-of-pocket expense incident to the exercise by the Depositor or the Trustee
of any right under this Section 10.09 shall be borne by the party requesting
such inspection (except in the case of the Trustee in which case such expenses
shall be borne by the requesting Certificateholder(s)); all other such expenses
shall be borne by the Servicer.

      Section 10.09. Certificates Nonassessable and Fully Paid.

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

      Section 10.10. Compliance with Regulation AB.

      Each of the parties hereto acknowledges and agrees that the purpose of
Sections 3.17, 3.18 and 3.20 of this Agreement is to facilitate compliance by
the Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish compliance with Regulation AB, (b) the parties' obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, interpretive advice or guidance, or convention or consensus among
active participants in the asset-backed securities markets in respect of the
requirements of Regulation AB and (c) the parties shall comply with reasonable
requests made by the Depositor for delivery of that or different information as
is necessary to comply with the provisions of Regulation AB.

                                    - 121 -
<PAGE>

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

                                   MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                        as Depositor

                                   By:________________________________________
                                   Name:
                                   Title:

                                   LASALLE BANK NATIONAL ASSOCIATION
                                        as Trustee

                                   By:________________________________________
                                   Name:
                                   Title:

                                   WILSHIRE CREDIT CORPORATION,
                                        as Servicer

                                   By:________________________________________
                                   Name:
                                   Title:
<PAGE>

                                    EXHIBIT A

                              FORMS OF CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                       A-1
<PAGE>

                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                       B-1
<PAGE>

                                    EXHIBIT C

                                   [RESERVED]

                                       C-1
<PAGE>

                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wilshire Credit Corporation
14523 S.W. Millikan Way, Suite 200
Beaverton, Oregon 97005

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2006-SL1

Ladies and Gentlemen:

      In accordance with Section 2.02 of the Pooling and Servicing Agreement
dated as of January 1, 2006 among Merrill Lynch Mortgage Investors, Inc., as
depositor, LaSalle Bank National Association, as trustee, Wilshire Credit
Corporation, as servicer (the "Pooling and Servicing Agreement"), the
undersigned, as Trustee, hereby certifies that [, except as set forth in
Schedule A hereto,] as to each Mortgage Loan listed in the Mortgage Loan
Schedule attached hereto (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that:

            (i) All documents in the Mortgage File required to be delivered to
      the Trustee pursuant to Section 2.01 of the Pooling and Servicing
      Agreement are in its possession;

            (ii) In connection with each Mortgage Loan or Assignment thereof as
      to which documentary evidence of recording was not received on the Closing
      Date, it has received evidence of such recording; and

            (iii) Such documents have been reviewed by it and appear regular on
      their face and relate to such Mortgage Loan.

      The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number, the
name of the Mortgagor, the street address (excluding zip code), the mortgage
interest rate at origination, the gross margin (if applicable), the lifetime
rate cap (if applicable), the periodic rate cap (if applicable), the original
principal balance, the first payment due date and the original maturity date in
each Mortgage File conform to the respective Mortgage Loan number and name
listed on the Mortgage Loan Schedule and (ii) the existence in each Mortgage
File of each of the documents listed in subparagraphs (i)(A) through (E), as
applicable, inclusive, of Section 2.01 in the Agreement. The Trustee makes no
representations or warranties as to the validity, legality, recordability,
sufficiency, enforceability, due authorization or genuineness of any of the

                                       D-1
<PAGE>

documents contained in each Mortgage Loan or the collectability, insurability,
effectiveness, priority, perfection or suitability of any such Mortgage Loan.

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Pooling and Servicing
Agreement.

                                              LASALLE BANK NATIONAL ASSOCIATION,
                                                  as Trustee

                                              By:______________________________
                                              Name:____________________________
                                              Title:___________________________

                                       D-2
<PAGE>

                                   EXHIBIT E-1

                    FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention:   Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
             Series 2006-SL1

Ladies and Gentlemen:

      We propose to purchase Merrill Lynch Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-SL1, Class R, described in the
Prospectus Supplement, dated November 8, 2005, and the Prospectus, dated August
26, 2005.

      1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "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 (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

      2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.

                                       E-1
<PAGE>

      3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:1

      ___________ The Class R Certificate will be registered in our name.

      ___________ The Class R Certificate will be held in the name of our
nominee, _________________, which is not a disqualified organization.

      4. We certify that we are not 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 subject to federal, state,
local, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code (each, a "Plan"), and are not directly or indirectly
acquiring the Class R Certificate on behalf of or with any assets of a Plan.

      5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or 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 such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons. We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.

      6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us and the Trustee with a duly completed and
effective Internal Revenue Service Form W-8ECI or successor form at the time and
in the manner required by the Code and (iii) has delivered to the Trustee a
letter in the form of this letter (including the affidavit appended hereto) and,
we will provide the Trustee a written statement substantially in the form of
Exhibit E-2 to the Pooling and Servicing Agreement.

      7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement.

                                Very truly yours,

                                  [PURCHASER]

__________________
1     check appropriate box ad if neccessary fill in the name of the
      transferee's nominee.

                                       E-2
<PAGE>

                                              By:______________________________
                                                   Name:
                                                   Title:

      In accordance with Section 2.02 of the Pooling and

Accepted as of __________ __, 200__

MERRILL LYNCH MORTGAGE INVESTORS, INC.

By: ___________________________________
    Name:
    Title:

                                       E-3
<PAGE>

                                   APPENDIX A

                                   Affidavit pursuant to (i) Section 860E(e)(4)
                                   of the Internal Revenue Code of 1986, as
                                   amended, and (ii) certain provisions of the
                                   Pooling and Servicing Agreement

Under penalties of perjury, the undersigned declares that the following is true:

      1. He or she is an officer of _______________________ (the "Transferee"),

      2. the Transferee's Employer Identification number is __________,

      3. the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and is not
acquiring any of its interest in the Merrill Lynch Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-SL1, Class R Certificate on
behalf of a disqualified organization or any other entity,

      4. unless Merrill Lynch Mortgage Investors, Inc.("MLMI") has consented to
the transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed as
Appendix A, the Transferee is a "U.S. person" (as defined below),

      5. that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,

      6. the Transferee has historically paid its debts as they became due,

      7. the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,

      8. the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows generated
by the Class R Certificate,

      9. the Transferee intends to pay any taxes associated with holding the
Class R Certificate as they become due,

      10. the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by MLMI (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Class R Certificate will
not be owned directly or indirectly by a disqualified organization, and

      11. IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the residual
interests represented by the Class R Certificate, the present value of the
anticipated tax liabilities associated with holding such residual interest does
not exceed the sum of:

      12. the present value of any consideration given to the Transferee to
acquire such residual interest;

                                       E-4
<PAGE>

      13. the present value of the expected future distributions on such
residual interest; and

      14. the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.

For purposes of this declaration, (i) the Transferee is assumed to pay tax at a
rate equal to the highest rate of tax specified in Section 11(b)(1) of the Code,
but the tax rate specified in Section 55(b)(1)(B) of the Code may be used in
lieu of the highest rate specified in Section 11(b)(1) of the Code if the
Transferee has been subject to the alternative minimum tax under Section 55 of
the Code in the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate, and (ii) present
values are computed using a discount rate equal to the Federal short-term rate
prescribed by Section 1274(d) of the Code for the month of the transfer and the
compounding period used by the Transferee;]

[(11) (A)   at the time of the transfer, and at the close of each of the
            Transferee's two fiscal years preceding the Transferee's fiscal year
            of transfer, the Transferee's gross assets for financial reporting
            purposes exceed $100 million and its net assets for financial
            reporting purposes exceed $10 million; and

      (B)   the Transferee is an eligible corporation as defined in Treasury
            regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
            any subsequent transfer of the Class R Certificate will be to
            another eligible corporation in a transaction that satisfies
            Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
            1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be
            a direct or indirect transfer to a foreign permanent establishment
            (within the meaning of an applicable income tax treaty) of a
            domestic corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.

For purpose of this affidavit, the term "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 (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary

                                       E-5
<PAGE>

supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).

__________________________________

By: ______________________________
    ______________________________

    Address of Investor for receipt of distribution:

    Address of Investor for receipt of tax information:

    (Corporate Seal)

    Attest:

    ______________________________
    ______________________________, Secretary

                                       E-6
<PAGE>

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 to me that he executed the same as his
free act and deed and the free act and deed of the Investor.

Subscribed and sworn before me this  day of  ,
200_ .

_____________________________________
Notary Public

County of____________________________
State of_____________________________
My commission expires the ________ day of ______________

                                              By: _____________________________
                                                   Name:
                                                   Title:

Dated: ___________

                                       E-7
<PAGE>

                                  EXHIBIT E - 2

                         FORM OF TRANSFEROR'S AFFIDAVIT

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
           Series 2006-SL1

Re:     Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
        Certificates, Series 2006-SL1

      _______________________ (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
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 the
Class R Certificate referred to in the attached affidavit. 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:

                                      E-2-1
<PAGE>

                                    EXHIBIT F

                         FORM OF TRANSFEROR CERTIFICATE

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
           Series 2006-SL1

RE:     Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
        Certificates, Series 2006-SL1

Ladies and Gentlemen:

      In connection with our disposition of the Class [____] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of January 1,
2006, among Merrill Lynch Mortgage Investors, Inc., as depositor, LaSalle Bank
National Association, as trustee, and Wilshire Credit Corporation, as servicer.

                                       Very truly yours,

                                       ____________________________________
                                       Name of Transferor

                                       By: ________________________________
                                       Name:
                                       Title:

                                       F-1
<PAGE>

                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER

                              (ACCREDITED INVESTOR)

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
           Series 2006-SL1

Re:     Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
        Certificates, Series 2006-SL1

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-SL1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2006 (the "Pooling and Servicing Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor"), LaSalle Bank National
Association, as trustee (the "Trustee"), Wilshire Credit Corporation, as
servicer (the "Servicer"). [The Purchaser intends to register the Transferred
Certificate in the name of ____________________, as nominee for
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

      2. The Certificates (other than the Class R Certificate) will bear a
legend to the following effect:

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
      DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE

                                       G-1
<PAGE>

      TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
      REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER PROVISIONS
      OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. IF THE CERTIFICATE
      IS A DEFINITIVE CERTIFICATE, NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE
      UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY
      TO THE TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND
      (B) REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF
      THE CERTIFICATES.

      3. The ERISA Restricted Certificates will bear a legend to the following
effect:

      NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS
      RECEIVED (A) A REPRESENTATION THAT SUCH TRANSFEREE IS NOT 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 SUBJECT
      TO STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO
      THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
      (COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
      CERTIFICATE BY, 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 SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS
      ACQUIRING THE CERTIFICATE WITH ASSETS OF 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 UPON WHICH THE TRUSTEE SHALL BE
      ENTITLED TO RELY, TO THE EFFECT THAT THE ACQUISITION AND HOLDING OF SUCH
      CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT CONSTITUTE OR RESULT IN
      A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION 4975
      OF THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE
      TRUSTEE, THE SERVICER OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
      THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT,
      WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE
      SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT A DEFINITIVE
      CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE REPRESENTATION IN
      (A) OR (B) ABOVE.

      4. The Class R Certificate will bear a legend to the following effect:

      THIS CLASS R CERTIFICATE MAY NOT BE TRANSFERRED, EXCEPT IN ACCORDANCE WITH
      SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT AND THE HOLDER OF THIS
      CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
      TRANSFER SUCH CERTIFICATE ONLY IN ACCORDANCE WITH SECTION 5.02 OF THE
      POOLING AND SERVICING AGREEMENT.

                                       G-2
<PAGE>

      NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
      HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE (A) A
      TRANSFER AFFIDAVIT FROM THE PROSPECTIVE INVESTOR; AND (B) AN AFFIDAVIT
      FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATE.

      NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
      TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION THAT SUCH TRANSFEREE
      IS NOT 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 SUBJECT TO STATE, LOCAL,
      FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT DIRECTLY OR
      INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS
      OF ANY SUCH PLAN.

      5. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY] * and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.

      6. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.

      7. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.

      8. The Purchaser of an ERISA Restricted Certificate (A) is not an employee
benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, a plan subject to any state, local,

_____________________
*     No required of a broker/dealer purchaser.

                                       G-3
<PAGE>

federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") and is not directly or indirectly acquiring
such Certificates by, on behalf of, or with any assets of any such plan, or (B)
if the Certificate has been the subject of an ERISA-Qualifying Underwriting, is
an insurance company that is acquiring the Certificate with assets of 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 event the Certificate is a Definitive Certificate, herewith
delivers an Opinion of Counsel satisfactory to the Trustee, and upon which the
Trustee shall be entitled to rely, to the effect that the acquisition and
holding of the Certificate will not constitute or result in a nonexempt
prohibited transaction under Title I of ERISA or Section 4975 of the Code, or a
violation of Similar Law, and will not subject the Trustee, the Servicer or the
Depositor to any obligation in addition to those expressly undertaken in the
Pooling and Servicing Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Servicer or the Depositor.

      9. The Purchaser of a Class R Certificate is not an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, a plan
subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), or a
Person directly or indirectly acquiring such Certificate by, on behalf of, or
with any assets of any such plan.

      10. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit H to the Pooling and Servicing Agreement.

                                       G-4
<PAGE>

      11. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.

                                Very truly yours,

                                [PURCHASER]

                                By: __________________________________
                                    Name:
                                    Title:

                                       G-5
<PAGE>

                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER

                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
           Series 2006-SL1

      Re: Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
          Certificates, Series 2006-SL1

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-SL1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2006 (the "Pooling and Servicing Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor"), LaSalle Bank National
Association, as trustee (the "Trustee"), Wilshire Credit Corporation, as
servicer (the "Servicer"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED
CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      In connection with our acquisition of the above Transferred Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) solely with respect to
ERISA Restricted Certificates, (A) we are not 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"), a plan subject to any state, local, federal, non-U.S.
or other law substantively similar to the foregoing provisions of ERISA or the
Code ("Similar Law"), or Persons directly or indirectly acting on behalf of or
using any assets of any such plan, or (B), if the Certificate has been the
subject of an ERISA-Qualifying Underwriting, we are an insurance

                                       H-1
<PAGE>

company that is acquiring the Certificate with assets of 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
event the Certificate is a Definitive Certificate, we will herewith deliver an
Opinion of Counsel satisfactory to the Trustee, and upon which the Trustee shall
be entitled to rely, to the effect that the acquisition and holding of the
Certificate will not constitute or result in a nonexempt prohibited transaction
under Title I of ERISA or Section 4975 of the Code, or a violation of Similar
Law, and will not subject the Trustee, the Servicer or the Depositor to any
obligation in addition to those expressly undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be an expense of the
Trustee, the Servicer or the Depositor, (e) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
one of the forms of certification to that effect attached hereto as Annex 1 or
Annex 2. We are aware that the sale of the Transferred Certificates to us is
being made in reliance on Rule 144A. We are acquiring the Transferred
Certificates for our own account or for resale pursuant to Rule 144A and further
understand that such Certificates may be resold, pledged or transferred only (i)
to a person reasonably believed by us, based upon certifications of such
purchaser or information we have in our possession, to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.

                                       H-2
<PAGE>

      We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.

                                Very truly yours,

                                [PURCHASER]

                                By: _________________________________________
                                Name:
                                Title:

                                       H-3
<PAGE>

                                                                         ANNEX 1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

      2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________ * in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.

          _____   Corporation, etc. The Buyer is a corporation (other than a
                  bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or
                  charitable organization described in Section 501(c)(3) of the
                  Internal Revenue Code of 1986, as amended.

          _____   Bank. The Buyer (a) is a national bank or banking institution
                  organized under the laws of any State, territory or the
                  District of Columbia, the business of which is substantially
                  confined to banking and is supervised by Federal, State or
                  territorial banking commission or similar official or is a
                  foreign bank or equivalent institution, and (b) has an audited
                  net worth of at least $25,000,000 as demonstrated in its
                  latest annual financial statements, a copy of which is
                  attached hereto.

          _____   Savings and Loan. The Buyer (a) is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar institution, which is
                  supervised and examined by a State or Federal authority having
                  supervision over such institution or is a foreign savings and
                  loan association or equivalent institution and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.

          _____   Broker-dealer. The Buyer is a dealer registered pursuant to
                  Section 15 of

----------
      * Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case, Buyer
must own and/or invest on a discretionary basis at least $10,000,000 in
securities.

                                      H-4
<PAGE>

                  the Securities Exchange Act of 1934, as amended.

          _____   Insurance Company. The Buyer is an insurance company whose
                  primary and predominant business activity is the writing of
                  insurance or the reinsuring of risks underwritten by insurance
                  companies and which is subject to supervision by the insurance
                  commissioner or a similar official or agency of the State,
                  territory or the District of Columbia.

          _____   State or Local Plan. The Buyer is a plan established and
                  maintained by a State, its political subdivisions, or any
                  agency or instrumentality of the State or its political
                  subdivisions, for the benefit of its employees.

          _____   ERISA Plan. The Buyer is an employee benefit plan subject to
                  Title I of the Employee Retirement Income Security Act of
                  1974, as amended.

          _____   Investment Advisor. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940, as
                  amended.

          _____   Small Business Investment Company. Buyer is a small business
                  investment company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small
                  Business Investment Act of 1958, as amended.

          _____   Business Development Company. Buyer is a business development
                  company as defined in Section 202(a)(22) of the Investment
                  Advisors Act of 1940, as amended.

      3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.

      4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

                                      H-5
<PAGE>

      5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

      6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                   By:
                                           --------------------------------
                                           Name:
                                           Title:

                                   Date:
                                           --------------------------------

                                      H-6
<PAGE>

                                                                         ANNEX 2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

      2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

      _____    The Buyer owned $___________ in securities (other than the
               excluded securities referred to below) as of the end of the
               Buyer's most recent fiscal year (such amount being calculated in
               accordance with Rule 144A).

      _____    The Buyer is part of a Family of Investment Companies which owned
               in the aggregate $__________ in securities (other than the
               excluded securities referred to below) as of the end of the
               Buyer's most recent fiscal year (such amount being calculated in
               accordance with Rule 144A).

      3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

      4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

                                      H-7
<PAGE>

      5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.

      6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                   By:
                                           ------------------------------
                                           Name:
                                           Title:

                                   IF AN ADVISER:

                                   --------------------------------------
                                   Print Name of Buyer

                                   Date:
                                         --------------------------------

                                      H-8
<PAGE>
                                    EXHIBIT I

                           FORM OF REQUEST FOR RELEASE

                                     [DATE]

To:   LaSalle Bank National Association 135 South LaSalle Street Chicago,
      Illinois 60603 Attention: Account Manager--MLMI 2006-SL1

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2006-SL1

      In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the Pooling and Servicing Agreement dated as of January
1, 2006 among Merrill Lynch Mortgage Investors, Inc., as depositor, LaSalle Bank
National Association, as Trustee, Wilshire Credit Corporation, as servicer (the
"Pooling and Servicing Agreement"), we request the release, and hereby
acknowledge receipt, of the Mortgage File for the Mortgage Loan described below,
for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

<TABLE>
<S>      <C>    <C>
______   1.     Mortgage Paid in Full

______   2.     Foreclosure

______   3.     Substitution

______   4.     Other Liquidation (Repurchases, etc.)

______   5.     Nonliquidation
</TABLE>

Address to which the Trustee should deliver the Mortgage File:

                                By:
                                    -------------------------------------
                                               (authorized signer)
                                Address:
                                          -------------------------------
                                Date:
                                       ----------------------------------

                                      I-1
<PAGE>

If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.

If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

Please acknowledge the execution of the above request by your signature and date
below:

LASALLE BANK NATIONAL ASSOCIATION
as Trustee

By:
     ---------------------------         --------------------------------
     Signature                           Date

Documents returned to Trustee:

By:
     ---------------------------         --------------------------------
     Signature                           Date

                                      I-2
<PAGE>

                                    EXHIBIT J

      1.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of July 1, 2005, between Merrill Lynch Mortgage Lending, Inc., as
            initial purchaser and Accredited Home Lenders, Inc., as seller and
            interim servicer.

      2.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of April 1, 2005, between Merrill Lynch Mortgage Lending, Inc.,
            as initial purchaser and Acoustic Home Loans, LLC., as seller and
            interim servicer.

      3.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of August 1, 2005, among Merrill Lynch Mortgage Lending, Inc., as
            initial purchaser, American Home Mortgage Corp., as seller and
            American Home Mortgage Servicing, Inc., as interim servicer.

      4.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of July 1, 2005, between Merrill Lynch Mortgage Lending, Inc., as
            initial purchaser and GreenPoint Mortgage Funding, Inc., as seller
            and interim servicer.

      5.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of April 1, 2005, between Merrill Lynch Mortgage Lending, Inc.,
            as initial purchaser and Lime Financial Services, Ltd., as seller
            and interim servicer.

      6.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of May 1, 2005, among Merrill Lynch Mortgage Lending, Inc., as
            initial purchaser, FMF Capital LLC, as seller and Michigan Fidelity
            Acceptance Corporation as seller and interim servicer.

      7.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of August 1, 2005, between Merrill Lynch Mortgage Lending, Inc.,
            as initial purchaser and Home Loan Corporation, as seller and
            interim servicer.

      8.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of November 1, 2005, between Merrill Lynch Mortgage Lending,
            Inc., as initial purchaser and Security Atlantic Mortgage Co., Inc.,
            as seller and interim servicer.

      9.    Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of November 1, 2005, between Merrill Lynch Mortgage Lending,
            Inc., as initial purchaser and CitiMortgage, Inc., as seller and
            interim servicer.

      10.   Master Mortgage Loan Purchase and Interim Servicing Agreement, dated
            as of April 1, 2005, among Merrill Lynch Mortgage Lending, Inc., as
            purchaser, Option One Mortgage Corporation, as seller and servicer
            and Option One Owner Trust 2001-1A ("Trust A"), Option One Owner
            Trust 2001-1B ("Trust B"), Option One Owner Trust 2001-2 ("Trust
            2"), Option One Owner Trust 2002-3 ("Trust 3"), Option One Owner
            Trust 2003-4 ("Trust 4") and Option One Owner Trust 2003-5, as
            sellers.

                                      J-1
<PAGE>

                                    EXHIBIT K

                    FORM OF OFFICER'S CERTIFICATE OF TRUSTEE

                                      K-1
<PAGE>

                                    EXHIBIT L

                    FORM OF OFFICER'S CERTIFICATE OF SERVICER  (DRAFT)

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

      Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
            Certificates, Series 2006-SL1

      [Wilshire Credit Corporation (the "Servicer") certifies to the Depositor
and the Trustee, and their officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:]

      [(1) I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and I have reviewed the
servicer compliance statement of the Servicer and the compliance statements of
each Subservicer, if any, engaged by the Servicer provided to the Depositor and
the Trustee for the Trust's fiscal year [___] in accordance with Item 1123 of
Regulation AB (each a "Compliance Statement"), the report on assessment of the
Servicer's compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria") and reports on assessment of compliance
with servicing criteria for asset-backed securities of the Servicer and of each
Subservicer [or Subcontractor], if any, engaged or utilized by the Servicer
provided to the Depositor and the Trustee for the Trust's fiscal year [___] in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934,
as amended (the "Exchange Act") and Item 1122 of Regulation AB (each a
"Servicing Assessment"), and all servicing reports, officer's certificates and
other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[ ] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");]

      [(2) Based on my knowledge, the Servicing Information, 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 the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Servicing Information;]

      [(3) Based on my knowledge, the servicing information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;]

      [(4) Based on my knowledge and the compliance review conducted in
preparing Compliance Statement of the Servicer and, if applicable, reviewing
each Compliance Statement of each Subservicer, if any, engaged by the Servicer,
and except as disclosed in such Compliance Statement[(s)], the Servicer

                                      L-1
<PAGE>

[(directly and through its Subservicers, if any)] has fulfilled its obligations
under the Pooling and Servicing Agreement in all material respects.]

      [(5) Each Servicing Assessment of the Servicer and of each Subservicer ]or
Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.]

Date:

                                 Wilshire Credit Corporation,
                                 as Servicer

                                 By:
                                     ---------------------------------

                                 Name:
                                       -------------------------------

                                 Title:
                                        ------------------------------

                                      L-2
<PAGE>

                                   EXHIBIT M-1

                                   [RESERVED]

                                     M-1-1
<PAGE>

                                   EXHIBIT M-2

                                   [RESERVED]

                                     M-2-1
<PAGE>

                                   EXHIBIT M-3

                                   [RESERVED]

                                     M-3-1
<PAGE>

                                    EXHIBIT N

                    FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
  FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
  Series 2006-SL1

RE:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2006-SL1

Ladies and Gentlemen:

            In connection with our disposition of the Class ___ Certificates
which are held in the form of Definitive Certificates or in the form of a
beneficial interest in a Rule 144A Book-Entry Certificate and to effect the
transfer pursuant to Regulation S under the Securities Act of 1933, as amended
("Regulation S") of the above Certificates in exchange for an equivalent
beneficial interest in a Regulation S Book-Entry Certificate, we hereby certify
that such transfer has been effected in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated as of
January 1, 2006, among Merrill Lynch Mortgage Investors, Inc., as Depositor,
LaSalle Bank National Association, as Trustee, Wilshire Credit Corporation, as
Servicer and in the Certificates and (ii) in accordance with Regulation S, and
that:

            a. the offer of the Certificates was not made to a person in the
United States;

            b. at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;

            c. no directed selling efforts have been made in contravention of
the requirements of Rule 903 or 904 of Regulation S, as applicable;

            d. the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended; and

            e. the transferee is not a U.S. Person (as defined by Regulation S).

            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 Proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.

                                      N-1
<PAGE>

                               Very truly yours,

                               --------------------------------------------
                               Print Name of Transferor

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

                                      N-2
<PAGE>

                                    EXHIBIT O

                    FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
         A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE

                                     [DATE]

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
  Series 2006-SL1

RE:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2006-SL1

Ladies and Gentlemen:

            In connection with our disposition of the Class __ Certificates
which are held in the form of Definitive Certificates or in the form of a
beneficial interest in a Regulation S Book-Entry Certificate and to effect the
transfer pursuant to Rule 144A under the Securities Act of 1933, as amended
("Rule 144A") of the above Certificates in exchange for an equivalent beneficial
interest in a Rule 144A Book-Entry Certificate or a Definitive Note, we hereby
certify that such Certificates are being transferred in accordance with (i) the
transfer restrictions set forth in the Pooling and Servicing Agreement, dated as
of January 1, 2006, among Merrill Lynch Mortgage Investors, Inc., as Depositor,
La Salle Bank National Association, as Trustee, Wilshire Credit Corporation, as
Servicer and in the Certificates and (ii) Rule 144A under the Securities Act of
1933, as amended, to a transferee that we reasonably believe is purchasing the
Certificates for its own account or an account with respect to which the
transferee exercises sole investment discretion, the transferee and any such
account is a "qualified institutional buyer" within the meaning of 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
jurisdiction.

            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 Proceedings or official inquiry with respect to the
matters covered hereby.

                                          Very truly yours,

                                          Print Name of Transferor

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

                                      O-1
<PAGE>

                                    EXHIBIT P

                        FORM OF ASSESSMENT OF COMPLIANCE

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention:    Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
              Series 2006-SL1

Wilshire Credit Corporation
14523 SW Millikan Way
Suite 200
Beaverton, Oregon 97005

Moody's Investors Service, Inc.
99 Church Street, 4th Floor
New York, New York 10007

Standard & Poor's, a division of
  The McGraw-Hill Companies, Inc.
25 Broadway, 12th Floor
New York, New York  10004

      Re:   Pooling and Servicing Agreement (the "Agreement") dated as of
            January 1, 2006 among Merrill Lynch Mortgage Investors, Inc., as
            depositor, Wilshire Credit Corporation, as servicer and LaSalle Bank
            National Association, as trustee, relating to Merrill Lynch Mortgage
            Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
            2006-SL1 (the "Trust")

      For the calendar year ending December 31, [2006] or portion thereof,
[LaSalle Bank National Association, as Trustee] [Wilshire Credit Corporation, as
Servicer] [Wells Fargo Bank, N.A., as Custodian] for the Trust has complied in
all material respects with the relevant Servicing Criteria in Exhibit Q of the
Agreement.

                                      P-1
<PAGE>

      All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.

Date:
      --------------------------------
                                           By:
                                              -------------------------------

                                           Name:
                                                -----------------------------

                                           Title:
                                                 ----------------------------

                                      P-2
<PAGE>

                                    EXHIBIT Q

                       SERVICING CRITERIA TO BE ADDRESSED
                           IN ASSESSMENT OF COMPLIANCE
                          (RMBS unless otherwise noted)

<TABLE>
<CAPTION>
DEFINITIONS                                                     KEY:
<S>                                                        <C>
PRIMARY SERVICER - transaction party
  having borrower contact                                  X - obligation

CUSTODIAN - safe keeper of certain  pool assets
TRUSTEE - fiduciary of the transaction
  and safe keeper of certain pool assets
</TABLE>

WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN THEIR MANAGEMENT ASSERTION THAT THEY ARE ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN THEY ARE RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.

<TABLE>
<CAPTION>
                                                                      WILSHIRE
                                                                       CREDIT                         LASALLE
REG AB                                                               CORPORATION      WELLS FARGO       BANK          ADDITIONAL
REFERENCE        SERVICING CRITERIA                                  (SERVICER)       (CUSTODIAN)     (TRUSTEE)      INFORMATION
---------------  ------------------                                 -------------    -------------  -------------  ----------------
<S>              <C>                                                <C>              <C>            <C>            <C>
                 GENERAL SERVICING  CONSIDERATIONS
1122(d)(1)(i)    Policies and procedures are instituted to                                                X
                 monitor any performance or other triggers and
                 events of default in accordance with the
                 transaction agreements.

1122(d)(1)(ii)   If any material servicing activities are
                 outsourced to third parties, policies and          IF APPLICABLE    IF APPLICABLE  IF APPLICABLE
                 procedures are instituted to monitor the third         FOR A            FOR A          FOR A
                 party's performance and compliance with such        TRANSACTION     A TRANSACTION   TRANSACTION
                 servicing activities.                               PARTICIPANT      PARTICIPANT    PARTICIPANT

1122(d)(1)(iii)  Any requirements in the transaction agreements
                 to maintain a back-up servicer for the Pool
                 Assets are maintained.                                 N/A               N/A           N/A

1122(d)(1)(iv)   A fidelity bond and errors and omissions policy        X
                 is in effect on the party participating in the
                 servicing function throughout the reporting
                 period in the amount of coverage required by and
                 otherwise in accordance with the terms of the
                 transaction agreements.

                 CASH COLLECTION AND ADMINISTRATION

1122(d)(2)(i)    Payments on pool assets are deposited into the          X                               X
                 appropriate custodial bank
</TABLE>

                                      Q-1
<PAGE>

<TABLE>
<CAPTION>
                                                                       WILSHIRE
                                                                        CREDIT                         LASALLE
REG AB                                                                CORPORATION     WELLS FARGO       BANK          ADDITIONAL
REFERENCE        SERVICING CRITERIA                                   (SERVICER)      (CUSTODIAN)     (TRUSTEE)      INFORMATION
---------------  ------------------                                   -----------    -------------  -------------  ----------------
<S>              <C>                                                  <C>            <C>            <C>            <C>
                 accounts and related
                 bank clearing accounts no more than two business
                 days following receipt, or such other number of
                 days specified in the transaction agreements.

1122(d)(2)(ii)   Disbursements made via wire transfer on behalf
                 of an obligor or to an investor are made only by
                 authorized personnel.                                    X                               X        Servicer
                                                                                                                   disburses funds
                                                                                                                   totrustee.
                                                                                                                   Trustee
                                                                                                                   disbursesfunds to
                                                                                                                   certificate-
                                                                                                                   eholders.

1122(d)(2)(iii)  Advances of funds or guarantees regarding
                 collections, cash flows or distributions, and any
                 interest or other
                 fees charged for such advances, are made,
                 reviewed and approved as
                 specified in the transaction agreements.                 X

1122(d)(2)(iv)   The related accounts for the transaction,
                 such as cash
                 reserve accounts or accounts
                 established as a form of
                 over collateralization, are
                 separately maintained
                 (e.g., with respect to commingling
                 of cash) as set
                 forth in the
                 transaction agreements.                                  X                               X

1122(d)(2)(v)    Each custodial account is
                 maintained at a federally
                 insured depository institution
                 as set forth in the
                 transaction agreements.
                 For purposes of this
                 criterion, "federally insured
                 depository institution"
                 with respect to a foreign financial
                 institution means
                 a foreign financial
                 institution that meets the
                 requirements of Rule 13k-1(b)(1) of the
                 Securities Exchange Act.                                  X                               X

1122(d)(2)(vi)   Unissued checks are safeguarded so as to prevent
                 unauthorized access.                                      X                               X

1122(d)(2)(vii)  Reconciliations are prepared
                 on a monthly basis                                        X                               X
                 for all asset-backed securities
                 related bank accounts,
                 including custodial accounts
                 and related bank clearing
                 accounts. These reconciliations
                 are (A) mathematically
                 accurate; (B) prepared within
                 30 calendar days after
                 the bank statement cutoff date,
                 or such other number
                 of days specified in the
                 transaction agreements; (C)
                 reviewed and approved by someone
                 other than the person
                 who prepared the reconciliation;
                 and (D) contain
                 explanations for reconciling
                 items. These reconciling
                 items are resolved within 90
                 calendar days of their
                 original identification, or
                 such other number of days
                 specified in the
</TABLE>

                                      Q-2
<PAGE>

<TABLE>
<CAPTION>
                                                                      WILSHIRE
                                                                        CREDIT                    LASALLE
REG AB                                                                CORPORATION   WELLS FARGO    BANK           ADDITIONAL
REFERENCE        SERVICING CRITERIA                                   (SERVICER)    (CUSTODIAN)  (TRUSTEE)        INFORMATION
---------------  ------------------                                   -----------   -----------  ---------  -----------------------
<S>              <C>                                                  <C>           <C>          <C>            <C>
                 transaction agreements.

                 INVESTOR REMITTANCES AND REPORTING

1122(d)(3)(i)    Reports to investors, including those to be              X                         X
                 filed with the Commission, are maintained in
                 accordance with the transaction agreements and
                 applicable Commission requirements.
                 Specifically, such reports
                 (A) are prepared in
                 accordance with timeframes
                 and other terms set forth
                 in the transaction agreements;
                 (B) provide information
                 calculated in accordance with
                 the terms specified in
                 the transaction agreements;
                 (C) are filed with the
                 Commission as required by its
                 rules and regulations;
                 and (D) agree with investors'
                 or the trustee's records
                 as to the total unpaid principal
                 balance and number of
                 Pool Assets serviced by the Servicer.

1122(d)(3)(ii)   Amounts due to to investors are allocated and            X                          X      Wilshire  remits
                 remitted in accordance with timeframes,                                                    cash and loan
                 distribution priority and other terms set forth                                            level  data to
                 in the transaction agreements.                                                             trustees based on
                                                                                                            timelines
                                                                                                            established in the
                                                                                                            PSA. The  trustee  is
                                                                                                            responsible  for
                                                                                                            the allocation  of funds
                                                                                                            certificateholders using
                                                                                                            the appropriate
                                                                                                            distribution priority as
                                                                                                            established by the PSA.

1122(d)(3)(iii)  Disbursements made to an investor are posted                                        X      Trustee disburses funds
                 within two business days to the Servicer's                                                 to certificateholders.
                 investor records, or such other number of days
                 specified in the transaction agreements.

1122(d)(3)(iv)   Amounts remitted to investors per the investor           X                          X      Servicer remits funds
                 reports agree with cancelled checks, or other                                              and provides
                 form of payment, or custodial bank statements.                                             certain investor
                                                                                                            reports to trustees
                                                                                                             within guidelines
                                                                                                            and timeframes
                                                                                                            established in PSA.
                                                                                                            Trustee disburses funds
                                                                                                            to certificateholders.

                 POOL ASSET ADMINISTRATION

1122(d)(4)(i)    Collateral or security on pool assets is                 X              X           X
                 maintained as required by the transaction
                 agreements or related pool asset documents.

1122(d)(4)(ii)   Pool assets  and related documents are                   X              X           X
</TABLE>

                                      Q-3
<PAGE>

<TABLE>
<CAPTION>
                                                                          WILSHIRE
                                                                           CREDIT                    LASALLE
REG AB                                                                   CORPORATION   WELLS FARGO    BANK      ADDITIONAL
REFERENCE        SERVICING CRITERIA                                      (SERVICER)    (CUSTODIAN)  (TRUSTEE)   INFORMATION
---------------  ------------------                                      -----------   -----------  ---------   -----------
<S>              <C>                                                     <C>           <C>          <C>         <C>
                 safeguarded as required by the transaction
                 agreements

1122(d)(4)(iii)  Any additions, removals or substitutions to the              X                         X
                 asset pool are made, reviewed and approved in
                 accordance with any conditions or requirements
                 in the transaction agreements.

1122(d)(4)(iv)   Payments on pool assets, including any payoffs, made         X
                 in accordance with the related pool asset documents
                 are posted to the Servicer's obligor records
                 maintained no more than two business days after
                 receipt, or such other number of days specified in the
                 transaction agreements, and allocated to principal,
                 interest or other items (e.g., escrow) in accordance
                 with the related
                 pool asset documents.

1122(d)(4)(v)    The Servicer's records regarding the pool assets agree       X
                 with the Servicer's records with respect
                 to an obligor's unpaid principal balance.

1122(d)(4)(vi)   Changes with respect to the terms or status of an            X
                 obligor's pool assets (e.g., loan modifications or
                 re-agings) are made, reviewed and approved by
                 authorized personnel in accordance with the
                 transaction agreements and
                 related pool asset documents.

1122(d)(4)(vii)  Loss mitigation or recovery actions (e.g., forbearance       X
                 plans, modifications and deeds in lieu of foreclosure,
                 foreclosures and repossessions, as applicable) are
                 initiated, conducted and concluded in accordance with
                 the timeframes or other requirements established by
                 the transaction agreements.

1122(d)(4)(viii) Records documenting collection efforts are                   X
                 maintained during the period a pool asset is
                 delinquent in accordance with the transaction
                 agreements. Such records are maintained on at
                 least a monthly basis, or such other period
                 specified in the transaction agreements, and
                 describe the entity's activities in monitoring
                 delinquent pool assets including, for example,
                 phone calls, letters and payment rescheduling
                 plans in cases where delinquency is deemed
                 temporary (e.g., illness or unemployment).
</TABLE>

                                      Q-4
<PAGE>

<TABLE>
<CAPTION>
                                                                          WILSHIRE
                                                                           CREDIT                    LASALLE
REG AB                                                                   CORPORATION   WELLS FARGO    BANK      ADDITIONAL
REFERENCE        SERVICING CRITERIA                                      (SERVICER)    (CUSTODIAN)  (TRUSTEE)   INFORMATION
---------------  ------------------                                      -----------   -----------  ---------   -----------
<S>              <C>                                                     <C>           <C>          <C>         <C>
1122(d)(4)(ix)   Adjustments to interest rates or rates of return             X
                 for pool assets with variable rates are computed
                 based on the related pool asset documents.

1122(d)(4)(x)    Regarding any funds held in trust for an obligor (such       X
                 as escrow accounts): (A) such funds are analyzed, in
                 accordance with the obligor's pool asset documents, on
                 at least an annual basis, or such other period
                 specified in the transaction agreements; (B) interest
                 on such funds is paid, or credited, to obligors in
                 accordance with applicable pool asset documents and
                 state laws; and (C) such funds are returned to the
                 obligor within 30 calendar days of full repayment of
                 the related pool assets, or such other number of
                 days specified in the transaction agreements.

1122(d)(4)(xi)   Payments made on behalf of an obligor (such as tax or        X
                 insurance payments) are made on or before the related
                 penalty or expiration dates, as indicated on the
                 appropriate bills or notices for such payments,
                 provided that such support has been received by the
                 servicer at least 30 calendar days prior to these
                 dates, or such other number of days specified in the
                 transaction agreements.

1122(d)(4)(xii)  Any late payment penalties in connection with any            X
                 payment to be made on behalf of an obligor are paid
                 from the Servicer's funds and not charged to the
                 obligor, unless the late payment
                 was due to the obligor's error or omission.

1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted        X
                 within two business days to the obligor's records
                 maintained by the servicer, or such other number of
                 days specified in the
                 transaction agreements.

1122(d)(4)(xiv)  Delinquencies, charge-offs and uncollectible                 X
                 accounts are recognized and recorded in
                 accordance with the transaction agreements.

1122(d)(4)(xv)   Any external enhancement or other support, identified                                  X
                 in Item 1114(a)(1) through (3) or Item 1115 of
                 Regulation AB, is maintained as set
                 forth in the transaction agreements.
</TABLE>

                                      Q-5
<PAGE>

                                    EXHIBIT R

                          SARBANES-OXLEY CERTIFICATIONS

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wilshire Credit Corporation
14523 SW Millikan Way
Suite 200
Beaverton, Oregon 97005

      Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
            Certificates, Series 2006-SL1

      I, [identify the certifying individual], certify that:

      1. I have reviewed the report on Form 10-K and all reports on Form 10-D
required to be filed in respect of the period covered by this report on Form
10-K of [identify the issuing entity] (the "Exchange Act periodic reports");

      2. Based on my knowledge, the Exchange Act periodic reports, taken as a
whole, do 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 with respect
to the period covered by this report;

      3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;

      4. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]

      5. All of the reports on assessment of compliance with servicing criteria
for ABS and their related attestation reports on assessment of compliance with
servicing criteria for asset-backed securities required to be included in this
report in accordance with Item 1122 of Regulation AB and Exchange Act Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as
otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.

                                      R-1
<PAGE>

      [In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, sub-servicer, co-servicer, depositor or trustee].]

  Date:
       ---------------------

                                                  -----------------------------
                                                  [Signature]
                                                  [Title]

                                      R-2
<PAGE>

                                    EXHIBIT S

                   FORM OF ITEM 1123 CERTIFICATION OF SERVICER

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603

Attention:    Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
              Series 2006-SL1

Re:   Pooling and Servicing Agreement (the "Agreement") dated as of January 1,
      2006 among Merrill Lynch Mortgage Investors, Inc., as depositor, Wilshire
      Credit Corporation, as servicer and LaSalle Bank National Association, as
      trustee, relating to Merrill Lynch Mortgage Investors Trust, Mortgage Loan
      Asset-Backed Certificates, Series 2006-SL1

I, [identify name of certifying individual], [title of certifying individual] of
Wilshire Credit Corporation (the "Servicer"), hereby certify that:

      (1) A review of the activities of the Servicer during the preceding
calendar year and of the performance of the Servicer under the Agreement has
been made under my supervision; and

      (2) To the best of my knowledge, based on such review, the Servicer has
fulfilled all its obligations under the Agreement in all material respects
throughout such year or a portion thereof[, or, if there has been a failure to
fulfill any such obligation in any material respect, I have specified below each
such failure known to me and the nature and status thereof].

Date:

                                       Wilshire Credit Corporation,
                                       as Servicer

                                       By:
                                           -----------------------------------
                                       Name:
                                             ---------------------------------
                                       Title:
                                              --------------------------------

                                      S-1
<PAGE>

                                   SCHEDULE X

<TABLE>
<CAPTION>
            Item on Form 8-K                 Party Responsible
<S>                                          <C>

*Item 1.01- Entry into a Material
  Definitive Agreement                        All parties
*Item 1.02- Termination of a
  Material Definitive Agreement               All parties
Item 1.03- Bankruptcy or Receivership         Depositor
Item 2.04- Triggering Events that
  Accelerate or Increase a Direct Financial
Obligation or an Obligation under
 an Off-Balance Sheet Arrangement             Depositor
*Item 3.03- Material Modification to
  Rights of Security Holders                  Trustee
Item 5.03- Amendments of Articles of
  Incorporation or Bylaws; Change of Fiscal
Year                                          Depositor
Item 6.01- ABS Informational and
  Computational Material                      Depositor
*Item 6.02- Change of Servicer or Trustee     Servicer, Primary Servicer, Trustee
*Item 6.03- Change in Credit
  Enhancement or External Support             Depositor/Trustee
*Item 6.04- Failure to Make a
   Required Distribution                      Trustee
Item 6.05- Securities Act
  Updating Disclosure                         Depositor
Item 7.01- Reg FD Disclosure                  Depositor
Item 8.01                                     Depositor
Item 9.01                                     Depositor
</TABLE>

<PAGE>
                                   SCHEDULE Y

<TABLE>
<CAPTION>
        Item on Form 10-D                                                          Party Responsible
<S>                                                                  <C>
Item 1: Distribution and Pool Performance Information                Trustee
Plus any information required by
1121 which is NOT included on the                                    Servicer and Trustee (to
monthly  statement to Certificateholders                             the extent required by Regulation AB)
Item 2: Legal Proceedings  per Item 1117 of Reg AB                   All parties to the PSA (as to themselves), the
                                                                     trustee/servicer as to the issuing entity, the sponsor,
                                                                     1106(b) originator, any 1100(d)(1) party
                                                                     Depositor
Item 3:  Sale of Securities and Use of Proceeds                      Trustee
Item 4:  Defaults Upon Senior Securities                             Trustee
Item 5:  Submission of Matters to a Vote of Security Holders         Depositor/Sponsor/Mortgage Loan Seller/ Servicer
Item 6:  Significant Obligors of Pool Assets                         Depositor/Sponsor
Item 7:  Significant Enhancement Provider Information                Trustee and any other party responsible for disclosure items
Item 8:  Other Information                                            on Form 8-K
                                                                     Trustee
Item 9:  Exhibits
</TABLE>

<PAGE>

                                   SCHEDULE Z

<TABLE>
<CAPTION>

              Item on Form 10-K                                                  Party Responsible
<S>                                                     <C>
Item 1B: Unresolved Staff Comments                      Depositor

*Item 9B:  Other Information                            Trustee and any other party responsible for disclosure items on Form 8-K
*Item 15:  Exhibits, Financial Statement Schedules      Trustee/servicer/primary servicer/ subservicers. Depositor
*Additional Item:                                       All parties to the PSA (as to themselves), the trustee/servicer/the issuing
                                                        entity, the sponsor, 1106(b) originator, any 1100(d)(1) party
Disclosure per Item 1117 of Reg AB                      All parties to the PSA, the sponsor, originator, significant obligor,
*Additional Item:                                       enhancement or support provider
Disclosure per Item 1119 of Reg AB                      Depositor/Sponsor/Mortgage Loan Seller/Servicer/Primary Servicer
Additional Item:                                        Depositor/Sponsor
Disclosure per Item 1112(b) of Reg AB
Additional Item:
Disclosure per Items 1114(b) and 1115(b) of Reg AB
</TABLE><PAGE>
                                                                     Exhibit 4.2

                             FISCAL AGENCY AGREEMENT

                                     between

                                RAM HOLDINGS LTD.
                                       and

                              THE BANK OF NEW YORK,
                                 as Fiscal Agent

                           dated as of March 26, 2004

                                    regarding

                $40,000,000 6.875% Senior Notes due April 1, 2024

<PAGE>

                                TABLE OF CONTENTS

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

SECTION 1.1.     Definitions...............................................    1
SECTION 1.2.     Rules of Construction.....................................    9

ARTICLE II THE NOTES.......................................................    9

SECTION 2.1.     Form......................................................    9
SECTION 2.2.     Execution and Authentication..............................   10
SECTION 2.3.     Registrar, Paying Agent, Depository and Custodian.........   10
SECTION 2.4.     Payment on Notes..........................................   11
SECTION 2.5.     Noteholder Lists..........................................   12
SECTION 2.6.     Replacement Notes.........................................   12
SECTION 2.7.     Outstanding Notes.........................................   12
SECTION 2.8.     Treasury Notes............................................   13
SECTION 2.9.     Cancellation..............................................   13
SECTION 2.10.    Person Deemed Owner.......................................   13
SECTION 2.11.    CUSIP Numbers.............................................   13
SECTION 2.12.    Payments Free and Clear of Taxes..........................   14

ARTICLE III TRANSFER, EXCHANGE AND REDEMPTION; TRANSFER RESTRICTIONS.......   15

SECTION 3.1.     Transfer and Exchange.....................................   15
SECTION 3.2.     Optional Redemption.......................................   20
SECTION 3.3.     ERISA Restrictions........................................   22

ARTICLE IV COVENANTS.......................................................   23

SECTION 4.1.     Payment of Principal and Interest.........................   23
SECTION 4.2.     Rule 144A and Other Information...........................   23
SECTION 4.3.     Limitation on Liens.......................................   23

ARTICLE V EVENTS OF DEFAULT................................................   23

ARTICLE VI REMEDIES........................................................   25

SECTION 6.1.     Acceleration..............................................   25
SECTION 6.2.     Other Remedies............................................   25
SECTION 6.3.     Rescission................................................   25
SECTION 6.4.     No Waivers or Election of Remedies, Expenses, Etc.........   26

ARTICLE VII FISCAL AGENT...................................................   26

SECTION 7.1.     Duties of Fiscal Agent....................................   26
SECTION 7.2.     Rights of Fiscal Agent....................................   26
SECTION 7.3.     Individual Rights of Fiscal Agent.........................   28
SECTION 7.4.     Fiscal Agent's Disclaimer.................................   28
SECTION 7.5.     Compensation and Indemnity................................   28
</TABLE>

<PAGE>

<TABLE>
<S>                                                                           <C>
SECTION 7.6.     Replacement of Fiscal Agent...............................   29
SECTION 7.7.     Successor Fiscal Agent, Agent by Merger, Etc..............   29
SECTION 7.8.     Eligibility...............................................   30

ARTICLE VIII AMENDMENTS, SUPPLEMENTS AND WAIVERS...........................   30

SECTION 8.1.     Without Consent of Noteholders............................   30
SECTION 8.2.     With Consent of Noteholders...............................   30
SECTION 8.3.     Revocation and Effect of Consents.........................   31
SECTION 8.4.     Notation on or Exchange of Notes..........................   32
SECTION 8.5.     Fiscal Agent to Sign Amendments Etc.......................   32

ARTICLE IX MEETING OF NOTEHOLDERS..........................................   32

SECTION 9.1.     Purposes for Which Meetings May Be Called.................   32
SECTION 9.2.     Call, Notice and Place of Meetings........................   32
SECTION 9.3.     Persons Entitled to Vote at Meetings......................   33
SECTION 9.4.     Quorum....................................................   33
SECTION 9.5.     Action by Written Consent.................................   33
SECTION 9.6.     Determination of Voting Rights; Conduct and Adjournment
                 of Meetings...............................................   33
SECTION 9.7.     Counting Votes and Recording Action of Meetings...........   34

ARTICLE X MISCELLANEOUS....................................................   34

SECTION 10.1.    Notices...................................................   34
SECTION 10.2.    Tax Information...........................................   35
SECTION 10.3.    Governing Law; Jury Trial.................................   35
SECTION 10.4.    No Recourse Against Others................................   36
SECTION 10.5.    Duplicate Originals; Counterparts.........................   36
SECTION 10.6.    Headings and Table of Contents............................   36
SECTION 10.7.    Successor and Assigns.....................................   36
SECTION 10.8.    Separability..............................................   36
SECTION 10.9.    Legal Holidays............................................   36
SECTION 10.10.   Force Majeure.............................................   36
</TABLE>

<PAGE>

     FISCAL AGENCY AGREEMENT dated as of March 26, 2004, between RAM HOLDINGS
LTD., a limited liability company organized under the laws of Bermuda (the
"Company"), and THE BANK OF NEW YORK, a New York banking corporation, as Fiscal
Agent (together with any permitted successor Fiscal Agent hereunder, the "Fiscal
Agent").

     Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Company's 6.875% unsecured
senior notes due 2024 (the "Notes"):

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.1. Definitions.

     In this Agreement, unless the context otherwise requires:

     "Agent" means any Registrar, Paying Agent, Co-Registrar or Custodian.

     "Agreement" means this Agreement, as amended or supplemented from time to
time.

     "Authenticating Agent" means the Fiscal Agent, in its capacity as
Authenticating Agent.

     "Authorized Officer" means any officer or assistant officer of the Fiscal
Agent assigned by the Fiscal Agent to administer the transactions contemplated
hereby.

     "Backstop Facility" means a credit agreement or other contractual
arrangement which provides (i) for advances thereunder if one or more parties to
a Soft Capital Facility shall fail to make an advance under such Soft Capital
Facility and (ii) that recourse for the obligations incurred thereunder are
limited to the collateral securing such Soft Capital Facility.

     "Beneficial Holder" means each participant in the Depository that holds an
interest in a Note, as indicated in the Participant List.

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions are authorized or required by law or executive
order to close in New York, New York or in Hamilton, Bermuda.

     "Closing Date" means March 26, 2004.

     "Code" means the United States Internal Revenue Code of 1986, as amended
from time to time. Any reference to a particular section of the Code shall
include any successor Code section.

<PAGE>

     "Company Order" means any request, instruction, order or directive signed
by an authorized signatory of the Company.

     "Contingent Capital Facility" means a facility which provides a pool of
capital which may be drawn upon by the Company or any Subsidiary at its option
in connection with the purchase of either Debt or preferred stock issued by the
Company or any Subsidiary.

     "Consolidated Net Worth" means the combined shareholders' equity of the
Guarantor, the Company and its Subsidiaries as determined in accordance with
U.S. GAAP.

     "Co-Registrar" has the meaning set forth in Section 2.3(a).

     "Custodian" has the meaning set forth in Section 2.1(b).

     "Debt" of any Person means, all obligations of such Person for borrowed
money (including obligations of such Person evidenced by bonds, debentures,
notes or similar instruments).

     "Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

     "Default Rate" means the rate of interest that is 2% per annum above the
Stated Rate.

     "Definitive Note" has the meaning set forth in Section 2.1(a).

     "Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.3 as the Depository
with respect to the Global Notes, until a successor shall have been appointed
and becomes such pursuant to the applicable provisions of this Agreement, and,
thereafter, "Depository" shall mean such successor.

     "DTC" means The Depository Trust Company.

     "Event of Default" has the meaning set forth in Article V.

     "Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.

     "Existing Credit Agreements" means the Credit Agreement, dated as of May
11, 1999, among RAM Re, various banks and Norddeutsche Landesbank Girozentrale,
New York Branch, as Agent, as amended, restated or replaced from time to time.

     "Global Note" has the meaning set forth in Section 2.1(a).

     "Guarantor" means RAM Holdings II Ltd., as guarantor pursuant to the
Guaranty.

                                        2

<PAGE>

     "Guaranty" means the guaranty by Holdings II in favor of the Holders, dated
as of March 26, 2004.

     "Guaranty Event of Default" has the meaning set forth in the Guaranty.

     "Holdings II" means RAM Holdings II Ltd., a limited liability company
organized under the laws of Bermuda.

     "Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.

     "Interest Payment Date" means each April 1st and October 1st, commencing
October 1, 2004.

     "Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, or on
such asset, and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
related to such asset.

     "Liquidity Facility" means unsecured lines of credit that provide any
Subsidiary with liquidity to pay claims in respect of financial guaranty
insurance policies or to meet other operating short-term cash short-falls that
may occur in the ordinary course of business.

     "Make-Whole Amount" has the meaning set forth in Section 3.2(a).

     "material" means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.

     "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries, taken as a whole, or (b) the ability of the
Company to perform its obligations under the Transaction Documents, or (c) the
validity or enforceability of the Transaction Documents.

     "Maturity Date" means April 1, 2024.

     "Notes" has the meaning set forth in the second paragraph hereof.

     "Officer" means any of the Chairman, President, Chief Executive Officer,
Chief Financial Officer, Managing Director Finance or Senior Vice President of
the Company.

     "Officer's Certificate" means a certificate signed by an Officer.

     "Opinion of Counsel" means a written opinion from the general counsel of
the Company.

                                        3

<PAGE>

     "Outstanding Notes" means, at any given point in time, the Notes
outstanding at such time as determined in accordance with Section 2.7.

     "Participant List" means the list furnished by the Depository showing
participants that have a beneficial interest in the Notes evidenced by any
Global Note held by the Depository and the amount of such interest. If DTC is
the Depository, then the Participant List shall be the DTC Security Position
Listing Report furnished by DTC showing DTC participants that have a beneficial
interest in the Notes evidenced by any Global Note held by DTC and the amount of
such interest.

     "Paying Agent" has the meaning set forth in Section 2.3(b).

     "Payment Date" means an Interest Payment Date, Maturity Date or Redemption
Date, as the context requires.

     "Permitted Liens" means:

     (i)  Liens for taxes, assessments or other governmental charges that are
          not yet due and payable or the payment of which are being contested in
          good faith and by appropriate proceedings and adequate reserves with
          respect thereto are maintained on the books of the Company;

     (ii) Liens to secure statutory obligations (including obligations under
          workers compensation, unemployment insurance and other social welfare
          legislation), incurred in the ordinary course of business and not in
          connection with the borrowing of money;

     (iii) easements, rights-of-way, restrictions and similar encumbrances
          incurred in the ordinary course of business and subleases, leases, and
          statutory liens of landlords which are not material in amount and do
          not detract from the value of the properties of the Company or
          interfere with the ordinary conduct of business of the Company;

     (iv) Liens in respect of property or assets of the Company imposed by law,
          which are incurred in the ordinary course of business, such as
          carriers, warehousemen's and mechanics' Liens, Liens on insurance
          license security deposits and other similar Liens arising in the
          ordinary course of business and not in connection with borrowing money
          and (a) which do not in the aggregate materially detract from the
          value of the properties of the Company, taken as a whole, or (b) which
          are being contested in good faith by appropriate proceedings, which
          proceedings have the effect of preventing the forfeiture or sale of
          the property or assets subject to such Lien;

     (v)  Liens on assets in any trust established for the benefit of
          reinsurance cedents;

                                        4

<PAGE>

     (vi) Liens on cash and securities incurred as part of the management of the
          investment portfolios of the Company and its Subsidiaries in the
          ordinary course of business;

     (vii) Liens arising in the ordinary course of business on operating
          accounts (including any related securities accounts) maintained by the
          Company or any of its Subsidiaries in the ordinary course of business;

     (viii) Liens incurred pursuant to security arrangements in connection with
          insurance and reinsurance polices;

     (ix) Attachments, judgments and other similar Liens, provided that the
          execution or enforcement of such Lien is stayed, contested in good
          faith and bonded;

     (x)  Liens existing on the Closing Date;

     (xi) Liens securing Debt of the Company or any Subsidiary under the
          Existing Credit Agreements, any Soft Capital Facility and any Backstop
          Facility;

     (xii) Liens securing Debt under Contingent Capital Facilities;

     (xiii) Liens securing Liquidity Facilities in an aggregate amount not in
          excess of the greater of $60,000,000 and 30% of Consolidated Net
          Worth;

     (xiv) Liens securing other credit facilities entered into by the Company or
          any of its Subsidiaries from time to time in order solely to provide
          support for a specified transaction or transactions in which
          obligations are insured or reinsured by the Company or any of its
          Subsidiaries under an insurance policy or contract selling or
          providing protection, provided that such Liens in respect of each such
          transaction are limited to the interests of the Company or such
          Subsidiary in connection with such transaction;

     (xv) Liens incurred after the Closing Date given to secure the payment of
          the purchase price incurred in connection with the acquisition,
          construction or improvement of property useful and intended to be used
          in carrying on the business of the Company, including Liens existing
          on such property at the time of acquisition or construction thereof
          (or created within 180 days after such acquisition), provided that (a)
          the Lien shall attach solely to the property acquired, purchased,
          constructed or improved; (b) at the time of acquisition, construction
          or improvement of such property, the aggregate amount remaining unpaid
          on all Debt secured by Liens on such property, whether or not assumed
          by the Company or a

                                        5

<PAGE>

          Subsidiary, shall not exceed the cost of such acquisition,
          construction or improvement; and (c) at the time of such incurrence
          and after giving effect thereto, no Default or Event of Default would
          exist;

     (xvi) any Lien existing on property of a Person immediately prior to its
          being consolidated with or merged into the Company, or any Lien
          existing on any property acquired by the Company at the time such
          property is so acquired (whether or not the Debt secured thereby shall
          have been assumed), provided that (a) no such Lien shall have been
          created or assumed in contemplation of such consolidation or merger or
          such acquisition of property, (b) each such Lien shall extend solely
          to the item or items of property so acquired and, if required by the
          terms of the instrument originally creating such Lien, other property
          which is an improvement to or is acquired for specific use in
          connection with such acquired property, and (c) at the time of such
          incurrence and after giving effect thereto, no Default or Event of
          Default would exist;

     (xvii) in addition to the Liens permitted by the preceding subparagraphs
          (i) through (xvi), Liens securing Debt of the Company, provided that
          the aggregate principal amount of Debt secured by Liens pursuant to
          this clause shall not exceed the greater of $30,000,000 and 10% of
          Consolidated Net Worth; and

     (xviii) any extension, renewal or replacement of any Lien permitted by the
          foregoing, provided, that no additional property (other than a
          substitution of like property) shall be encumbered thereby unless such
          additional Lien on such property would have been permitted in
          connection with the original creation, incurrence or assumption of
          such Lien.

     "Permitted Corporate Transaction" means the consolidation, amalgamation or
merger by the Company with any other Person or the conveyance, transfer or lease
by the Company of substantially all of the assets of the Company in a single
transaction or series of transactions to any other Person; provided that:

     (i)  the successor formed by such consolidation or amalgamation or the
          survivor of such merger or the Person that acquires by conveyance,
          transfer or lease substantially all of the assets of the Company as an
          entirety (the "Successor Corporation"), shall be a solvent
          corporation, partnership or trust organized and existing under the
          laws of the United States of America, any State thereof, the District
          of Columbia or Bermuda;

     (ii) if the Company is not the Successor Corporation, such Successor
          Corporation shall have executed and delivered to each Holder its

                                        6

<PAGE>

          assumption of the due and punctual performance and observance of each
          covenant and condition of this Agreement and the Notes; provided,
          however, to the extent that the Successor Corporation is legally bound
          under Bermuda law to assume the obligations under this Agreement and
          the Notes pursuant to an amalgamation, such assumption shall not be
          required; and

     (iii) immediately after giving effect to such transaction no Default or
          Event of Default would exist.

     "Permitted Holdings II Transaction" means the consolidation or merger or
amalgamation by the Guarantor with any other corporation or the conveyance,
transfer or lease by the Guarantor of substantially all assets of the Guarantor,
as the case may be, in a single transaction or series of transactions to any
other Person; provided that:

     (i)  the successor formed by such consolidation or amalgamation or the
          survivor of such merger or the Person that acquires by conveyance,
          transfer or lease substantially all of the assets of the Guarantor as
          an entirety, as the case may be (the "Successor Guarantor"), shall be
          a solvent corporation organized and existing under the laws of the
          United States of America, any State thereof, the District of Columbia
          or Bermuda;

     (ii) if the Guarantor is not the Successor Guarantor, such Successor
          Guarantor shall have executed and delivered to each Holder its
          assumption of the due and punctual performance and observance of each
          covenant and condition of the Guaranty; provided, however, to the
          extent that the Successor Guarantor is legally bound under Bermuda law
          to assume the obligations under the Guaranty pursuant to an
          amalgamation, such assumption shall not be required; and

     (iii) immediately after giving effect to such transaction no default under
          the Guaranty or Guaranty Event of Default would exist.

     "Person" means any individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization or a government or
agency or political subdivision thereof.

     "Plan" has the meaning set forth in Section 3.3.

     "Purchase Agreement" has the meaning set forth in Section 2.1(a).

     "Purchaser" means the Purchaser named in the Purchase Agreement.

     "QIB" means a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act.

                                        7

<PAGE>

     "RAM Re" means RAM Reinsurance Company Ltd., a Subsidiary of the Company.

     "Record Date" means with respect to an Interest Payment Date, the March 15
or September 15 next preceding such Interest Payment Date.

     "Redemption Date" has the meaning set forth in Section 3.2(a).

     "Registrar" has the meaning set forth in Section 2.3(a).

     "Register" means the register of the Notes maintained pursuant to Section
2.3.

     "Responsible Officer" means any named executive officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

     "Restricted Note" means any Note that bears or is required to bear the
legend set forth in Section 3.1.

     "Rule 144A" has the meaning set forth in Section 2.1(a).

     "Rule 144A Information" has the meaning set forth in Section 4.2.

     "Securities Act" means the United States Securities Act of 1933, as amended
from time to time.

     "Significant Subsidiary" means each Subsidiary of the Company in which (i)
the Company has a direct or indirect equity ownership interest in the shares of
capital stock of such Subsidiary, and (ii) the Company's direct and indirect
equity interests in and advances to such Subsidiary constitute 25% or more of
the total assets of the Company and its Subsidiaries on a combined basis.

     "Soft Capital Facility" means credit agreements and other contractual
arrangements which (i) are similar to the Existing Credit Agreements, (ii)
contractually transfer a portion of the risk of loss under insured obligations
from the Company and its Subsidiaries to a third party, and (iii) provide that
recourse for any advance made thereunder is limited to the premiums, collateral
and proceeds of collateral securing the insured obligations in respect of which
such advance shall have been made.

     "Stated Rate" means a rate of interest equal to 6.875% per annum.

     "Subsidiary" means, as to any Person, any corporation, association, or
other business entity in which at least a majority of the outstanding voting
securities shall be beneficially owned, directly or indirectly, by such Person.
The term "Subsidiary" shall mean a Subsidiary of the Company.

     "U.S. GAAP" means those generally accepted accounting principles as in
effect from time to time in the United States. U.S. GAAP currently requires that
the

                                        8

<PAGE>

Company's financial statements be presented on a combined rather than
consolidated basis.

     SECTION 1.2. Rules of Construction. In this Agreement, unless the context
otherwise requires:

          (i) the words "herein," "hereof" and "hereunder" and other words of
     similar import refer to this Agreement and the forms of Note included as
     exhibits hereto as a whole, and not any particular Article, Section or
     other subdivision;

          (ii) words in the singular include the plural, and words in the plural
     include the singular;

          (iii) provisions apply to successive events and transactions; and

          (iv) any reference to a party includes its permitted successors from
     time to time.

                                   ARTICLE II

                                    THE NOTES

     SECTION 2.1. Form. (a) The Notes are being offered and sold by the Company,
pursuant to a Note Purchase Agreement, dated March 23, 2004 (the "Purchase
Agreement"), between the Company and the Purchaser, which Notes will be in fully
registered form without coupons. The Notes may be represented by registered
notes in global form ("Global Notes") or notes in certificated form registered
in the name of an individual purchaser or its nominee ("Definitive Notes"). The
Definitive Notes shall be substantially in the form attached as Exhibit A
hereto. The Global Note shall be substantially in the form attached as Exhibit
B. Any applicable legends for the Notes shall be provided in Exhibit A and
Exhibit B, as applicable.

     (b) Each Note sold by the Purchaser in an initial resale to a QIB in
reliance on Rule 144A ("Rule 144A") under the Securities Act shall be
represented by one or more permanent Global Notes, with such legends applicable
to such form of Note as are applicable to Global Notes included thereon. Each
such Global Note shall be deposited with a Person (which may be the Fiscal
Agent) appointed by the Company to act as custodian for the Depository (the
"Custodian") and registered in the name of the Depository or nominee thereof.

     (c) Each Global Note shall represent such of the Outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of Outstanding Notes from time to time endorsed thereon and that the
aggregate amount of Outstanding Notes represented thereby may, from time to
time, be increased or reduced to reflect transfers or exchanges. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the amount
of Outstanding Notes represented thereby shall be made by the Fiscal Agent or
the Custodian, at the direction of the Fiscal Agent, in such manner and upon
instructions given by the Holder thereof. Payment of

                                        9

<PAGE>

any interest on any Global Note shall be made to the Holder thereof as of the
close of business on the relevant Record Date.

     (d) The Notes may have notations, legends or endorsements required by law,
securities exchange rule or usage. Each Note shall be dated the date of its
authentication.

     (e) The Notes shall be issuable in minimum denominations of $100,000 and
any amount in excess thereof that is an integral multiple of $1,000.

     SECTION 2.2. Execution and Authentication. (a) Any two Officers shall sign
the Notes on behalf of the Company by manual or facsimile signature.

     (b) If an Officer whose signature is on a Note no longer holds that office
at the time the Note is authenticated, the Note shall nevertheless be valid.

     (c) A Note shall not be valid until authenticated by the manual signature
of an Authorized Officer of the Fiscal Agent. The Fiscal Agent's signature shall
be conclusive evidence that the Note has been authenticated under this
Agreement.

     (d) The Fiscal Agent shall authenticate the Notes for original issue in the
aggregate principal amount of $40,000,000 upon a written order of the Company
signed by any two Officers. The aggregate principal amount of Outstanding Notes
at any time may not exceed the sum of (i) $40,000,000, and (ii) the principal
amount of lost, destroyed or stolen Notes for which replacement Notes are issued
pursuant to Section 2.6.

     (e) The Fiscal Agent is hereby appointed as the Authenticating Agent to
authenticate Notes. The Authenticating Agent may authenticate Notes whenever the
Fiscal Agent may do so, other than upon original issuance or pursuant to Section
2.6. Each reference in this Agreement to authentication by the Fiscal Agent
includes authentication by such agent. The Authenticating Agent has the same
rights as an Agent to deal with the Company.

     SECTION 2.3. Registrar, Paying Agent, Depository and Custodian. (a) The
Company shall appoint itself or another Person to maintain an office or agency
where Notes may be presented for registration of transfer or exchange (the
Company or such other Person being referred to, in such capacity, as the
"Registrar"); provided, however, that the Company shall at all times maintain an
office of the Registrar in the Borough of Manhattan, The City of New York. As
set forth in Article IV hereof, the Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-Registrars (each, a "Co-Registrar") and may act as Co-Registrar. The Company
initially appoints the Fiscal Agent to act as Registrar.

     (b) The Company shall appoint itself or another Person to maintain an
office or agency where Notes may be presented for payment (the Company or such
other Person being referred to, in such capacity, as the "Paying Agent"). The
term "Paying Agent" includes any additional paying agent. The Company initially
appoints the Fiscal Agent to act as Paying Agent.

                                       10

<PAGE>

     (c) The Company shall appoint one or more other Persons to act as
depository (the "Depository") with respect to any Global Notes. The Company
initially appoints DTC to act as Depository with respect to the Global Notes. As
set forth in Section 3.1(d), the Company may, in certain circumstances, appoint
a successor Depository or determine that the Notes issued in the form of Global
Notes shall no longer be represented by such Global Notes.

     (d) The Company shall appoint itself or one or more other Persons to act as
Custodian with respect to any Global Note. The Company initially appoints the
Fiscal Agent to act as Custodian with respect to the Global Notes.

     (e) The Company shall notify the Fiscal Agent of the name and address of
the Depository and of any Agent not a party to this Agreement, and shall give
the Fiscal Agent at least 30 days' notice prior to changing the Depository or
any such Agent.

     SECTION 2.4. Payment on Notes. (a) The Company shall use its best efforts
to provide to the Paying Agent, in immediately available funds on or prior to
10:00 a.m., New York time, on each Interest Payment Date or the applicable
Maturity Date or Redemption Date, such amount, in U.S. dollars, as is necessary
to make such payment as is due, and the Company hereby authorizes and directs
the Paying Agent from funds so provided to it to make or cause to be made
payment of the principal of and interest on, and Make-Whole Amount with respect
to, the Notes in the manner, at the times and for the purposes set forth herein
and in the text of the Notes; provided that any payment of interest on the Notes
may be made on the Payment Date by check mailed to the Noteholders as of the
close of business on the relevant Record Date. Payments of interest on or
principal of, and any Make-Whole Amount with respect to, the Notes may be made,
in the case of a Noteholder of at least $5,000,000 aggregate principal amount of
Notes, by electronic funds transfer providing immediately available funds on the
Payment Date to an account maintained by the payee with a bank if such
Noteholder so elects by giving written notice to the Paying Agent, not less than
15 days prior to the date on which such payments are scheduled to be made, of
such election and of the account to which payment is to be made. Unless such
designation is revoked not less than 15 days prior to a Payment Date, any such
designation made by such Noteholder with respect to such Notes shall remain in
effect with respect to any future payments with respect to the Notes payable to
such Noteholder. The Company shall pay any reasonable administrative costs in
connection with making any such payments. Any monies held in respect of the
Notes remaining unclaimed at the end of two years after such amounts shall have
become payable (whether at the Maturity Date, Redemption Date or otherwise) and
monies sufficient therefor shall have been duly made available for payment
shall, together with any interest made available for payment thereon, be repaid
to the Company upon written request and upon such repayment all liability of the
Fiscal Agent with respect thereto shall cease, without, however, limiting in any
way any obligation the Company may have to pay principal of and interest on the
Notes and any Make-Whole Amount.

     (b) Interest will continue to accrue at (i) the Stated Rate on any unpaid
principal, and (ii) to the extent permitted by applicable law, the Default Rate
on any

                                       11

<PAGE>

payment of interest which is not punctually paid or duly provided for on the
applicable Interest Payment Date, in each case to, but not including, the date
of actual payment.

     (c) The Company shall require each Paying Agent other than the Fiscal Agent
to agree in writing that the Paying Agent will hold in trust for the benefit of
Noteholders or the Fiscal Agent all money held by the Paying Agent for the
payment of principal of or interest on, or the Make-Whole Amount with respect
to, the Notes, and will notify the Fiscal Agent of any failure by the Company to
make any such payment. Until any such failure has been remedied, the Fiscal
Agent may require a Paying Agent to pay all money held by it to the Fiscal
Agent. In the event the Company wishes to terminate the Fiscal Agent's
appointment as Paying Agent, the Company shall provide 30 days' prior written
notice to the Fiscal Agent that the Fiscal Agent's appointment to act as Paying
Agent is so terminated and the Fiscal Agent may rely on such notice. The Company
at any time may require a Paying Agent to pay all money held by the Paying Agent
to the Fiscal Agent. Upon doing so the Paying Agent shall have no further
liability for the money so paid.

     SECTION 2.5. Noteholder Lists. The Fiscal Agent shall preserve, in as
current a form as is reasonably practicable, a list of names and addresses of
Noteholders. If the Fiscal Agent is not the Registrar, the Company shall cause
the Registrar to furnish to the Fiscal Agent not less than five Business Days
prior to each Interest Payment Date and at such other times as the Fiscal Agent
may request in writing a list of the names and addresses of Noteholders in such
form and as of such date as the Fiscal Agent may reasonably require.

     SECTION 2.6. Replacement Notes. If any Note shall be mutilated, destroyed,
lost or stolen, the Company shall, upon the written request of the Holder of
such Note, issue and execute, and the Fiscal Agent shall authenticate and make
available for delivery, in replacement thereof, a replacement Note payable to
such Noteholder and in the same principal amount as the Note so mutilated,
destroyed, lost or stolen. If the Note being replaced has become mutilated, the
Noteholder shall surrender such Note to the Fiscal Agent to save harmless the
Company and the Fiscal Agent. If the Note has been destroyed, lost or stolen,
the Holder of such Note shall furnish to the Company and the Fiscal Agent (i)
satisfactory evidence of such Noteholder's ownership of such Note, (ii)
satisfactory evidence of the destruction, loss or theft of such Note, and (iii)
such security or indemnity as may be required by the Company and the Fiscal
Agent to save harmless the Company and the Fiscal Agent. Upon the issuance of a
replacement Note pursuant to this Section, the Noteholder requesting such
replacement Note shall pay to the Fiscal Agent a sum sufficient to cover any
transfer tax or governmental charge payable in connection with the issuance of
such replacement Note. Any Note issued pursuant to this Section shall be
registered with the Registrar.

     Every replacement Note shall be an obligation of the Company.

     SECTION 2.7. Outstanding Notes. (a) The Notes deemed to be outstanding at
any time are only those Notes authenticated by the Fiscal Agent (or an
authenticating agent appointed pursuant to Section 2.2) except for those
cancelled by the Fiscal Agent,

                                       12

<PAGE>

those delivered to the Fiscal Agent for cancellation, those reductions in the
interests in a Global Note effected by the Fiscal Agent hereunder, and those
described in this Section as not outstanding.

     (b) A Note does not cease to be outstanding because the Company holds the
Note.

     (c) If a Note is replaced pursuant to Section 2.6, it ceases to be
outstanding unless the Fiscal Agent receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

     (d) Notes are not outstanding which have been called for redemption in
accordance with Section 4.2 or which otherwise have become payable at the
Maturity Date and, in each case, monies sufficient to pay the principal thereof,
any interest thereon and the Make-Whole Amount with respect thereto have been
paid.

     SECTION 2.8. Treasury Notes. In determining whether the Noteholders of the
required principal amount of Outstanding Notes have concurred in any direction,
waiver or consent, Notes owned by the Company or any subsidiary or affiliate of
the Company shall be disregarded, except that for the purposes of determining
whether the Fiscal Agent shall be protected in relying on any such direction,
waiver or consent, only Notes which an Authorized Officer of the Fiscal Agent
actually knows are so owned by the Company or any subsidiary or affiliate of the
Company shall be so disregarded.

     SECTION 2.9. Cancellation. The Company at any time may deliver Notes to the
Fiscal Agent for cancellation. The Registrar and Paying Agent shall promptly
forward to the Fiscal Agent any Notes surrendered to them for registration of
transfer, exchange or payment. The Fiscal Agent shall cancel all Notes
surrendered for registration of transfer, exchange, payment or cancellation and
shall dispose of such cancelled Notes in accordance with its customary
procedures. The Company may not issue new Notes to replace Notes that it has
paid or delivered to the Fiscal Agent for cancellation.

     SECTION 2.10. Person Deemed Owner. Prior to due presentment for
registration of transfer, the Company, the Fiscal Agent, the Authenticating
Agent, if any, and any Agent may treat the Person in whose name a Note is
registered on the Registrar's books as the owner of such Note for the purpose of
receiving payment of principal of, interest on, and the Make-Whole Amount with
respect to, such Note and for all other purposes whatsoever, and neither the
Company, the Fiscal Agent, the Authenticating Agent, nor any other Agent shall
be affected by notice to the contrary.

     SECTION 2.11. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Fiscal Agent may use
"CUSIP" numbers in notices to Noteholders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption.
The Company will promptly notify the Fiscal Agent in writing of any change in
the CUSIP numbers.

                                       13

<PAGE>

     SECTION 2.12. Payments Free and Clear of Taxes. The Company will make all
payments of principal, interest and any other amounts on, or in respect of, the
Notes without withholding or deduction at source for, or on account of, any
present or future taxes, fees, duties, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of Bermuda or any other
jurisdiction in which the Company is organized or any other jurisdiction from
which or through which a payment is made by the Company (a "taxing
jurisdiction") or any political subdivision or taxing authority thereof or
therein, unless such taxes, fees, duties, assessments or governmental charges
are required to be withheld or deducted by (a) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or any political
subdivision or taxing authority thereof or therein, or (b) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in a taxing
jurisdiction or any political subdivision thereof). If a withholding or
deduction at source is required, the Company will, subject to certain
limitations and exceptions described below, pay to the Noteholder such
additional amounts as may be necessary so that every net payment of principal,
interest or any other amount made to such Noteholder, after the withholding or
deduction, will not be less than the amount provided for in such Note and
pursuant to the terms of this Agreement to be then due and payable. The Company
will not be required to pay any additional amounts for or on account of:

     (i)  any tax, fee, duty, assessment or governmental charge of whatever
          nature which would not have been imposed but for the fact that such
          holder (A) was a resident, domiciliary or national of, or engaged in
          business or maintained a permanent establishment or was physically
          present in, the relevant taxing jurisdiction or any political
          subdivision thereof or otherwise had some connection with the relevant
          taxing jurisdiction other than by reason of the mere ownership of, or
          receipt of payment under, or enforcement of claims under such Note,
          (B) presented such Note for payment in the relevant taxing
          jurisdiction or any political subdivision thereof, unless such Note
          could not have been presented for payment elsewhere without incurring
          taxes, or (C) presented such Note for payment more than 30 days after
          the date on which the payment in respect of such Note became due and
          payable or provided for, whichever is later, except to the extent that
          the holder would have been entitled to such additional amounts if it
          had presented such Note for payment on any day within that 30-day
          period;

     (ii) any estate, inheritance, gift, sale, transfer, personal property or
          similar tax, assessment or other governmental charge;

     (iii) any tax, assessment or other governmental charge that is imposed or
          withheld by reason of the failure by the holder or the beneficial
          owner of such Note to comply with any reasonable request by the
          Company addressed to the holder within 90 days of such request (such
          request to include any relevant form required to provide the following
          information or

                                       14

<PAGE>

          declaration in English) (A) to provide information concerning the
          nationality, residence or identity of the holder or such beneficial
          owner, or (B) to make any declaration or other similar claim or
          satisfy any information or reporting requirement, which is required or
          imposed by statute, treaty, regulation or administrative practice of
          the relevant taxing jurisdiction or any political subdivision thereof
          as a precondition to exemption from all or part of such tax,
          assessment or other governmental charge;

     (iv) any withholding or deduction required to be made pursuant to any EU
          Directive on the taxation of savings implementing the conclusions of
          ECOFIN Council meetings of 26-27 November 2000 or 3 June 2003 or any
          law implementing or complying with, or introduced in order to conform
          to, such EU Directive; or

     (v)  any combination of items (i), (ii), (iii) and (iv).

In addition, the Company will not pay additional amounts with respect to any
payment of principal, interest or any other amounts on, any such Note to any
Holder who is a fiduciary or partnership or other than the sole beneficial owner
of such Note to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of a
beneficiary or partner or settlor with respect to such fiduciary or a member of
such partnership or a beneficial owner who would not have been entitled to such
additional amounts had it been the Holder of the Note.

                                  ARTICLE III

            TRANSFER, EXCHANGE AND REDEMPTION; TRANSFER RESTRICTIONS

     SECTION 3.1. Transfer and Exchange. (a) When Definitive Notes are presented
to the Registrar with a request to register the transfer of such Definitive
Notes or to exchange such Definitive Notes for an equal principal amount of
Definitive Notes of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Definitive Notes surrendered
for registration of transfer or exchange (A) shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Noteholder thereof or its
attorney, duly authorized in writing, and (B) in the case of definitive
Restricted Notes only, shall be accompanied by the following additional
information and documents, as applicable:

               (i) if such definitive Restricted Note is being exchanged,
          without transfer, a certification from such Noteholder to that effect
          (in substantially the form of Exhibit C hereto); or

                                       15

<PAGE>

               (ii) if such definitive Restricted Note is being transferred to a
          QIB in accordance with Rule 144A or pursuant to an exemption from
          registration in accordance with Rule 144(k) under the Securities Act,
          certifications from the transferor and the transferee to that effect
          (in substantially the form of Exhibit C hereto).

To permit registrations of transfers and exchanges, the Company shall execute
and the Fiscal Agent (or an authenticating agent appointed pursuant to Section
2.2) shall authenticate and make available for delivery definitive Notes at the
Registrar's request, and upon written direction of the Company. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other governmental charge payable in connection with any registration of
transfer or exchange. All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Agreement, as the Notes
surrendered upon such registration of transfer or exchange.

     (b) Except as permitted by this Section 4.1(b), each certificate evidencing
the Global Notes and each of the Definitive Notes (and all securities issued in
exchange therefor or substitution thereof) shall bear a legend in substantially
the following form:

     THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF RAM HOLDINGS LTD. THAT
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO RAM HOLDINGS LTD. OR (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE, TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER", AS DEFINED IN RULE 144A (TOGETHER WITH ANY SUCCESSOR PROVISION THERETO,
AND AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME, "RULE 144A") UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN A TRANSACTION IN
ACCORDANCE WITH RULE 144A, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAW OF
THE STATES OF THE UNITED STATES, SUBJECT IN EACH CASE TO ANY REQUIREMENT OF LAWS
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF ANY SUCH ACCOUNT OR
ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL. ANY RESALE OR OTHER
TRANSFER OF THIS NOTE WHICH IS PROPOSED TO BE MADE PURSUANT TO CLAUSE (B) ABOVE
SHALL REQUIRE THAT THE TRANSFEROR AND THE TRANSFEREE COMPLETE THE CERTIFICATE OF
TRANSFER APPEARING ON THE REVERSE OF THIS NOTE AND DELIVER SUCH CERTIFICATE OF
TRANSFER TO THE FISCAL AGENT UNDER THE FISCAL AGENCY AGREEMENT DATED AS OF MARCH
26, 2004 (THE "FISCAL AGENT").

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT IT IS ITS INTENT AND IT UNDERSTANDS
IT IS THE INTENT OF RAM HOLDINGS LTD., FOR PURPOSES OF UNITED STATES FEDERAL,
STATE AND LOCAL INCOME TAXES, THAT THE NOTES BE TREATED AS INDEBTEDNESS

                                       16

<PAGE>

OF RAM HOLDINGS LTD., AGREES TO SUCH TREATMENT AND AGREES TO TAKE NO ACTION
INCONSISTENT WITH SUCH TREATMENT.

     THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE ACT, AND MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM AND IN ACCORDANCE WITH THE FISCAL AGENCY
AGREEMENT DATED AS OF MARCH 26, 2004, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL CORPORATE TRUST OFFICE OF THE FISCAL AGENT. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A THEREUNDER.

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT SUCH HOLDER IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF PERSONS WHO
ARE QUALIFIED INSTITUTIONAL BUYERS.

Upon any request for registration of transfer of a Restricted Note (including
any Restricted Notes represented by a Global Note) made subsequent to the date
which is two years (or such period as may be required by Rule 144(k) under the
Securities Act, or any successor rule or regulation) after the later of (i) the
date of original issuance of the Notes, and (ii) the last date on which the
Company or an affiliate of the Company within the meaning of Rule 144 under the
Securities Act was the Noteholder of such Restricted Note and with respect to
which a certification substantially in the form of Exhibit C hereto is furnished
by the transferor, (a) in the case of any Definitive Restricted Note, the
Registrar shall permit the Noteholder thereof to exchange such Restricted Note
for Definitive Notes that do not bear the legend set forth above and such
request shall be effective to rescind any restriction on the further transfer of
such Note, and (b) any such Restricted Notes represented by a Global Note shall
not be subject to any restriction on transfer set forth above; and in each such
case, such Notes (whether in definitive or global form) shall no longer
constitute "Restricted Notes" for purposes of this Agreement. The Registrar (at
the direction of the Company) and the Company shall be entitled (but not
obligated) to require such additional certificates, opinions of counsel and
information as it may reasonably deem necessary to demonstrate that any sale or
other transfer of a Restricted Note is made in compliance with the applicable
restrictions set forth above and with applicable securities laws. The Company
shall give the Registrar written direction as to the additional information
which is necessary to evidence such compliance.

     (c) Notwithstanding any other provisions of this Agreement or the Notes, a
Global Note shall not be exchanged in whole or in part for a Note registered in
the name of any Person other than the Depository or a nominee thereof, provided
that a Global Note may be exchanged for Notes registered in the names of any
Person designated by

                                       17

<PAGE>

the Depository in the event that (i) the Depository has notified the Company
that it is unwilling or unable to continue as Depository for such Global Note
and the Company has not appointed a successor Depository within 60 days of
receiving such notice, or such Depository has ceased to be a "clearing agency"
registered under the Exchange Act, (ii) an Event of Default has occurred and is
continuing, (iii) the exchange is pursuant to a request made in accordance with
Section 3.1(f), or (iv) the Company, at its sole discretion, determines that the
Notes issued in the form of Global Notes shall no longer be represented by such
Global Notes. Any Global Note exchanged pursuant to clause (i) or (iv) above
shall be so exchanged in whole and not in part and any Global Note exchanged
pursuant to clause (ii) or (iii) above may be exchanged in whole or from time to
time in part as directed by the Depository. Any Note issued in exchange for a
Global Note or any portion thereof shall be a Global Note, provided that any
such Note so issued that is registered in the name of a Person other than the
Depository or a nominee thereof shall not be a Global Note.

     (d) If at any time the Depository for the Notes notifies the Company that
it is unwilling or unable to continue as Depository for the Notes, the Company
may within 60 days of receiving such notice appoint a successor Depository with
respect to the Notes.

     (e) If in accordance with Section 3.1(c), the Notes will no longer be
represented by Global Notes, the Company will execute, and the Fiscal Agent,
upon receipt of an Officer's Certificate for the authentication and delivery of
Definitive Notes by the Company, will authenticate and make available for
delivery, Notes in definitive form in an aggregate principal amount equal to the
principal amount of the Notes in global form, in exchange for such Notes in
global form. If a Definitive Note is issued in exchange for any portion of a
Global Note after the close of business at the office or agency where such
exchange occurs on any Record Date and before the opening of business at such
office or agency on the next succeeding Interest Payment Date, interest will not
be payable on such Interest Payment Date in respect of such Definitive Note, but
will be payable on such Interest Payment Date only to the Noteholder to whom
interest in respect of such portion of such Global Note is payable in accordance
with the provisions of this Agreement. Definitive Notes issued in exchange for a
Global Note pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Fiscal
Agent. Upon execution and authentication, the Fiscal Agent shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.

     (f) Any Person having a beneficial interest in Global Notes may upon
request exchange its interest in the Global Notes for a Definitive Note at any
time by giving at least 60 days' prior written notice to the Fiscal Agent in
accordance with the Depository's customary procedures; provided that such notice
requirement will not apply in the case of a transfer of a beneficial interest in
any Global Note to a transferee required to hold its interest in definitive
form. Upon receipt by the Registrar and the Fiscal Agent of (i) written or
electronic instructions from the Depository or its nominee on behalf of any
Person having a beneficial interest in Global Notes, identifying such Person as
a beneficial holder and specifying the amount of such Person's interest, (ii) a
written order

                                       18

<PAGE>

of such Person requesting issuance of a Definitive Note and containing
registration instructions, and (iii) in the case of Restricted Notes only, a
certification from such Person in substantially the form of Exhibit C hereto,
the Fiscal Agent or the Custodian, at the direction of the Fiscal Agent, will
cause, in accordance with the standing instructions and procedures existing
between the Depository and the Custodian, the aggregate principal amount of the
Global Notes to be reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the form of an Officer's
Certificate, the Fiscal Agent will authenticate and make available for delivery
to such Person, as the case may be, a Definitive Note.

     (g) A Definitive Note may be exchanged by the Noteholder at any time for a
beneficial interest in Global Notes or transferred by the Noteholder at any time
in accordance with Rule 144A to a QIB or to another Person permitted and wishing
to hold the Global Note upon satisfaction of the requirements set forth below.
Upon receipt by the Registrar and the Fiscal Agent of a Definitive Note, duly
endorsed or accompanied by appropriate instruments of exchange or transfer, as
the case may be, in form satisfactory to the Registrar, together with (a) the
applicable certification(s), substantially in the form of Exhibit C hereto, that
such Definitive Note is either being exchanged for a beneficial interest in
Global Notes or being transferred to a QIB in accordance with Rule 144A and (b)
written instructions from the Noteholder surrendering such Definitive Note for a
beneficial interest in Global Notes or so transferring Notes, directing the
Fiscal Agent to make, or to direct the Custodian to make, an endorsement on the
Global Note to reflect an increase in the aggregate principal amount of the
Notes represented by the Global Note, the Fiscal Agent shall cancel such
Definitive Note and cause, or direct the Custodian to cause, in accordance with
the standing instructions and procedures existing between the Depository and the
Custodian, the aggregate principal amount of Global Notes to be increased
accordingly.

     (h) At such time as all interests in a Global Note have either been
exchanged for Definitive Notes or cancelled, such Global Note shall be cancelled
by the Fiscal Agent in accordance with the standing procedures and instructions
existing between the Depository and the Custodian. At any time prior to such
cancellation, if any interest in a Global Note is exchanged for Definitive Notes
or cancelled, the principal amount of Notes represented by such Global Note
shall, in accordance with the standing procedures and instructions existing
between the Depository and the Custodian, be reduced and an endorsement shall be
made on such Global Note, by the Fiscal Agent or the Custodian, at the direction
of the Fiscal Agent, to reflect such reduction.

     (i) Notwithstanding anything in this Agreement to the contrary, (i) all
transfers and exchanges of the Notes may be made only in accordance with the
procedures set forth in this Agreement (including the restrictions on transfer);
(ii) all Notes, whether issued in definitive or global form, shall be registered
as to principal and interest with the Registrar; (iii) the registration of
transfer of a Note may be effected only by the surrender of the old Note and
either the reissuance by the Company of the old Note to the new Noteholder or
the issuance by the Company of a new Note to the new Noteholder; and (iv) the
transfer and exchange of a beneficial interest in a Global Note

                                       19

<PAGE>

may only be effected through the Depository in accordance with the procedures
promulgated by the Depository.

     SECTION 3.2. Optional Redemption. (a) The Notes are subject to optional
redemption, in whole or in part, at the option of the Company at any time or
from time to time, with at least 45 days' advance notice to the Fiscal Agent and
at least 30 days' advance notice to the relevant Noteholder, at a redemption
price equal to the sum of (i) accrued interest to the date of the redemption
(the "Redemption Date"), (ii) principal and (iii) the Make-Whole Amount (as
defined below), if any. The term "Make-Whole Amount" means with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such Note,
over the amount of such Called Principal, provided that the Make-Whole Amount
may in no event be less than zero. For the purposes of the Company's
determination of the Make-Whole Amount, the following terms have the following
meanings:

          "Called Principal" means the principal of the Note that is to be
     prepaid pursuant to a notice provided under this Section 3.2(a).

          "Discounted Value" means, with respect to the Called Principal of a
     Note, the amount obtained by discounting all Remaining Scheduled Payments
     with respect to such Called Principal from their respective scheduled due
     dates to the Settlement Date with respect to such Called Principal, in
     accordance with accepted financial practice and at a discount factor
     (applied on the same periodic basis as that on which interest on the Note
     is payable) equal to the Reinvestment Yield with respect to such Called
     Principal.

          "Reinvestment Yield" means, with respect to the Called Principal of a
     Note, 0.375% plus the yield to maturity implied by (i) the yield reported,
     as of 10:00 A.M. (New York City time) on the second Business Day preceding
     the Settlement Date with respect to such Called Principal, on the display
     designated as "PX-1" on the Bloomberg Financial Market Screen (or such
     other display as may replace "PX-1" on the Bloomberg Financial Market
     Screen) for the 7.500% 11/15/24 U.S. Treasury (CUSIP 912810 ES 3), or (ii)
     if such yield is not reported as of such time or the yield reported as of
     such time is not ascertainable, the Treasury Constant Maturity Series
     Yields reported, for the latest day for which such yield has been so
     reported as of the second Business Day preceding the Settlement Date with
     respect to such Called Principal, in Federal Reserve Statistical Release
     H.15 (519) (or any comparable successor publication) for actively traded
     U.S. Treasury securities having a constant maturity equal to the Remaining
     Average Life of such Called Principal as of such Settlement Date. Such
     implied yield will be determined, if necessary, by (a) converting U.S.
     Treasury bill quotations to bond-equivalent yields in accordance with
     accepted financial practice and (b) interpolating linearly on a straight
     line basis between (1) the actively traded U.S. Treasury security with the
     maturity closest to and greater than the Remaining Average Life and (2) the
     actively traded U.S. Treasury security with the maturity closest to and
     less than the Remaining Average Life.

                                       20

<PAGE>

          "Remaining Average Life" means, with respect to any Called Principal,
     the number of years (calculated to the nearest one-twelfth year) obtained
     by dividing (i) such Called Principal into (ii) the sum of the products
     obtained by multiplying (a) the principal component of each Remaining
     Scheduled Payment with respect to such Called Principal by (b) the number
     of years (calculated to the nearest one-twelfth year) that will elapse
     between the Settlement Date with respect to such Called Principal and the
     scheduled due date of such Remaining Scheduled Payment.

          "Remaining Scheduled Payments" means, with respect to the Called
     Principal of a Note, all payments of such Called Principal and interest
     thereon that would be due after the Settlement Date with respect to such
     Called Principal if no payment of such Called Principal were made prior to
     its scheduled due date, provided that if such Settlement Date is not a date
     on which interest payments are due to be made under the terms of the Notes,
     then the amount of the next succeeding scheduled interest payment will be
     reduced by the amount of interest accrued to such Settlement Date and
     required to be paid on such Settlement Date pursuant to this Section
     3.2(a).

          "Settlement Date" means, with respect to the Called Principal of a
     Note, the date on which such Called Principal is to be prepaid pursuant to
     this Section 3.2(a).

     (b) In the case of any partial redemption of Notes, the Notes to be
redeemed shall be in an amount not less than 5% of the aggregate principal
amount of the Notes then outstanding and selected by the Fiscal Agent not more
than 30 days prior to the date of such redemption, from the Outstanding Notes
not previously called for redemption, by such method as the Fiscal Agent shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $1,000 or any integral multiple thereof) of the principal
amount of registered Notes of a denomination larger than $100,000.

     (c) Notices to redeem Notes shall be given to Noteholders in writing
mailed, first-class postage prepaid, to each Holder of registered Notes, or
portions thereof, so to be redeemed, at his address as it appears in the
Register. Such notice will be given once not less than 30 days and not more than
60 days prior to the date fixed for redemption. If by reason of the suspension
of regular mail service, or by reason of any other cause, it shall be
impracticable to give notice to the Noteholders in the manner prescribed herein,
then such notification in lieu thereof as shall be made by the Company or by the
Fiscal Agent on behalf of and at the instruction of the Company shall constitute
sufficient provision of such notice, if such notification shall, so far as may
be practicable, approximate the terms and conditions of the mailed notice in
lieu of which it is given. Neither the failure to give notice nor any defect in
any notice given to any particular Holder of a Note shall affect the sufficiency
of any notice with respect to other Notes. Notices to redeem Notes shall
identify the Notes to be redeemed (including CUSIP numbers) and specify the date
fixed for redemption, the aggregate principal amount of the Notes to be redeemed
on such date, the redemption price, the place or places of payment,

                                       21

<PAGE>

that payment will be made upon presentation and surrender of the Notes to be
redeemed (or portion thereof in the case of a partial redemption), that interest
accrued to the date fixed for redemption (unless the date of redemption is an
Interest Payment Date) will be paid as specified in said notice and that on and
after said date interest thereon will cease to accrue if the Notes are so
redeemed. In addition, in the case of a partial redemption, the Redemption
Notice shall specify the Notes called for redemption and the aggregate principal
amount of the Notes to remain outstanding after the redemption.

     (d) If notice of redemption has been given in the manner set forth in
Section 3.2(c) hereof, the Notes so to be redeemed shall be payable in full or
in part, as applicable, on the date specified in such notice and upon
presentation and surrender of the Notes at the place or places specified in such
notice, the Notes shall be paid and redeemed by the Company at the places and in
the manner and currency herein specified and at the redemption price, together
with accrued interest (unless the Redemption Date is an Interest Payment Date)
to the Redemption Date. From and after the Redemption Date, if monies for the
redemption of Notes called for redemption shall have been made available at the
principal office of the Fiscal Agent for redemption on the Redemption Date, the
Notes called for redemption shall cease to bear interest, and the only right of
the Noteholders with respect to such Notes or portion thereof being redeemed
shall be to receive payment of the redemption price together with accrued
interest (unless the Redemption Date is an Interest Payment Date) to the
Redemption Date as aforesaid. If monies for the redemption of the Notes are not
made available for payment until after the Redemption Date, the Notes called for
redemption shall not cease to bear interest until such monies have been so made
available.

     (e) Any Note which is to be redeemed only in part shall be surrendered
with, if the Company or the Fiscal Agent so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Fiscal Agent duly executed by, the Noteholder thereof or his attorney duly
authorized in writing, and the Company shall execute, and the Fiscal Agent shall
authenticate and deliver to the Holder of such Note without service charge, a
new registered Note or Notes, of any authorized denomination as requested by
such Noteholder, and as permitted by Section 2.1, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the Note
so surrendered.

     SECTION 3.3. ERISA Restrictions. No employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the prohibited transaction provisions of the Code, as
to which the Company is a party in interest or a disqualified person (each a
"Plan"), and no Person acting on behalf of a Plan, may acquire any Note or
interest therein, unless such acquisition is exempt under one or more of
Prohibited Transaction Exemptions 84-14, 90-1, 91-38, 95-60 or 96-23 (or any
amendment thereof) or another applicable exemption from the prohibited
transaction provisions under ERISA and the Code. The purchase by any Person of a
Note constitutes a representation by such Person to the Company and the Fiscal
Agent that such Person either (i) is not a Plan, or (ii) is a Plan, and may
acquire such Note under an applicable exemption from the prohibited transactions
provisions under ERISA and the Code. The restrictions on purchases of the Notes
set forth in this

                                       22

<PAGE>

Section are in addition to those set forth in Section 4.1 hereof and under
applicable law. The Fiscal Agent shall have no responsibility nor any liability
whatsoever for determining or monitoring compliance with this Section.

                                   ARTICLE IV

                                    COVENANTS

     SECTION 4.1. Payment of Principal and Interest. The Company will duly and
punctually pay or cause to be paid the principal of and interest on the Notes in
accordance with, and subject to, the terms of such Notes and this Agreement.

     SECTION 4.2. Rule 144A and Other Information. Any time at which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a
Noteholder, the Company shall deliver (or the Company shall deliver to the
Fiscal Agent who shall deliver) to each such Noteholder or to a prospective
purchaser of such Note designated by such Noteholder, a copy of: (i) the audited
financial statements of the Company at the end of each fiscal year, (ii) the
unaudited financial statements of the Company at the end of each fiscal quarter,
(iii) the statutory-basis financial statements of RAM Re at the end of each
fiscal year and fiscal quarter, as prepared in accordance with the standards set
forth by the Bermuda Monetary Authority, and (iv) the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act ("Rule 144A
Information") to permit compliance with Rule 144A in connection with resales of
the Notes.

     SECTION 4.3. Limitation on Liens. The Company and any Significant
Subsidiary may not issue, assume, incur or guarantee any indebtedness for
borrowed money secured by a lien, directly or indirectly, upon any shares of the
voting stock of any Significant Subsidiary which shares are owned by the Company
or any Significant Subsidiary without effectively providing that the Notes (and
if the Company so elects, any other indebtedness of the Company ranking on a
parity with the Notes) shall be secured equally and ratably with, or prior to,
any such secured indebtedness so long as such indebtedness remains outstanding.
This Section shall not apply to Permitted Liens or to any mortgage, pledge, lien
or other encumbrance upon any shares of voting stock of any Person existing at
the time such Person becomes a Significant Subsidiary and any extensions,
renewals or replacements thereof.

                                   ARTICLE V

                                EVENTS OF DEFAULT

     Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:

          (a) the Company fails to pay any principal or Make-Whole Amount when
     due;

                                       23

<PAGE>

          (b) the Company fails to pay interest when due, subject to a five
     Business Day grace period;

          (c) the Company defaults in the performance or compliance with any
     other term, covenant or warranty and such default is not remedied within 60
     days after the Company receives written notice of such default;

          (d) the Company merges, amalgamates or consolidates with any other
     Person or transfers or leases substantially all of its assets to any
     Person, other than in a Permitted Corporate Transaction; provided that the
     provisions of this clause (d) shall not be applicable to: (i) the direct or
     indirect conveyance, transfer or lease of all or any portion of the stock,
     assets or liabilities of any Subsidiary to the Company or to any other
     wholly owned Subsidiary of the Company; or (ii) any recapitalization or
     highly leveraged transaction or a change of control of the Company, unless
     such transaction or change of control is structured to include a merger or
     consolidation by the Company or conveyance, transfer or lease of the
     Company' assets substantially as an entirety;

          (e) a Guaranty Event of Default shall have occurred and be continuing;

          (f) there shall occur an event of default, as defined in any
     instrument evidencing Debt in excess of the greater of $20,000,000 or 5% of
     Consolidated Net Worth for money borrowed by the Company or a Significant
     Subsidiary, if such event of default shall result in the acceleration of
     such Debt prior to its express maturity unless such Debt is discharged or
     such acceleration is cured, waived, rescinded or annulled within 10 days
     after written notice thereof shall have been given by registered or
     certified mail to the Company by the holders of at least 25% in aggregate
     principal amount of the Notes which notice shall state that it is a "Notice
     of Default";

          (g) the Company or any Significant Subsidiary (i) is not generally
     paying or is unable to pay its debts as they become due, (ii) files or
     consents to the filing of a petition for relief or reorganization or
     arrangement or any other petition in bankruptcy, for liquidation or to take
     advantage of any bankruptcy, insolvency or similar law of any jurisdiction,
     (iii) makes an assignment for the benefit of its creditors, (iv) consents
     to the appointment of a custodian, receiver, or trustee with respect to any
     substantial part of its property, (v) is adjudicated as insolvent or to be
     liquidated, or (vi) takes corporate action for any of the foregoing; or

          (h) bankruptcy, reorganization, arrangement or insolvency proceedings
     are instituted against the Company or any Significant Subsidiary which are
     approved by the court or are not dismissed, discharged or stayed within 90
     days or the appointment of a receiver for the Company or any Significant
     Subsidiary which is not dismissed, discharged or stayed within 90 days.

                                       24

<PAGE>

                                   ARTICLE VI

                                    REMEDIES

     SECTION 6.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Article V (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

     (b) If any other Event of Default has occurred and is continuing, any
Holder or Holders of more than 50% in aggregate principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be immediately
due and payable.

     (c) If any Event of Default described in paragraph (a) or (b) of Article V
has occurred and is continuing with respect to any Note, any holder or holders
of Notes at the time outstanding affected by such Event of Default may at any
time, at its or their option, by notice or notices to the Company, declare all
the Notes held by such holder or holders to be immediately due and payable.

     (d) Upon any Note's becoming due and payable under this Section 6.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus all accrued and unpaid
interest thereon shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of which are
hereby waived.

     SECTION 6.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 6.1, the Holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such Holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

     SECTION 6.3. Rescission. At any time after any Notes have been declared due
and payable pursuant to clause (b) or (c) of Section 6.1, the required Holders,
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on, and all
principal of, any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal and (to
the extent permitted by applicable law) any overdue interest in respect of the
Notes at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Article IX, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto

                                       25

<PAGE>

or to any Notes. No rescission and annulment under this Section 6.3 will extend
to or affect any subsequent Event of Default or Default or impair any right
consequent thereon.

     SECTION 6.4. No Waivers or Election of Remedies, Expenses, Etc. No course
of dealing and no delay on the part of any Holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such Holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any Holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.

                                   ARTICLE VII

                                  FISCAL AGENT

     SECTION 7.1. Duties of Fiscal Agent. (a) The Fiscal Agent acts under this
Agreement solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with the Noteholders, except that all
funds held by the Fiscal Agent for the payment of the Make-Whole Amount with
respect to, or principal of or interest on, and any other amounts with respect
to, the Notes shall be held in trust but need not be segregated from other
funds, except as required by law, and shall be applied as set forth herein and
in the Notes. The Fiscal Agent need perform only those duties that are
specifically set forth in this Agreement and no others.

     (b) In the absence of gross negligence or willful misconduct on its part,
the Fiscal Agent may conclusively rely, as to the truth of the statement and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Fiscal Agent and conforming to the requirements of this
Agreement. However, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the Fiscal
Agent, the Fiscal Agent shall examine the certificates and opinion to determine
whether or not they conform to the requirements of this Agreement, as to form
and the subject matter of the content but need not verify the accuracy of the
contents thereof.

     (c) The Fiscal Agent shall not be liable for any error of judgment made in
good faith by an Authorized Officer, unless it is proven that the Fiscal Agent
was negligent in ascertaining the pertinent facts.

     (d) No provisions of this Agreement shall require the Fiscal Agent 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.

     SECTION 7.2. Rights of Fiscal Agent. (a) In the absence of negligence or
willful misconduct, the Fiscal Agent may conclusively rely and shall be
protected in acting or refraining from acting upon any document reasonably
believed by it to be genuine and to

                                       26

<PAGE>

have been signed or presented by the proper Person. The Fiscal Agent need not
investigate any fact or matter stated in the document.

     (b) Before the Fiscal Agent acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel, in either case as is reasonably
acceptable to the Fiscal Agent. The Fiscal Agent shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officer's
Certificate or Opinion of Counsel.

     (c) The Fiscal Agent shall not be liable for any action it takes or omits
to take in good faith without negligence which (i) is taken pursuant to any
Company Order addressed and delivered to the Fiscal Agent, or (ii) the Fiscal
Agent otherwise believes to be authorized or within its rights or powers.

     (d) The Fiscal Agent may consult with counsel reasonably acceptable to the
Fiscal Agent, which may be counsel to the Company, and the advice of such
counsel as to matters of law shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by it hereunder
in good faith without negligence and in accordance with the advice or opinion of
such counsel.

     (e) The Fiscal Agent shall not be bound and shall have no duty to ascertain
or inquire as to the performance or observance of any covenants, conditions or
agreements on the part of the Company under this Agreement; but the Fiscal Agent
may require of the Company full information and advice as to the performance of
the covenants, conditions and agreements aforesaid.

     (f) The Fiscal Agent shall not be required to give any bond or surety in
respect of the execution of its trusts and powers or in respect of this
Agreement.

     (g) Money held by the Fiscal Agent hereunder need not be segregated from
other funds except to the extent required by law. The Fiscal Agent shall be
under no liability to the Company for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company.

     (h) In no event shall the Fiscal Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits) even if the Fiscal Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.

     (i) The Fiscal Agent may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Fiscal Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.

     (j) The rights, privileges, protections, immunities and benefits given to
the Fiscal Agent, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Fiscal Agent in each of its
capacities hereunder, and each agent, custodian and other Person employed to act
hereunder.

                                       27

<PAGE>

     (k) The Fiscal Agent may request that the Company deliver an Officer's
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Agreement,
which Officer's Certificate may be signed by any person authorized to sign an
Officer's Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

     SECTION 7.3. Individual Rights of Fiscal Agent. The Fiscal Agent in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company with the same rights the Fiscal Agent would
have if it were not Fiscal Agent. Any Agent may do the same with like rights.

     SECTION 7.4. Fiscal Agent's Disclaimer. The Fiscal Agent makes no
representation as to the validity or adequacy of this Agreement or the Notes,
shall not be accountable for the Company's use of the proceeds from the sale of
the Notes or the use or application of any money received by any Paying Agent
other than the Fiscal Agent, and shall not be responsible for any statement in
the Notes other than the Fiscal Agent's certificate of authentication.

     SECTION 7.5. Compensation and Indemnity. (a) The Company shall from time to
time pay to the Fiscal Agent compensation for its services as agreed in writing
by the Company from time to time. The Fiscal Agent's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Fiscal Agent, within 45 days after receiving request
therefor, for all reasonable out-of-pocket disbursements, fees and expenses
incurred by the Fiscal Agent in connection with the performance of its duties
under the agreement, including, without limitation, those incurred in connection
with the enforcement of any remedy hereunder or the interpretation of any
provision hereunder. Such expenses may include the reasonable compensation and
out-of-pocket expenses of the Fiscal Agent's agents and counsel.

     (b) The Company shall indemnify the Fiscal Agent for, and hold it harmless
against, any and all loss, damage, claims or liability or reasonable expenses,
including taxes (other than taxes based on the income of the Fiscal Agent)
incurred by it in connection with its accepting appointment or acting as Fiscal
Agent, Paying Agent, Authenticating Agent and Registrar under this Agreement.
The Fiscal Agent shall promptly notify the Company of any claim for which the
Fiscal Agent may seek indemnity, including reasonable costs and expenses of
defending itself against any claim for liability arising from the exercise or
performance of any of its powers or duties hereunder. The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.

     (c) Notwithstanding any of the foregoing, the Company need not reimburse
any expense or indemnify against any loss or liability incurred by the Fiscal
Agent in connection with the Fiscal Agent's negligence or willful misconduct.

     (d) The Fiscal Agent shall have a lien prior to the Notes as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Fiscal Agent

                                       28

<PAGE>

pursuant to this Section 7.5, except with respect to funds held in trust for the
benefit of the Noteholders with respect to payments on such Notes.

     (e) The provisions of this Section shall survive the resignation or removal
of the Fiscal Agent and the termination of this Agreement.

     SECTION 7.6. Replacement of Fiscal Agent. (a) A resignation or removal of
the Fiscal Agent and appointment of a successor Fiscal Agent shall become
effective only upon the successor Fiscal Agent's acceptance of appointment as
provided in this Section.

     (b) The Fiscal Agent may resign at any time by giving 60 days' prior
written notice thereof to the Company. Either the Company or the Holders of a
majority in principal amount of the Outstanding Notes may remove the Fiscal
Agent at any time by giving written notice thereof (i) to the Fiscal Agent and
(ii) in the case where removal is at the election of the Holders of a majority
in principal aggregate amount of the Notes, to the Company.

     (c) If the Fiscal Agent resigns or is removed or if a vacancy exists in the
office of Fiscal Agent for any reason, the Company shall promptly appoint a
successor Fiscal Agent. Within six months after the successor Fiscal Agent takes
office, the Holders of a majority in principal amount of the Outstanding Notes
may appoint a successor Fiscal Agent to replace the successor Fiscal Agent
appointed by the Company.

     (d) If a successor Fiscal Agent does not take office within 60 days after
the retiring Fiscal Agent resigns or is removed, the retiring Fiscal Agent, the
Company or the Holders of at least 10% in principal amount of the Outstanding
Notes may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Fiscal Agent.

     (e) If the Fiscal Agent fails to comply with Section 7.8, any Noteholder or
Beneficial Holder may petition any court of competent jurisdiction for the
removal of the Fiscal Agent and the appointment of a successor Fiscal Agent.

     (f) A successor Fiscal Agent shall deliver a written acceptance of its
appointment to the retiring Fiscal Agent and to the Company. Thereupon, the
retiring Fiscal Agent shall transfer all property held by it as Fiscal Agent to
the successor Fiscal Agent, the resignation or removal of the retiring Fiscal
Agent shall become effective, and the successor Fiscal Agent shall have all the
rights, powers and duties of the Fiscal Agent under this Agreement. The
successor Fiscal Agent shall mail a notice of its succession to Noteholders.

     SECTION 7.7. Successor Fiscal Agent, Agent by Merger, Etc. If the Fiscal
Agent or any Agent consolidates with, merges or converts into, or transfers all
or substantially all of its fiscal agency or corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Fiscal Agent or Agent, as the case maybe.

                                       29

<PAGE>

     SECTION 7.8. Eligibility. The Fiscal Agent shall have a combined capital
and surplus of at least $100 million as set forth in its most recent annual
financial statements.

                                  ARTICLE VIII

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

     SECTION 8.1. Without Consent of Noteholders. Subject to Section 8.2, the
Company and the Fiscal Agent may amend, supplement or modify this Agreement or
the Notes without the consent of any Noteholder for the purpose of:

          (i) adding to the covenants of the Company for the benefit of the
     Noteholders; or

          (ii) surrendering any right or power conferred on the Company; or

          (iii) securing the Notes; or

          (iv) evidencing the succession of another entity to the Company and
     the assumption by any such successor of the covenants and obligations of
     the Company herein and in the Notes as permitted by this Agreement and the
     Notes; or

          (v) modifying the restrictions on, and procedures for, resale and
     other transfers of the Notes to the extent required by any change in
     applicable law or regulation, or the interpretation thereof, or in the
     practices relating to the resale or transfer of restricted securities
     generally; or

          (vi) accommodating the issuance, if any, of the Notes in book-entry or
     certificated form and matters related thereto that do not adversely affect
     the interests of any Noteholder in any material respect; or

          (vii) curing any ambiguity or correcting or supplementing any
     defective provision herein or in the Notes in a manner that does not
     adversely affect the interests of any Noteholder in any material respect;
     or

          (viii) effecting any amendment that the Company and the Fiscal Agent
     may determine is necessary or desirable and which shall not adversely
     affect the interests of any Noteholder in any material respect.

     SECTION 8.2. With Consent of Noteholders. (a) Except as otherwise provided
herein, the Company and the Fiscal Agent may amend, supplement or modify this
Agreement or the Notes (i) with the written consent of the Holders of at least a
majority in aggregate principal amount of the Outstanding Notes or (ii) upon the
adoption of a resolution, at meetings of Noteholders held pursuant to Article IX
at which, in each case, a quorum is present, by the Holders of not less than a
majority in principal amount of the Outstanding Notes. In addition, the Holders
of a majority in aggregate principal amount of the Outstanding Notes may waive
compliance by the Company with any provision of

                                       30

<PAGE>

this Agreement or the Notes, either by written consent or by affirmative vote at
meetings of Noteholders as described above. Without the written consent or
affirmative vote of each Noteholder affected, no amendment, supplement,
modification or waiver under this Section may:

          (i) change the Maturity Date of, or the dates for payment of interest
     on, any Note; or

          (ii) reduce the Make-Whole Amount with respect to, principal amount
     of, or interest rate on, any Note; or

          (iii) change the place or currency or payment of principal of,
     interest on, or Make-Whole Amount with respect to, any Note; or

          (iv) change the Company's obligations under Section 4.2 hereof; or

          (v) reduce the percentage in principal amount of Notes the consent of
     whose Noteholders is required to amend, supplement or modify this Agreement
     or the Notes or to make, take or give any request, demand, authorization,
     direction, notice, consent, waiver (including waiver of future compliance
     or past failure to perform) or other action provided thereby to be made,
     taken or given; or

          (vi) reduce the percentage of aggregate principal amount of
     Outstanding Notes that constitutes the quorum at any meeting of Noteholders
     at which a resolution is adopted.

     (b) It shall not be necessary for the consent of the Noteholders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof. The Company may establish, by delivery of an Officer's Certificate to
the Fiscal Agent, a record date for determining Noteholders of record entitled
to give any consent or waiver.

     (c) After an amendment or supplement under this Section becomes effective,
the Fiscal Agent shall mail to Noteholders a notice prepared by the Company
briefly describing the amendment or supplement. Any failure of the Fiscal Agent
to mail each such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any supplemental agreement.

     SECTION 8.3. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a written consent to it by a Noteholder
is a continuing consent by the Noteholder and every subsequent Holder of a Note
or portion of a Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note. However, any such
Noteholder or subsequent Noteholder may revoke the written consent as to such
Note or portion of a Note if an Authorized Officer of the Fiscal Agent receives
the written notice or revocation before the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver becomes effective
in accordance with its terms and thereafter binds every Noteholder.
Notwithstanding the foregoing, if a record date has been established

                                       31

<PAGE>

for the purpose of determining Noteholders entitled to consent, such written
notice of revocation must be signed by the Noteholder of record as of the record
date or his duly appointed proxy.

     SECTION 8.4. Notation on or Exchange of Notes. The Fiscal Agent may place
an appropriate notation relating to an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue,
and the Fiscal Agent shall authenticate, new Notes that reflect the amendment,
supplement or waiver.

     SECTION 8.5. Fiscal Agent to Sign Amendments Etc. In executing, or
accepting the additional obligations created by, any supplemental agreement
permitted by this Article or the modifications thereby of the obligations
created by this Agreement, the Fiscal Agent shall be entitled to receive, and
(subject to Section 8.1) shall be fully protected in relying upon, an Opinion of
Counsel and an Officer's Certificate stating that the execution of such
supplemental agreement is authorized or permitted by this Agreement and that all
conditions precedent to the execution and delivery of such supplemental
agreement have been satisfied. The Fiscal Agent shall sign any amendment or
supplement authorized pursuant to this Article if the amendment or supplement
does not adversely affect the rights of the Fiscal Agent. If the amendment or
supplement does adversely affect the Fiscal Agent's rights, the Fiscal Agent
may, but need not, sign it.

                                   ARTICLE IX

                             MEETING OF NOTEHOLDERS

     SECTION 9.1. Purposes for Which Meetings May Be Called. A meeting of
Noteholders may be called at any time and from time to time pursuant to this
Article to make, give or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Agreement to be made,
given or taken by Noteholders.

     SECTION 9.2. Call, Notice and Place of Meetings. The Company may at any
time, and at the written request and direction of the Holders of at least 25%
of-the aggregate principal amount of the Outstanding Notes at any time, the
Fiscal Agent shall on behalf of such Noteholders, call a meeting of Noteholders
for any purpose specified in Section 9.1 hereof. Each such meeting shall be held
at such time and at such place in New York, New York or Bermuda as the Company
or the Noteholders calling such meeting shall determine. Notice of any such
meeting of Noteholders, setting forth the time and the place of such meeting
and, in general terms, the action proposed to be taken at such meeting, shall be
given by the Company to the Fiscal Agent and the Noteholders, or by the Fiscal
Agent (on behalf and at the direction of the Noteholders calling the meeting) to
the Company and the Noteholders, not less that 30 nor more than 60 days prior to
the date fixed for the meeting. If the Fiscal Agent shall not have given notice
of any meeting as directed by the requisite Noteholders within 21 days after
receiving such direction, such Noteholders may call a meeting of the Noteholders
generally by giving written notice thereof to the Company, the Fiscal Agent and
the Noteholders in the manner described above.

                                       32

<PAGE>

     SECTION 9.3. Persons Entitled to Vote at Meetings. To be entitled to vote
at any meeting of Noteholders, a Person shall be (i) a Noteholder, or (ii) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more of the Notes. The only Persons who shall be entitled to be present
or to speak at any meeting of Noteholders shall be the Persons entitled to vote
at such meeting and their counsel, any representatives of the Fiscal Agent and
its counsel, and any representatives of the Company and its counsel.

     SECTION 9.4. Quorum. At any meeting of the Noteholders, a majority in
aggregate principal amount of the Outstanding Notes shall constitute a quorum.
In the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Noteholders, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 9.2, except that such
notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Any action taken at any meeting
of Noteholders duly held in accordance with this Section, if taken by the
Holders of any aggregate principal amount of the Outstanding Notes required for
such action by this Agreement, shall be binding on all the Noteholders whether
or not present or represented at the meeting.

     SECTION 9.5. Action by Written Consent. Any action required or permitted to
be taken by the Noteholders may be effected by consent in writing by such
Noteholders.

     SECTION 9.6. Determination of Voting Rights; Conduct and Adjournment of
Meetings. (a) Notwithstanding any other provisions of this Agreement, the
Company may make such reasonable regulations as it may deem advisable for any
meeting of Noteholders in regard to proof of the holding of the Notes and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without other proof.

     (b) The Company shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Noteholders, in which case the Noteholders calling the meeting shall in like
manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled to
vote a majority in principal amount of the Outstanding Notes represented at the
meeting.

     (c) At any meeting each Noteholder or proxy therefor shall be entitled to
one vote for each $1,000 principal amount of the Notes held or represented by
such

                                       33

<PAGE>

Noteholder; provided that no vote shall be cast or counted at any meeting in
respect of any Note ruled by the chairman of the meeting to be not outstanding
or otherwise not entitled to vote. The chairman of the meeting shall have no
right to vote, except as a Noteholder or proxy.

     (d) Any meeting of Noteholders duly called pursuant to Section 9.2 at which
a quorum is present may be adjourned from time to time by Persons entitled to
vote a majority in principal amount of the Outstanding Notes represented at the
meeting, and such meeting may be held as so adjourned without further notice.

     SECTION 9.7. Counting Votes and Recording Action of Meetings. The vote upon
any resolution submitted to any meeting of Noteholders shall be by written
ballots on which shall be subscribed the signatures of the Noteholders or their
representatives by proxy and the principal amounts and serial numbers, if
applicable, of the Notes held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of Noteholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken at such meeting and affidavits
by one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 10.4 hereof. Each copy shall be signed
and verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to each of the Company and the
Fiscal Agent, the latter to have attached thereto the ballots voted at the
meeting. Any record so signed and verified shall be presumptive evidence of the
matters therein stated.

                                    ARTICLE X

                                  MISCELLANEOUS

     SECTION 10.1. Notices. (a) Any notice or communication to the Company or
the Fiscal Agent by the other shall be duly given if in writing and delivered in
person or mailed by first class mail addressed as follows:

     If to the Company:

          RAM Holdings Ltd.
          RAM Re House
          46 Reid Street
          Hamilton HM 12
          Bermuda

                                       34

<PAGE>

          Attention: Chief Financial Officer
          Telephone: 441-296-6501
          Facsimile: 441-296-6509

          Copy to:   General Counsel

     If to the Fiscal Agent:

          The Bank of New York
          101 Barclay Street, Floor 8 West
          New York, New York 10286

          Attention: Corporate Trust Administration
          Telephone: 212-815-5498
          Facsimile: 212-815-5074

     (b) The Company or the Fiscal Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.

     (c) Any notice or communication to a Noteholder shall be mailed by
first-class mail to its address as shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect in it
shall not affect its sufficiency with respect to other Noteholders. If the
Company mails a notice or communication to Noteholders, it shall mail a copy to
the Fiscal Agent and each Agent at the same time.

     (d) If a notice or communication is mailed in the manner provided above
within the time prescribed it is duly given, whether or not the addressee
receives it.

     SECTION 10.2. Tax Information. The Fiscal Agent will comply with all
withholding requirements under United States federal law. The Fiscal Agent will
request, and each Noteholder will provide to the Fiscal Agent, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to the Noteholder, and any representations and forms as will reasonably
be requested by the Fiscal Agent to assist it in determining the extent of, and
in fulfilling, its withholding obligations. The Fiscal Agent will file required
forms with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Noteholder, will remit amounts withheld with respect
to the Noteholder to applicable jurisdictions. The Fiscal Agent will furnish or
make available, within a reasonable time after the end of each calendar year, to
each Noteholder, such information as the Fiscal Agent is required by law to
provide to the Noteholders to enable them to prepare their federal income tax
returns.

     SECTION 10.3. Governing Law; Jury Trial. This Agreement and the Notes shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to the conflicts of laws principles thereof. The Company
and the Fiscal Agent hereby agree that in connection with any legal proceeding
arising out of or relating to this Agreement, the Notes or the transaction
contemplated hereby, they will

                                       35

<PAGE>

enter into discussions to determine in good faith whether a waiver of trial by
jury is in their mutual interest.

     SECTION 10.4. No Recourse Against Others. No director, officer, employee,
member or policyholder, as such, of the Company shall have any liability for any
obligation of the Company under the Notes or this Agreement or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Noteholder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Notes.

     SECTION 10.5. Duplicate Originals; Counterparts. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement. This Agreement may be signed in any number of
counterparts, each of which may be signed separately and all of which taken
together shall constitute one signed copy.

     SECTION 10.6. Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

     SECTION 10.7. Successor and Assigns. All covenants and agreements in this
Agreement by the Company shall bind its successor and assigns, whether so
expressed or not.

     SECTION 10.8. Separability. In case any provision of this Agreement or the
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

     SECTION 10.9. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions are not required to be open either in New
York, New York or in Hamilton, Bermuda. If a payment date is a Legal Holiday at
a place of payment, payment may be made at such place on the next succeeding day
that is not a Legal Holiday, and no interest on the amount payable on such
payment date shall accrue for the intervening period.

     SECTION 10.10. Force Majeure. In no event shall the Fiscal Agent be
responsible or liable for any failure or delay in the performance of its
obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities or communications services; it being understood that
the Fiscal Agent shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.

                                       36

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

                                        RAM HOLDINGS LTD.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        THE BANK OF NEW YORK,
                                        as Fiscal Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       37

<PAGE>

                       EXHIBIT A - FORM OF DEFINITIVE NOTE

                                 (FACE OF NOTE)

CUSIP No. 751302 AA 8                                                         $0

                                RAM HOLDINGS LTD.

                          6.875 % SENIOR NOTE DUE 2024

     RAM HOLDINGS LTD., a limited liability company organized under the laws of
Bermuda, promises to pay to _______________ or registered assigns, the principal
sum of $_______________ on April 1, 2024.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     This Note shall not be valid until authenticated by the manual signature of
the Fiscal Agent (as defined on the reverse hereof) or the Authenticating Agent.

          IN WITNESS WHEREOF, RAM HOLDINGS LTD., has caused this Note to be
signed by its duly authorized officers and its corporate seal to be affixed
hereto or imprinted hereon.

Dated: March 26, 2004                   RAM HOLDINGS LTD.

Authenticated:

                                        By:
                                            ------------------------------------
THE BANK OF NEW YORK,                   Name:
as Fiscal Agent                               ----------------------------------
                                        Title:
                                               ---------------------------------

By:                                     By:
    ---------------------------------       ------------------------------------
    Authorized Signatory                Name:
                                              ----------------------------------
                                        Title.
                                               ---------------------------------

                                       A-1

<PAGE>

                                (REVERSE OF NOTE)

                                RAM HOLDINGS LTD.

                          6.875% Note due April 1, 2024

     THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF RAM HOLDINGS LTD. THAT
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO RAM HOLDINGS LTD. OR (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE, TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER", AS DEFINED IN RULE 144A (TOGETHER WITH ANY SUCCESSOR PROVISION THERETO,
AND AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME, "RULE 144A") UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN A TRANSACTION IN
ACCORDANCE WITH RULE 144A, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAW OF
THE STATES OF THE UNITED STATES, SUBJECT IN EACH CASE TO ANY REQUIREMENT OF LAWS
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF ANY SUCH ACCOUNT OR
ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL. ANY RESALE OR OTHER
TRANSFER OF THIS NOTE WHICH IS PROPOSED TO BE MADE PURSUANT TO CLAUSE (B) ABOVE
SHALL REQUIRE THAT THE TRANSFEROR AND THE TRANSFEREE COMPLETE THE CERTIFICATE OF
TRANSFER APPEARING ON THE REVERSE OF THIS NOTE AND DELIVER SUCH CERTIFICATE OF
TRANSFER TO THE FISCAL AGENT UNDER THE FISCAL AGENCY AGREEMENT DATED AS OF MARCH
26, 2004 (THE "FISCAL AGENT").

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT IT IS ITS INTENT AND IT UNDERSTANDS
IT IS THE INTENT OF RAM HOLDINGS LTD., FOR PURPOSES OF UNITED STATES FEDERAL,
STATE AND LOCAL INCOME TAXES, THAT THE NOTES BE TREATED AS INDEBTEDNESS OF RAM
HOLDINGS LTD., AGREES TO SUCH TREATMENT AND AGREES TO TAKE NO ACTION
INCONSISTENT WITH SUCH TREATMENT.

     THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE ACT, AND MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM AND IN ACCORDANCE WITH THE FISCAL AGENCY
AGREEMENT DATED AS OF MARCH 26, 2004, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL CORPORATE TRUST OFFICE OF THE FISCAL AGENT. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A THEREUNDER.

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT SUCH

                                       A-2

<PAGE>

HOLDER IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR THE
ACCOUNT OF PERSONS WHO ARE QUALIFIED INSTITUTIONAL BUYERS.

     1. Interest. RAM HOLDINGS LTD. (the "Company"), a limited liability company
organized under the laws of Bermuda, promises to pay interest on the principal
amount of this Note at the rate of 6.875% per annum. The Company will pay
interest semi-annually on April 1st and October 1st of each year, commencing
October 1, 2004, to Holders at the close of business on the relevant record
dates specified in Paragraph 2 below. Interest on the Notes will accrue from the
most recent Interest Payment Date with respect to which interest has been paid
or, if no interest has been paid, from March 26, 2004. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

     2. Method of Payment. When paying interest on the Notes, the Company will
pay, or cause to be paid, interest on the Notes to the Persons who are
registered Holders at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date. Noteholders must surrender Notes to a
Paying Agent to collect payments of principal and the Make-Whole Amount, if any.
The Company will pay, or cause to be paid, principal, interest and the
Make-Whole Amount in money of the United States that at the time of payment is
legal tender for payment of public and private debt. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding Business Day, and no interest on the amount payable on such
payment date shall accrue for the intervening period.

     3. Paying Agent; Registrar. Initially, The Bank of New York (the "Fiscal
Agent") will act as Paying Agent, Authenticating Agent and Registrar. The
Company may change any Paying Agent, Registrar or Co-Registrar by giving notice
to the Fiscal Agent. The Company may act as Paying Agent, Registrar or
Co-Registrar.

     4. Agreement. The Company issued this Note as one of a duly authorized
issue of Notes of the Company designated as its 6.875% Notes due 2024 (the
"Notes") under a Fiscal Agency Agreement, dated as of March 26, 2004 (the
"Agreement"), between the Company and the Fiscal Agent. The Notes are subject to
the terms and conditions hereof and thereof, and Noteholders are referred to the
Agreement for a statement of those terms. Unless the context otherwise requires,
terms used herein that are defined in the Agreement shall have the respective
meanings assigned thereto in the Agreement.

     5. ERISA Restrictions. No employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the prohibited transaction provisions of the Code, as to which the
Company is a party in interest or a disqualified person (each a "Plan"), and no
Person acting on behalf of a Plan, may acquire this Note, unless the acquisition
of the Note is exempt under one or more of Prohibited Transaction Exemptions
84-14, 90-1 or 91-38, 95-60 or 96-23 (or any amendment thereof) or another
applicable exemption from the prohibited transaction provisions under ERISA and
the Code. The purchase by any Person of this Note constitutes a representation
by such Person to the Company and the Fiscal Agent that such Person either (i)
is not a Plan, or (ii) is a Plan, but may acquire such Note under an applicable
exemption from the prohibited transaction provisions under ERISA and the Code.

                                       A-3

<PAGE>

     6. Denominations; Transfer; Exchange. The Notes are in registered form
without coupons in minimum denominations of $100,000 and any amount in excess
thereof that is an integral multiple of $1,000. Notes may be exchanged as
provided in the Agreement. The Registrar may require a Noteholder, among other
things, to furnish appropriate endorsements, opinions of counsel and transfer
documents and to pay any taxes and fees required by law or permitted by the
Agreement.

     7. Redemption. (a) The Notes are subject to optional redemption, in whole
or in part, at the option of the Company at any time or from time to time, with
at least 45 days' advance notice to the Fiscal Agent and at least 30 days'
advance notice to the relevant Noteholder, at a redemption price equal to the
sum of (i) accrued interest to the date of the redemption (the "Redemption
Date"), (ii) principal and (iii) the Make-Whole Amount (as defined in the
Agreement), if any.

     (b) In the case of any partial redemption of Notes, the Notes to be
redeemed shall be in an amount not less than 5% of the aggregate principal
amount of the Notes then outstanding and selected by the Fiscal Agent not more
than 30 days prior to the date of such redemption, from the Outstanding Notes
not previously called for redemption, by such method as the Fiscal Agent shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $1,000 or any integral multiple thereof) of the principal
amount of registered Notes of a denomination larger than $100,000.

     (c) Notices to redeem Notes shall be given to Noteholders in writing
mailed, first-class postage prepaid, to each Holder of registered Notes, or
portions thereof, so to be redeemed, at his address as it appears in the
Register. Such notice will be given once not less than 30 days and not more than
60 days prior to the date fixed for redemption. If by reason of the suspension
of regular mail service, or by reason of any other cause, it shall be
impracticable to give notice to the Noteholders in the manner prescribed herein,
then such notification in lieu thereof as shall be made by the Company or by the
Fiscal Agent on behalf of and at the instruction of the Company shall constitute
sufficient provision of such notice, if such notification shall, so far as may
be practicable, approximate the terms and conditions of the mailed notice in
lieu of which it is given. Neither the failure to give notice nor any defect in
any notice given to any particular Noteholder shall affect the sufficiency of
any notice with respect to other Notes. Notices to redeem Notes shall identify
the Notes to be redeemed (including CUSIP numbers) and specify the date fixed
for redemption, the aggregate principal amount of the Notes to be redeemed on
such date, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of the Notes to be redeemed (or
portion thereof in the case of a partial redemption), that interest accrued to
the date fixed for redemption (unless the date of redemption is an Interest
Payment Date) will be paid as specified in said notice and that on and after
said date interest thereon will cease to accrue if the Notes are so redeemed. In
addition, in the case of a partial redemption, the Redemption Notice shall
specify the Notes called for redemption and the aggregate principal amount of
the Notes to remain outstanding after the redemption.

     (d) If notice of redemption has been given in the manner set forth in the
Agreement, the Notes so to be redeemed shall be payable in full or in part, as
applicable, on the date specified in such notice and upon presentation and
surrender of the Notes at the place or places specified in such notice, the
Notes shall be paid and redeemed by the Company at the places and

                                       A-4

<PAGE>

in the manner and currency and at the redemption price together with accrued
interest (unless the Redemption Date is an Interest Payment Date) to the
Redemption Date specified in the Agreement. From and after the Redemption Date,
if monies for the redemption of Notes called for redemption shall have been made
available at the principal office of the Fiscal Agent for redemption on the
Redemption Date, the Notes called for redemption shall cease to bear interest,
and the only right of the Holders with respect to such Notes or portion thereof
being redeemed shall be to receive payment of the redemption price together with
accrued interest (unless the Redemption Date is an Interest Payment Date) to the
Redemption Date as aforesaid. If monies for the redemption of the Notes are not
made available for payment until after the Redemption Date, the Notes called for
redemption shall not cease to bear interest until such monies have been so made
available.

     (e) Any Note which is to be redeemed only in part shall be surrendered
with, if the Company or the Fiscal Agent so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Fiscal Agent duly executed by, the Noteholder thereof or his attorney duly
authorized in writing, and the Company shall execute, and the Fiscal Agent shall
authenticate and deliver to the Holder of such Note without service charge, a
new registered Note or Notes, of any authorized denomination as requested by
such Noteholder, and as permitted by Section 2.1 of the Agreement, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.

     8. Persons Deemed Owners. The registered Holder may be treated as its owner
for all purposes.

     9. Amendment, Supplement, Waiver. Subject to certain exceptions, the
Agreement or the Notes may be amended, supplemented or modified, with the
consent of the Company and the Holders of a majority in aggregate principal
amount of the Outstanding Notes, and any existing default may be waived with the
consent of the Holders of at least a majority in aggregate principal amount of
the Outstanding Notes and without the consent of any Noteholder, the Agreement
or the Notes may be amended, modified or supplemented inter alia, to cure any
ambiguity or correct any defective provision, to evidence the succession of
another entity to the Company and provide for assumption of the Company's
covenants and obligations under the Agreement and the Notes or to make any
change that the Fiscal Agent and the Company determine is necessary or desirable
and which shall not adversely affect the interests of any Noteholder in any
material respect.

     10. Fiscal Agent Dealings With the Company. The Fiscal Agent under the
Agreement, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company and may otherwise deal with
the Company as if it were not Fiscal Agent.

     11. No Recourse Against Others. A director, officer, employee or policy
owner, as such, of the Company shall not have any liability for any obligations
of the Company under the Notes or the Agreement or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Noteholder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.

                                       A-5

<PAGE>

     12. Abbreviations. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

     13. Governing Law. The Agreement, the Notes and the obligations of the
Company thereunder shall be governed by and construed in accordance with the
laws of New York, without regard to the conflicts of laws principles thereof.

     14. Copy of Agreement. The Company will furnish any Noteholder upon written
request and without charge a copy of the Agreement. Requests may be made to: RAM
Holdings Ltd., PO Box HM 3302, Hamilton HM PX, Bermuda, Attention: General
Counsel.

                                       A-6

<PAGE>

                            ANNEX A - ASSIGNMENT FORM

     To assign this Note fill in the form below:

     We assign and transfer this Note to

________________________________________________________________________________
        (Insert assignee's social security or tax identification number)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

              (Print or type assignee's name, address and zip code)

and irrevocably appoint ___________________________________________________
agent to transfer this Note on the books of RAM Holdings Ltd. The agent may
substitute another to act for him.

Date:                                   Your signature:
      -----------------------                           ------------------------
                                        (Sign exactly as your name appears on
                                        the other side of this Note)

-------------------------------------
Signature Guaranteed:

                                       A-7

<PAGE>

                         EXHIBIT B - FORM OF GLOBAL NOTE

                                 (FACE OF NOTE)

CUSIP No. 751302 AA 8                                                $40,000,000

                                RAM HOLDINGS LTD.

                           6.875% SENIOR NOTE DUE 2024

     RAM HOLDINGS LTD., a limited liability company organized under the laws of
Bermuda, promises to pay to Cede & Co. or registered assigns, the principal sum
of $40,000,000 on April 1, 2024.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     This Note shall not be valid until authenticated by the manual signature of
the Fiscal Agent (as defined on the reverse hereof) or the Authenticating Agent.

          IN WITNESS WHEREOF, RAM HOLDINGS LTD. has caused this Note to be
signed by its duly authorized officers and its corporate seal to be affixed
hereto or imprinted hereon.

Dated: March 26, 2004                    RAM HOLDINGS LTD.

Authenticated:

                                        By:
                                            ------------------------------------
THE BANK OF NEW YORK,                   Name:
                                              ----------------------------------
as Fiscal Agent                         Title:
                                               ---------------------------------

By:                                     By:
    ---------------------------------       ------------------------------------
    Authorized Signatory                Name:
                                              ----------------------------------
                                        Title.
                                               ---------------------------------

                                       B-1

<PAGE>

                                (REVERSE OF NOTE)

                                RAM HOLDINGS LTD.

                          6.875% Note due April 1, 2024

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (I) BY THE
DEPOSITORY, THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK
10041 ("DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY, (II) BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR (III) BY
THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITORY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

     THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF RAM HOLDINGS LTD. THAT
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO RAM HOLDINGS LTD. OR (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE, TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER", AS DEFINED IN RULE 144A (TOGETHER WITH ANY SUCCESSOR PROVISION THERETO,
AND AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME, "RULE 144A") UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN A TRANSACTION IN
ACCORDANCE WITH RULE 144A, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAW OF
THE STATES OF THE UNITED STATES, SUBJECT IN EACH CASE TO ANY REQUIREMENT OF LAWS
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF ANY SUCH ACCOUNT OR
ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL. ANY RESALE OR OTHER
TRANSFER OF THIS NOTE WHICH IS PROPOSED TO BE MADE PURSUANT TO CLAUSE (B) ABOVE
SHALL REQUIRE THAT THE TRANSFEROR AND THE TRANSFEREE COMPLETE THE CERTIFICATE OF
TRANSFER APPEARING ON THE REVERSE OF THIS NOTE AND DELIVER SUCH CERTIFICATE OF
TRANSFER TO THE FISCAL AGENT UNDER THE FISCAL AGENCY AGREEMENT DATED AS OF MARCH
26, 2004 (THE "FISCAL AGENT").

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT IT IS ITS

                                       B-2

<PAGE>

INTENT AND IT UNDERSTANDS IT IS THE INTENT OF RAM HOLDINGS LTD., FOR PURPOSES OF
UNITED STATES FEDERAL, STATE AND LOCAL INCOME TAXES, THAT THE NOTES BE TREATED
AS INDEBTEDNESS OF RAM HOLDINGS LTD., AGREES TO SUCH TREATMENT AND AGREES TO
TAKE NO ACTION INCONSISTENT WITH SUCH TREATMENT.

     THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE ACT, AND MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM AND IN ACCORDANCE WITH THE FISCAL AGENCY
AGREEMENT DATED AS OF MARCH 26, 2004, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL CORPORATE TRUST OFFICE OF THE FISCAL AGENT. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A THEREUNDER.

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT SUCH HOLDER IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF PERSONS WHO
ARE QUALIFIED INSTITUTIONAL BUYERS.

     1. Interest. RAM HOLDINGS LTD. (the "Company"), a limited liability company
organized under the laws of the Bermuda, promises to pay interest on the
principal amount of this Note at the rate of 6.875% per annum. The Company will
pay interest semi-annually on April 1st and October 1st of each year, commencing
October 1, 2004 to Holders at the close of business on the relevant record dates
specified in Paragraph 2 below. Interest on the Notes will accrue from the most
recent Interest Payment Date with respect to which interest has been paid or, if
no interest has been paid, from March 26, 2004. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.

     2. Method of Payment. When paying interest on the Notes, the Company will
pay, or cause to be paid, interest on the Notes to the Persons who are
registered Holders at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date. Noteholders must surrender Notes to a
Paying Agent to collect payments of principal and the Make-Whole Amount, if any.
The Company will pay, or cause to be paid, principal, interest and the
Make-Whole Amount in money of the United States that at the time of payment is
legal tender for payment of public and private debt. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding Business Day, and no interest on the amount payable on such
payment date shall accrue for the intervening period.

     3. Paying Agent; Registrar. Initially, The Bank of New York (the "Fiscal
Agent") will act as Paying Agent, Authenticating Agent and Registrar. The
Company may change any Paying Agent, Registrar or Co-Registrar by giving notice
to the Fiscal Agent. The Company may act as Paying Agent, Registrar or
Co-Registrar.

                                       B-3

<PAGE>

     4. Agreement. The Company issued this Note as one of a duly authorized
issue of Notes of the Company designated as its 6.875% Notes due 2024 (the
"Notes") under a Fiscal Agency Agreement, dated as of March 26, 2004 (the
"Agreement"), between the Company and the Fiscal Agent. The Notes are subject to
the terms and conditions hereof and thereof, and Noteholders are referred to the
Agreement for a statement of those terms. Unless the context otherwise requires,
terms used herein that are defined in the Agreement shall have the respective
meanings assigned thereto in the Agreement.

     5. ERISA Restrictions. No employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the prohibited transaction provisions of the Code, as to which the
Company is a party in interest or a disqualified person (each a "Plan"), and no
Person acting on behalf of a Plan, may acquire this Note, unless the acquisition
of the Note is exempt under one or more of Prohibited Transaction Exemptions
84-14, 90-1 or 91-38, 95-60 or 96-23 (or any amendment thereof) or another
applicable exemption from the prohibited transaction provisions under ERISA and
the Code. The purchase by any Person of this Note constitutes a representation
by such Person to the Company and the Fiscal Agent that such Person either (i)
is not a Plan, or (ii) is a Plan, but may acquire such Note under an applicable
exemption from the prohibited transaction provisions under ERISA and the Code.

     6. Denominations; Transfer; Exchange. The Notes are in registered form
without coupons in minimum denominations of $100,000 and any amount in excess
thereof that is an integral multiple of $1,000. Notes may be exchanged as
provided in the Agreement. The Registrar may require a Noteholder, among other
things, to furnish appropriate endorsements, opinions of counsel and transfer
documents and to pay any taxes and fees required by law or permitted by the
Agreement.

     7. Redemption. (a) The Notes are subject to optional redemption, in whole
or in part, at the option of the Company at any time or from time to time, with
at least 45 days' advance notice to the Fiscal Agent and at least 30 days'
advance notice, at a redemption price equal to the sum of (i) accrued interest
to the date of the redemption (the "Redemption Date"), (ii) principal and (iii)
the Make-Whole Amount (as defined in the Agreement), if any.

     (b) In the case of any partial redemption of Notes, the Notes to be
redeemed shall be in an amount not less than 5% of the aggregate principal
amount of the Notes then outstanding and selected by the Fiscal Agent not more
than 30 days prior to the date of such redemption, from the Outstanding Notes
not previously called for redemption, by such method as the Fiscal Agent shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $1,000 or any integral multiple thereof) of the principal
amount of registered Notes of a denomination larger than $100,000.

     (c) Notices to redeem Notes shall be given to Noteholders in writing
mailed, first-class postage prepaid, to each Holder of registered Notes, or
portions thereof, so to be redeemed, at his address as it appears in the
Register. Such notice will be given once not less than 30 days and not more than
60 days prior to the date fixed for redemption. If by reason of the suspension
of regular mail service, or by reason of any other cause, it shall be
impracticable to give notice to the Noteholders in the manner prescribed herein,
then such notification in lieu thereof as shall be

                                       B-4

<PAGE>

made by the Company or by the Fiscal Agent on behalf of and at the instruction
of the Company shall constitute sufficient provision of such notice, if such
notification shall, so far as may be practicable, approximate the terms and
conditions of the mailed notice in lieu of which it is given. Neither the
failure to give notice nor any defect in any notice given to any particular
Noteholder shall affect the sufficiency of any notice with respect to other
Notes. Notices to redeem Notes shall identify the Notes to be redeemed
(including CUSIP numbers) and specify the date fixed for redemption, the
aggregate principal amount of the Notes to be redeemed on such date, the
redemption price, the place or places of payment, that payment will be made upon
presentation and surrender of the Notes to be redeemed (or portion thereof in
the case of a partial redemption), that interest accrued to the date fixed for
redemption (unless the date of redemption is an Interest Payment Date) will be
paid as specified in said notice and that on and after said date interest
thereon will cease to accrue if the Notes are so redeemed. In addition, in the
case of a partial redemption, the Redemption Notice shall specify the Notes
called for redemption and the aggregate principal amount of the Notes to remain
outstanding after the redemption.

     (d) If notice of redemption has been given in the manner set forth in the
Agreement, the Notes so to be redeemed shall be payable in full or in part, as
applicable, on the date specified in such notice and upon presentation and
surrender of the Notes at the place or places specified in such notice, the
Notes shall be paid and redeemed by the Company at the places and in the manner
and currency and at the redemption price together with accrued interest (unless
the Redemption Date is an Interest Payment Date) to the Redemption Date
specified in the Agreement. From and after the Redemption Date, if monies for
the redemption of Notes called for redemption shall have been made available at
the principal office of the Fiscal Agent for redemption on the Redemption Date,
the Notes called for redemption shall cease to bear interest, and the only right
of the Holders with respect to such Notes or portion thereof being redeemed
shall be to receive payment of the redemption price together with accrued
interest (unless the Redemption Date is an Interest Payment Date) to the
Redemption Date as aforesaid. If monies for the redemption of the Notes are not
made available for payment until after the Redemption Date, the Notes called for
redemption shall not cease to bear interest until such monies have been so made
available.

     (e) Any Note which is to be redeemed only in part shall be surrendered
with, if the Company or the Fiscal Agent so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Fiscal Agent duly executed by, the Noteholder thereof or his attorney duly
authorized in writing, and the Company shall execute, and the Fiscal Agent shall
authenticate and deliver to the Holder of such Note without service charge, a
new registered Note or Notes, of any authorized denomination as requested by
such Noteholder, and as permitted by Section 2.1 of the Agreement, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.

     8. Persons Deemed Owners. The registered Holder may be treated as its owner
for all purposes.

     9. Amendment, Supplement, Waiver. Subject to certain exceptions, the
Agreement or the Notes may be amended, supplemented or modified, with the
consent of the Company and the Holders of a majority in aggregate principal
amount of the Outstanding Notes, and any existing default may be waived with the
consent of the Holders of at least a majority in aggregate

                                       B-5

<PAGE>

principal amount of the Outstanding Notes and without the consent of any
Noteholder, the Agreement or the Notes may be amended, modified or supplemented
inter alia, to cure any ambiguity or correct any defective provision, to
evidence the succession of another entity to the Company and provide for
assumption of the Company's covenants and obligations under the Agreement and
the Notes or to make any change that the Fiscal Agent and the Company determine
is necessary or desirable and which shall not adversely affect the interests of
any Noteholder in any material respect.

     10. Fiscal Agent Dealings With the Company. The Fiscal Agent under the
Agreement, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company and may otherwise deal with
the Company as if it were not Fiscal Agent.

     11. No Recourse Against Others. A director, officer, employee or policy
owner, as such, of the Company shall not have any liability for any obligations
of the Company under the Notes or the Agreement or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Noteholder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.

     12. Abbreviations. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

     13. Governing Law. The Agreement, the Notes and the obligations of the
Company thereunder shall be governed by and construed in accordance with the
laws of New York,without regard to the conflicts of laws principles thereof.

     14. Copy of Agreement. The Company will furnish any Noteholder upon written
request and without charge a copy of the Agreement. Requests may be made to: RAM
Holdings Ltd., PO Box HM 3302, Hamilton HM PX, Bermuda, Attention: General
Counsel.

                                       B-6

<PAGE>

              EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED UPON
                  EXCHANGE OR REGISTRATION OF TRANSFER OF NOTE

Re: 6.875% Senior Note due 2024 of RAM Holdings Ltd.

     This Certificate relates to $____________ principal amount of Notes held in
*__ book-entry or *__ definitive form by ____________________________ (the
"Transferor").

The Transferor*:

     - has requested the Registrar and the Fiscal Agent by written order deliver
in exchange for its beneficial interest in Global Notes held by the Depository a
Note or Notes in definitive registered form of authorized denominations and in
an aggregate principal amount equal to its beneficial interest in such Global
Notes (or the portion thereof indicated above); or

     - has requested the Registrar and the Fiscal Agent by written order cause
it, in exchange for its surrendering a Note or Notes in definitive registered
form for cancellation, to be recorded as the owner of a beneficial interest in
Global Notes of an authorized denomination and an aggregate principal amount
equal to its aggregate interest in such definitive Note or Notes (or the portion
thereof indicated above); or

     - has requested the Registrar and the Fiscal Agent by written order
exchange or register the transfer of a Note or Notes.

     In connection with such request and in respect of each such Note, the
Transferor does hereby certify to RAM Holdings Ltd. (the "Company") and the
Registrar either:*

     - Such Note is owned by the Transferor and is being exchanged without
transfer; or

     In connection with the resale or other transfer of such Note occurring
prior to the time the legend originally set forth on such Note (or one or more
predecessor Notes) restricting resales and other transfers thereof has been
removed with the consent of the Company in accordance with the procedures set
forth in the Fiscal Agency Agreement referred to therein (other than a resale or
other transfer made to the Company), the undersigned confirms that without
utilizing any general solicitation or general advertising:

     - Such Note is being transferred by the undersigned to a "qualified
institutional buyer", as defined in Rule 144A under the Securities Act of 1933,
as amended, to whom notice has been given that such transfer is being made in
reliance on Rule 144A, pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144A thereunder.

                                       C-1

<PAGE>

If the foregoing box is not checked, then, so long as such Note shall bear a
legend restricting resales and other transfers thereof (except in the case of a
resale or other transfer made to the Company), the Registrar shall not be
obligated to register such Note in the name of any person other than the holder
thereof unless and until the conditions to any such transfer of registration set
forth in such Note and in the Fiscal Agency Agreement shall have been satisfied.

Dated:
       -----------------------------    ----------------------------------------
                                        (Type or print name of holder)

                                        By:
                                            ------------------------------------
                                        The signature of the holder must
                                        correspond with the name as written upon
                                        the face of such Note in every
                                        particular, without alteration or
                                        enlargement or any change whatsoever.

                                        [INSERT NAME OF TRANSFEROR]

By:
    ---------------------------------
Date:
      -------------------------------

*    Check applicable box.

                                       C-2

<PAGE>

TO BE COMPLETED BY TRANSFEREE

     The undersigned represents and warrants that (i) it is a "qualified
institutional buyer", as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that the undersigned either has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information, (ii) this
instrument has been executed on behalf of the undersigned by one of its
executive officers and (iii) it is aware that the Holder of such Note is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A. The undersigned acknowledges and agrees
that such Note has not been registered under the Securities Act of 1933, as
amended, and may not be transferred except in accordance with the resale and
other transfer restrictions set forth in the legend thereon. The undersigned
agrees, on its own behalf and on behalf of any accounts for which it is acting,
that it will transfer such Note only in accordance with the transfer
restrictions set forth in such legend. The Company, the Fiscal Agent and the
Registrar are entitled to rely upon this certification and are irrevocably
authorized to produce this certification or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.

Dated:
       -----------------------------    ----------------------------------------
                                        (Type or print name of holder)

                                        By:
                                            ------------------------------------
                                            Executive Officer

                                       C-3

<PAGE>

                                  ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.

TEN COM--as tenants in common

UNIF GIFT MIN ACT ____________________ Custodian _________________________
                         (Cust)                           (Minor)

                                        Under Uniform Gifts to Minors Act

                                        __________________________________
                                                     (State)

TEN ENT--as tenants by the entireties

JT TEN--as joint tenants with right of survivorship and not as tenants in common

     Additional abbreviations may also be used though not in the above list.

                                       C-4

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