Document:

EXECUTION COPY

                        RESIDENTIAL FUNDING CORPORATION,

                               as Master Servicer

                        HOME EQUITY LOAN TRUST 2003-HS3,

                                    as Issuer

                                       and

                               JPMORGAN CHASE BANK

                              as Indenture Trustee

                               SERVICING AGREEMENT

                         Dated as of September 29, 2003

                                Home Equity Loans

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                                TABLE OF CONTENTS

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ARTICLE I         Definitions...............................................................1

Section 1.01      Definitions...............................................................1

Section 1.02Other Definitional Provisions...................................................1

Section 1.03Interest Calculations; Servicing Fee............................................2

ARTICLE II        Representations and Warranties............................................2

Section 2.01      Representations and Warranties Regarding the Master Servicer..............2

Section 2.02      Representations and Warranties of the Issuer..............................3

Section 2.03      Enforcement of Representations and Warranties.............................4

ARTICLE III       Administration and Servicing of Home Equity Loans.........................5

Section 3.01      The Master Servicer.......................................................5

Section 3.02      Collection of Certain Home Equity Loan Payments..........................10

Section 3.03      Permitted Withdrawals from the Custodial Account.........................13

Section 3.04      Maintenance of Hazard Insurance; Property Protection Expenses............15

Section 3.05      Enforcement of Due-on-Sale Clauses; Assumption and Modification
                  Agreements; Release or Substitution of Lien..............................16

Section 3.06      Trust Estate; Related Documents..........................................18

Section 3.07      Realization Upon Defaulted Home Equity Loans; Loss Mitigation............19

Section 3.08      Issuer and Indenture Trustee to Cooperate................................22

Section 3.09      Servicing Compensation; Payment of Certain Expenses by Master............23

Section 3.10      Annual Statement as to Compliance........................................23

Section 3.11      Annual Servicing Report..................................................24

Section 3.12      Access to Certain Documentation and Information Regarding the Home
                  Equity Loans.............................................................24

Section 3.13      Maintenance of Certain Servicing Insurance Policies......................25

Section 3.14      Information Required by the Internal Revenue Service and Reports of
                  Foreclosures and Abandonments of Mortgaged Property......................25

Section 3.15      Optional Repurchase or Transfer of Home Equity Loans.....................25

Section 3.16      Limited Home Equity Loan Repurchase Right................................27

ARTICLE IV        Servicing Certificate....................................................27

Section 4.01      Statements to Securityholders............................................27

Section 4.02      Tax Reporting............................................................30

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Section 4.03      Statements to Credit Enhancer............................................30

ARTICLE V         Payment Account..........................................................31

Section 5.01      Payment Account..........................................................31

ARTICLE VI        The Master Servicer......................................................31

Section 6.01      Liability of the Master Servicer.........................................31

Section 6.02      Merger or Consolidation of, or Assumption of the Obligations of,
                  the Master Servicer......................................................31

Section 6.03      Limitation on Liability of the Master Servicer and Others................32

Section 6.04      Master Servicer Not to Resign............................................32

Section 6.05      Delegation of Duties.....................................................33

Section 6.06      Master Servicer to Pay Indenture Trustee's and Owner Trustee's Fees
                  and Expenses; Indemnification............................................33

ARTICLE VII       Default..................................................................34

Section 7.01      Servicing Default........................................................34

Section 7.02      Indenture Trustee to Act; Appointment of Successor.......................36

Section 7.03      Notification to Securityholders..........................................38

ARTICLE VIII      Miscellaneous Provisions.................................................38

Section 8.01      Amendment................................................................38

Section 8.02      GOVERNING LAW............................................................38

Section 8.03      Notices..................................................................38

Section 8.04      Severability of Provisions...............................................39

Section 8.05      Third-Party Beneficiaries................................................39

Section 8.06      Counterparts.............................................................39

Section 8.07      Effect of Headings and Table of Contents.................................39

Section 8.08      Termination Upon Purchase by the Master Servicer or Liquidation of
                  Home Equity Loans........................................................40

Section 8.09      Certain Matters Affecting the Indenture Trustee..........................41

Section 8.10      Owner Trustee Not Liable for Related Documents...........................41

EXHIBIT C         ..........................................................................1

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EXHIBITS

Exhibit A          Home Equity Loan Schedule..............................................A-1
Exhibit B          Limited Power of Attorney..............................................B-1
Exhibit C          Form of Request for Release............................................C-1
Exhibit D          Form of Lender Certification for Assignment
                   of Home Equity Loan....................................................D-1
Exhibit E          Form 10-K Certification................................................E-1
Exhibit F          Form of Back-Up Certification to Form 10-K Certificate.................F-1

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               This Servicing  Agreement,  dated as of September 29, 2003, among
Residential Funding  Corporation (the "Master  Servicer"),  the Home Equity Loan
Trust  2003-HS3  (the  "Issuer"),   and  JPMorgan  Chase  Bank  (the  "Indenture
Trustee").

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

               WHEREAS,  pursuant  to  the  terms  of  the  Purchase  Agreement.
Residential  Funding  Corporation  (in its  capacity as Seller) will sell to the
Depositor  the  Group I Loans  and  Group II  Loans  together  with the  Related
Documents  on the Closing Date and  thereafter  all  Additional  Balances on the
Group II Loans  created  on or after  the  Cut-off  Date  (except  as set  forth
herein);

               WHEREAS,  the Depositor  will sell the Group I Loans and Group II
Loans and all of its rights under the Purchase Agreement to the Issuer, together
with the Related  Documents on the Closing Date,  and  thereafter all Additional
Balances on the Group II Loans  created on or after the Cut-off  Date (except as
set forth herein);

               WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will  issue  and  transfer  to  or  at  the  direction  of  the  Depositor,  the
Certificates;

     WHEREAS,  pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Depositor, the Notes; and

               WHEREAS,  pursuant to the terms of this Servicing Agreement,  the
Master  Servicer  will service the Home Equity Loans  directly or through one or
more Subservicers;

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

                                   ARTICLE I

                                   DEFINITIONS

Section 1.01 DEFINITIONS.  For all purposes of this Servicing Agreement,  except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized  terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions  contained in Appendix A to the Indenture dated
the date hereof (the  "Indenture"),  between the Issuer and JPMorgan Chase Bank,
as indenture  trustee,  which is  incorporated  by reference  herein.  All other
capitalized terms used herein shall have the meanings specified herein.

Section  1.02  OTHER  DEFINITIONAL  PROVISIONS.  (i) All terms  defined  in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered  pursuant  hereto unless  otherwise  defined
therein.

        As used in this  Servicing  Agreement  and in any  certificate  or other
document  made or delivered  pursuant  hereto or thereto,  accounting  terms not
defined  in  this  Servicing  Agreement  or in any  such  certificate  or  other
document,  and accounting terms partly defined in this Servicing Agreement or in

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any such  certificate or other document,  to the extent not defined,  shall have
the  respective  meanings  given to them  under  generally  accepted  accounting
principles.  To the extent  that the  definitions  of  accounting  terms in this
Servicing   Agreement  or  in  any  such   certificate  or  other  document  are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.

        The words  "hereof,"  "herein,"  "hereunder" and words of similar import
when used in this Servicing Agreement shall refer to this Servicing Agreement as
a whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references  contained in this Servicing  Agreement are references to
Sections  and  Exhibits  in or to  this  Servicing  Agreement  unless  otherwise
specified;  the term "including" shall mean "including without limitation";  and
the term "proceeds" shall have the meaning ascribed thereto in the UCC.

        The definitions  contained in this Servicing Agreement are applicable to
the singular as well as the plural  forms of such terms and to the  masculine as
well as the feminine and neuter genders of such terms.

        Any agreement, instrument or statute defined or referred to herein or in
any  instrument  or  certificate  delivered in  connection  herewith  means such
agreement,  instrument  or statute  as from time to time  amended,  modified  or
supplemented and includes (in the case of agreements or instruments)  references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

Section 1.03 INTEREST CALCULATIONS;  SERVICING FEE. All calculations of interest
hereunder  that are made in respect of the Loan  Balance of a Home  Equity  Loan
shall be made in  accordance  with the  method of  calculation  set forth in the
related  Mortgage Note. All calculations of interest on the Class I Notes (other
than the  Class  A-I-1  Notes)  shall be made on the  basis  of a  360-day  year
consisting of twelve 30-day months.  All  calculations  of interest on the Class
A-I-1 and the Class II Notes shall be made on the basis of the actual  number of
days in an  Interest  Period and a year  assumed  to  consist  of 360 days.  The
calculation  of the  Servicing  Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day  months.  All dollar  amounts  calculated  hereunder
shall be rounded to the nearest  penny with  one-half of one penny being rounded
up.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

Section 2.01 REPRESENTATIONS AND WARRANTIES  REGARDING THE MASTER SERVICER.  The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee,  as pledgee of the Home Equity Loans and the Credit Enhancer,
as of the Closing Date:

        The Master Servicer is a corporation  duly organized,  validly  existing
and in good  standing  under  the  laws of the  State  of  Delaware  and has the
corporate  power to own its assets and to transact  the  business in which it is
currently  engaged.  The Master  Servicer is duly  qualified to do business as a
foreign  corporation  and is in good standing in each  jurisdiction in which the

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character of the business  transacted by it or properties  owned or leased by it
requires such  qualification and in which the failure to so qualify would have a
material  adverse  effect on the  business,  properties,  assets,  or  condition
(financial or other) of the Master Servicer;

        The  Master  Servicer  has the power  and  authority  to make,  execute,
deliver  and  perform  this  Servicing  Agreement  and  all of the  transactions
contemplated  under  this  Servicing  Agreement,  and has  taken  all  necessary
corporate  action to authorize the execution,  delivery and  performance of this
Servicing Agreement.  When executed and delivered, this Servicing Agreement will
constitute  the legal,  valid and  binding  obligation  of the  Master  Servicer
enforceable  in accordance  with its terms,  except as enforcement of such terms
may  be  limited  by  bankruptcy,  insolvency  or  similar  laws  affecting  the
enforcement of creditors'  rights generally and by the availability of equitable
remedies;

        The Master  Servicer is not  required to obtain the consent of any other
Person or any consent,  license, approval or authorization from, or registration
or declaration with, any governmental authority,  bureau or agency in connection
with the execution,  delivery,  performance,  validity or enforceability of this
Servicing   Agreement,   except  for  such   consent,   license,   approval   or
authorization,  or registration  or declaration,  as shall have been obtained or
filed, as the case may be;

        The  execution  and  delivery  of  this  Servicing   Agreement  and  the
performance of the transactions  contemplated hereby by the Master Servicer will
not violate any  provision  of any existing  law or  regulation  or any order or
decree of any court  applicable  to the Master  Servicer or any provision of the
Certificate of Incorporation  or Bylaws of the Master Servicer,  or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be bound;

        No  litigation  or  administrative  proceeding  of or before  any court,
tribunal or governmental body is currently  pending,  or to the knowledge of the
Master Servicer threatened, against the Master Servicer or any of its properties
or with  respect to this  Servicing  Agreement  or the  Securities  which in the
opinion of the Master  Servicer  has a reasonable  likelihood  of resulting in a
material  adverse  effect on the  transactions  contemplated  by this  Servicing
Agreement; and

        the  Master  Servicer  is a member  of MERS in good  standing,  and will
comply  in all  material  respects  with the  rules  and  procedures  of MERS in
connection  with the servicing of the Home Equity Loans that are registered with
MERS.

        The  foregoing   representations   and  warranties   shall  survive  any
termination of the Master Servicer hereunder.

Section 2.02  REPRESENTATIONS  AND  WARRANTIES OF THE ISSUER.  The Issuer hereby
represents  and  warrants  to the  Master  Servicer  and for the  benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, and the Credit Enhancer,
as of the Closing Date:

        The Issuer is a statutory  trust duly formed and in good standing  under
the laws of the State of Delaware and has full power,  authority and legal right
to execute and deliver this Servicing  Agreement and to perform its  obligations
under this Servicing Agreement,  and has taken all necessary action to authorize
the execution, delivery and performance by it of this Servicing Agreement; and

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        The execution and delivery by the Issuer of this Servicing Agreement and
the performance by the Issuer of its obligations under this Servicing  Agreement
will not violate any provision of any law or regulation  governing the Issuer or
any order,  writ,  judgment or decree of any court,  arbitrator or  governmental
authority  or  agency  applicable  to the  Issuer  or any  of its  assets.  Such
execution, delivery and performance will not require the consent or approval of,
the giving of notice to, the filing or  registration  with, or the taking of any
action,  other than such actions that have already been taken,  with respect to,
any  governmental  authority  or agency  regulating  the  activities  of limited
liability companies.  Such execution,  delivery,  authentication and performance
will not conflict  with,  or result in a breach or violation  of, any  mortgage,
deed of trust,  lease or other  agreement or  instrument  to which the Issuer is
bound.

Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master Servicer,
on behalf of and subject to the direction of the Indenture  Trustee,  as pledgee
of the Home Equity Loans,  or the Issuer or the Credit  Enhancer,  shall enforce
the  representations  and  warranties  of the Seller  pursuant  to the  Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Master Servicer,
the Indenture  Trustee,  the Credit Enhancer,  the Issuer, or any Custodian of a
breach  of  any of the  representations  and  warranties  made  in the  Purchase
Agreement,  in respect of any Home Equity Loan,  which  materially and adversely
affects the interests of the Securityholders or the Credit Enhancer in that Home
Equity Loan, the party  discovering such breach shall give prompt written notice
to the  other  parties  (any  Custodian  being so  obligated  under a  Custodial
Agreement);  provided that in the event of a breach of representation  set forth
in Section 3.1(b)(xxv) of the Purchase  Agreement,  notice shall be given within
five days of discovery.  The Master Servicer shall promptly notify the Seller of
such breach and request that,  pursuant to the terms of the Purchase  Agreement,
the Seller either (i) cure such breach in all material  respects  within 45 days
(with respect to a breach of the  representations  and  warranties  contained in
Section  3.1(a) of the Purchase  Agreement) or 90 days (with respect to a breach
of the representations and warranties  contained in Section 3.1(b) and 3.1(c) of
the Purchase Agreement) from the date the Seller was notified of such breach or,
in the case of a breach of the representation  set forth in Section  3.1(b)(xxv)
of the Purchase  Agreement,  within 90 days after the  discovery  thereof by the
Seller, the Depositor,  the Master Servicer,  the Indenture Trustee,  the Credit
Enhancer,  the Issuer or the  Purchaser or (ii)  purchase  such Home Equity Loan
from the  Issuer at the price,  during the time,  and in the manner set forth in
Section  3.1(d) of the  Purchase  Agreement;  provided  that the  Seller  shall,
subject  to  compliance  with  all the  conditions  set  forth  in the  Purchase
Agreement,  have the option to substitute an Eligible  Substitute  Loan or Loans
for such Home Equity Loan,  provided that in the case of the  substitution  of a
Group I Loan,  such  substitution  occurs within two years following the Closing
Date.  If the  breach  of  representation  and  warranty  that  gave rise to the
obligation  to  repurchase  or substitute a Home Equity Loan pursuant to Section
3.1 of the Purchase  Agreement was the  representation and warranty set forth in
clauses  (b)(viii),  (c)(I)(x)  or  (c)(II)(x)  of Section  3.1 of the  Purchase
Agreement,  then the Master  Servicer  shall  request that the Seller pay to the
Trust,  concurrently  with  and in  addition  to the  remedies  provided  in the
preceding  sentence,  an amount equal to any liability,  penalty or expense that
was  actually  incurred  and paid out of or on  behalf  of the  Trust,  and that
directly  resulted  from  such  breach,  or if  incurred  and paid by the  Trust
thereafter,  concurrently with such payment. In the event that the Seller elects
to substitute one or more Eligible  Substitute  Loans pursuant to Section 3.1(b)
or 3.1(c) of the Purchase Agreement, the Seller shall deliver to the Issuer with

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respect to such Eligible  Substitute  Loans,  the original Loan  Agreement,  the
Mortgage,  and such  other  documents  and  agreements  as are  required  by the
Purchase  Agreement.  Payments due with respect to Eligible  Substitute Loans in
the month of  substitution  shall not be  transferred  to the Issuer and will be
retained  by the Master  Servicer  and  remitted  by the Master  Servicer to the
Seller on the next succeeding  Payment Date provided a payment at least equal to
the applicable  Minimum Monthly Payment has been received by the Issuer for such
month in respect of the Home  Equity  Loan to be  removed.  The Master  Servicer
shall amend or cause to be amended the Home Equity Loan  Schedule to reflect the
removal of such Home Equity Loan and the substitution of the Eligible Substitute
Loans and the Master  Servicer  shall  promptly  deliver the amended Home Equity
Loan Schedule to the Owner Trustee and the Indenture Trustee.

        It is  understood  and agreed that the  obligation of the Seller to cure
such breach or purchase or substitute for such Home Equity Loan as to which such
a breach has  occurred and is  continuing  and to make any  additional  payments
required  under  the  Purchase  Agreement  in  connection  with a breach  of the
representations and warranties contain in Sections 3.1(b)(viii), 3.1(c)(I)(x) or
3.1(c)(II)(x)  thereof shall  constitute the sole remedy  respecting such breach
available to the Issuer and the Indenture Trustee, as pledgee of the Home Equity
Loans,  against the Seller.  In connection  with the purchase of or substitution
for any such Home  Equity  Loan by the Seller,  the Issuer  shall  assign to the
Seller all of its right, title and interest in respect of the Purchase Agreement
applicable to such Home Equity Loan.  Upon receipt of the Repurchase  Price,  or
upon  completion  of such  substitution,  the Master  Servicer  shall notify the
Custodian and then the Custodian  shall deliver the Mortgage Files to the Master
Servicer,  together with all relevant  endorsements and assignments  prepared by
the Master Servicer which the Indenture Trustee shall execute.

                                  ARTICLE III

                ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS

Section 3.01   THE MASTER SERVICER.

(a) The Master  Servicer shall service and administer the Home Equity Loans in a
manner generally  consistent with the terms of the Program Guide and in a manner
consistent with the terms of this Servicing Agreement, following such procedures
as it would employ in its good faith business  judgment and which are normal and
usual in its general mortgage  servicing  activities,  and shall have full power
and authority,  acting alone or through a Subservicer,  to do any and all things
which it may deem  necessary or desirable in connection  with such servicing and
administration,  it being understood, however, that the Master Servicer shall at
all times remain responsible to the Issuer and the Indenture Trustee, as pledgee
of the Home Equity Loans,  and the Credit  Enhancer for the  performance  of its
duties and  obligations  hereunder in  accordance  with the terms hereof and the
Program Guide. In addition, the Master Servicer shall perform the obligations of
the Master Servicer and REMIC  Administrator (for so long as the Master Servicer
is the REMIC Administrator) set forth in the Indenture and the Trust Agreement.

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        Without  limiting the generality of the foregoing,  the Master  Servicer
shall  continue,  and is hereby  authorized  and empowered by the Issuer and the
Indenture Trustee,  as pledgee of the Home Equity Loans, to execute and deliver,
on behalf of itself,  the Issuer,  the Indenture Trustee or any of them, any and
all instruments of satisfaction or cancellation,  or of partial or full release,
or discharge,  or of consent to assumption or  modification in connection with a
proposed  conveyance,  or of  assignment  of any Mortgage  and Mortgage  Note in
connection  with the  repurchase of a Home Equity Loan and all other  comparable
instruments,  or with respect to the  modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage,  the  subordination  of the lien, as
permitted  pursuant  to this  Agreement,  of the  Mortgage  in favor of a public
utility company or government agency or unit with powers of eminent domain,  the
taking  of a deed in lieu  of  foreclosure,  the  commencement,  prosecution  or
completion  of  judicial  or  non-judicial  foreclosure,  the  conveyance  of  a
Mortgaged  Property to the related  insurer,  the  acquisition  of any  property
acquired  by  foreclosure  or deed in lieu of  foreclosure,  or the  management,
marketing and conveyance of any property acquired by foreclosure or deed in lieu
of  foreclosure  with  respect to the Home Equity  Loans and with respect to the
Mortgaged Properties.

        The Issuer,  the Indenture  Trustee and the  Custodian,  as  applicable,
shall  furnish  the  Master  Servicer  with any  powers  of  attorney  and other
documents  necessary or appropriate  to enable the Master  Servicer to carry out
its servicing and  administrative  duties  hereunder.  On the Closing Date,  the
Indenture  Trustee  shall  deliver  to the Master  Servicer  a limited  power of
attorney  substantially  in the form of  Exhibit B hereto.  In  connection  with
servicing and  administering  the Home Equity Loans, the Master Servicer and any
Affiliate of the Master  Servicer may perform  services such as  appraisals  and
brokerage  services that are not  customarily  provided by servicers of mortgage
loans, and shall be entitled to reasonable  compensation  therefor in accordance
with Section 3.03. In addition,  the Master  Servicer may, at its own discretion
and on behalf of the Indenture Trustee, obtain credit information in the form of
a  Credit  Score  from a credit  repository.  The  Master  Servicer  is  further
authorized and empowered by the Issuer and the Indenture  Trustee,  on behalf of
the Noteholders and the Indenture Trustee, in its own name or in the name of the
Subservicer,  when the Master Servicer or the  Subservicer,  as the case may be,
believes it appropriate in its best judgment to register any Home Equity Loan on
the MERS(R)  System,  or cause the  removal  from the  registration  of any Home
Equity Loan on the MERS(R)  System,  to execute  and  deliver,  on behalf of the
Indenture Trustee and the Noteholders 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
Indenture  Trustee and its  successors  and assigns.  Any  expenses  incurred in
connection with the actions  described in the preceding  sentence shall be borne
by the Master Servicer, with no right of reimbursement.

        Notwithstanding  anything in this  Servicing  Agreement to the contrary,
subject  to  Section   3.02(a),   the  Master  Servicer  shall  not  permit  any
modification  with respect to any Group I Loan that would both constitute a sale
or exchange of such Group I Loan within the meaning of Section  1001 of the Code
and any proposed,  temporary or final  regulations  promulgated  thereunder  and
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC  under
the Code or, except as provided in Section 11.01(f) of the Indenture,  cause the

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imposition of a tax upon any of the REMICs (including but not limited to the tax
on prohibited  transactions as defined in Section 860F(a)(2) of the Code and the
tax on contributions to a REMIC set forth in Section 860G(d) of the Code).

(b) If the Mortgage relating to a Home Equity Loan did not have a lien senior to
the Home Equity Loan on the related  Mortgaged  Property as of the Cut-off Date,
then the Master Servicer, in such capacity,  may not consent to the placing of a
lien senior to that of the Mortgage on the related  Mortgaged  Property.  If the
Mortgage  relating  to a Group II Loan had a lien senior to the Group II Loan on
the related Mortgaged Property as of the Cut-off Date, then the Master Servicer,
in such  capacity,  may consent to the  refinancing  of the prior  senior  lien,
provided that the following requirements are met:

(i) (A) the Mortgagor's  debt-to-income ratio resulting from such refinancing is
less than the original debt-to-income ratio as set forth on the Home Equity Loan
Schedule;  provided,  however,  that in no instance shall the resulting Combined
Loan-to-Value  Ratio of such Home Equity Loan be higher than that  permitted  by
the Program Guide;  or (B) the resulting  Combined  Loan-to-Value  Ratio of such
Group II Loan is no higher than the Combined  Loan-to-Value  Ratio prior to such
refinancing;  provided, however, if such refinanced mortgage loan is a "rate and
term" mortgage loan  (meaning,  the Mortgagor does not receive any cash from the
refinancing),  the  Combined  Loan-to-Value  Ratio may increase to the extent of
either (a) the reasonable  closing costs of such refinancing or (b) any decrease
in the value of the related  Mortgaged  Property,  if the  Mortgagor  is in good
standing as defined by the Program Guide;

(ii) the interest  rate, or, in the case of an adjustable  rate existing  senior
lien, the maximum  interest rate, for the loan evidencing the refinanced  senior
lien is no more than 2.0% higher than the interest rate or the maximum  interest
rate,  as the case may be,  on the loan  evidencing  the  existing  senior  lien
immediately prior to the date of such refinancing; provided, however, (a) if the
loan evidencing the existing senior lien prior to the date of refinancing has an
adjustable rate and the loan  evidencing the refinanced  senior lien has a fixed
rate,  then the current  interest  rate on the loan  evidencing  the  refinanced
senior lien may be up to 2.0% higher than the then-current loan rate of the loan
evidencing the existing  senior lien and (b) if the loan evidencing the existing
senior  lien  prior to the  date of  refinancing  has a fixed  rate and the loan
evidencing the refinanced  senior lien has an adjustable  rate, then the maximum
interest rate on the loan  evidencing the  refinanced  senior lien shall be less
than or  equal to (x) the  interest  rate on the loan  evidencing  the  existing
senior lien prior to the date of refinancing plus (y) 2.0%; and

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

        The Master  Servicer  may also,  without  prior  approval  of the Rating
Agencies  or the Credit  Enhancer,  increase  the Credit  Limits on the Group II
Loans  (a  "Credit  Limit  Increase"),  provided  that  (i) a new  appraisal  is
obtained,  (ii) the new Combined  Loan-to-Value  Ratio of any such Group II Loan
after  giving  effect to such  increase  is less  than or equal to the  Combined
Loan-to-Value  Ratio of the  Group II Loan as of the  Cut-off  Date,  (iii)  the
Master  Servicer  receives  verbal  verification  of  employment  of the related
Mortgagor  and (iv) the payment  history of the related  Mortgagor is within the
underwriting  parameters of the Program Guide. In addition,  the Master Servicer
may  increase  the  Credit  Limits  on  Group  II Loans  without  obtaining  new
appraisals  provided that clauses  (iii) and (iv) of the preceding  sentence are

                                       7
<PAGE>

satisfied,  the Combined  Loan-to-Value Ratio of the Group II Loan following the
Credit Limit Increase will be limited to 100% and at no time shall the aggregate
Loan  Balance of such Group II Loans  exceed 5% of the current  Pool Balance for
the Group II Loans;  provided,  further,  however,  that for Group II Loans with
original  Combined   Loan-to-Value   Ratios  in  excess  of  80%,  the  Combined
Loan-to-Value  Ratio resulting from such Credit Limit Increase must be less than
or equal to the original Combined  Loan-to-Value  Ratio and at no time shall the
aggregate  Loan  Balance of such Group II Loans  exceed 5% of the  current  Pool
Balance for the Group II Loans.

        In connection with servicing the Group II Loans, the Master Servicer may
take  reasonable  actions  to  encourage  or  effect  the  termination  of  Loan
Agreements that have become dormant.

        The  relationship  of the Master  Servicer  (and of any successor to the
Master Servicer as servicer under this Servicing  Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.

        All  costs  incurred  by  the  Master  Servicer  or by  Subservicers  in
effecting the timely payment of taxes and assessments on the properties  subject
to the Home Equity  Loans  shall not,  for the  purpose of  calculating  monthly
distributions  to  Certificateholders,  be added to the amount  owing  under the
related Home Equity  Loans,  notwithstanding  that the terms of such Home Equity
Loan so permit,  and such costs shall be recoverable to the extent  permitted by
Section 3.03.

(c) The Master Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and  administration  of certain of the Home Equity Loans.  Any
Subservicing  Agreement that may be entered into and any other  transactions  or
services  relating  to the Home Equity  Loans  involving  a  Subservicer  in its
capacity  as such and not as an  originator  shall be deemed to be  between  the
Subservicer  and the  Master  Servicer  alone  and  the  Indenture  Trustee  and
Securityholders  shall not be deemed  parties  thereto and shall have no claims,
rights,  obligations,  duties or liabilities  with respect to the Subservicer in
its capacity as such except as set forth in Section 7.02. Each  Subservicer of a
Home Equity  Loan shall be  entitled  to receive and retain,  as provided in the
related Subservicing Agreement and in Section 3.02, the related Subservicing Fee
from payments of interest received on such Home Equity Loan after payment of all
amounts  required to be remitted to the Master  Servicer in respect of such Home
Equity Loan. For any Home Equity Loan that is a nonsubserviced Home Equity Loan,
the Master  Servicer  shall be entitled to receive and retain an amount equal to
the  Subservicing  Fee from payments of interest.  References in this  Servicing
Agreement  to actions  taken or to be taken by the Master  Servicer in servicing
the Home Equity Loans include  actions taken or to be taken by a Subservicer  on
behalf  of the  Master  Servicer  and  any  amount  actually  received  by  such
Subservicer  in  respect  of a Home  Equity  Loan  shall be  deemed to have been
received by the Master Servicer  whether or not actually  received by the Master

                                       8
<PAGE>

Servicer.  Each Subservicing Agreement will be upon such terms and conditions as
are not  inconsistent  with this Servicing  Agreement and as the Master Servicer
and the Subservicer  have agreed.  With the approval of the Master  Servicer,  a
Subservicer may delegate its servicing obligations to third-party servicers, but
such  Subservicers   will  remain  obligated  under  the  related   Subservicing
Agreements. The Master Servicer and the Subservicer may enter into amendments to
the related Subservicing Agreements; provided, however, that any such amendments
shall not cause the Home  Equity  Loans to be serviced in a manner that would be
materially   inconsistent  with  the  standards  set  forth  in  this  Servicing
Agreement.  The Master Servicer shall be entitled to terminate any  Subservicing
Agreement in accordance  with the terms and  conditions  thereof and without any
limitation by virtue of this Servicing Agreement; provided, however, that in the
event of termination of any Subservicing Agreement by the Master Servicer or the
Subservicer,  the Master  Servicer  shall  either act as servicer of the related
Home  Equity  Loan or  enter  into a  Subservicing  Agreement  with a  successor
Subservicer  which  will be  bound  by the  terms  of the  related  Subservicing
Agreement.  If the Master Servicer or any Affiliate of Residential  Funding acts
as servicer, it will not assume liability for the representations and warranties
of the  Subservicer  which it  replaces.  If the Master  Servicer  enters into a
Subservicing Agreement with a successor  Subservicer,  the Master Servicer shall
use reasonable  efforts to have the successor  Subservicer  assume liability for
the representations and warranties made by the terminated Subservicer in respect
of the related Home Equity Loans and, in the event of any such assumption by the
successor Subservicer,  the Master Servicer may, in the exercise of its business
judgment,   release  the   terminated   Subservicer   from  liability  for  such
representations and warranties.

        As part of its servicing activities hereunder,  the Master Servicer, for
the benefit of the Securityholders and the Credit Enhancer, shall use reasonable
efforts  to  enforce  the  obligations  of each  Subservicer  under the  related
Subservicing  Agreement,  to the  extent  that the  non-performance  of any such
obligation  would have a material  adverse  effect on a Home Equity  Loan.  Such
enforcement,  including,  without  limitation,  the legal prosecution of claims,
termination  of  Subservicing  Agreements  and the pursuit of other  appropriate
remedies,  shall be in such form and  carried  out to such an extent and at such
time as the Master Servicer, in its good faith business judgment,  would require
were it the owner of the related Home Equity Loans.  The Master  Servicer  shall
pay the costs of such  enforcement  at its own expense,  and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent,  if any,  that such  recovery  exceeds all amounts due in respect of the
related Home Equity Loan or (ii) from a specific recovery of costs,  expenses or
attorneys fees against the party against whom such enforcement is directed.

        Notwithstanding  any  Subservicing  Agreement,  any of the provisions of
this  Agreement  relating  to  agreements  or  arrangements  between  the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise,  the  Master  Servicer  shall  remain  obligated  and  liable  to the
Indenture   Trustee,   the   Credit   Enhancer,    the   Noteholders   and   the
Certificateholders  for the servicing and administering of the Home Equity Loans
in accordance  with the  provisions  of this Section 3.01 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 Master  Servicer
alone  were  servicing  and  administering  the Home  Equity  Loans.  The Master
Servicer  shall be entitled to enter into any agreement  with a  Subservicer  or
Program Seller for  indemnification of the Master Servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.

                                       9
<PAGE>

        In the event the Master  Servicer  shall for any reason no longer be the
master  servicer  (including  by reason of a Servicing  Default),  the Indenture
Trustee,  its designee or the successor servicer for the Indenture Trustee shall
be deemed to have assumed all of the Master  Servicer's  interest therein and to
have replaced the Master  Servicer as a party to the  Subservicing  Agreement to
the same  extent  as if the  Subservicing  Agreement  had been  assigned  to the
assuming party, except that the Master Servicer shall not thereby be relieved of
any liability or obligations  under the  Subservicing  Agreement,  nor shall the
Indenture  Trustee be responsible  for any  obligations or liabilities  prior to
such  replacement.  The  Indenture  Trustee  shall  not be  responsible  for any
representations  and  warranties  made by the Master  Servicer  pursuant to such
Subservicing Agreement.

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

Section 3.02   COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.

(a) The Master  Servicer shall make  reasonable  efforts to collect all payments
called for under the terms and  provisions of the Home Equity Loans,  and shall,
to the extent such procedures shall be consistent with this Servicing  Agreement
and  generally  consistent  with  the  Program  Guide,  follow  such  collection
procedures as it would employ in its good faith business  judgment and which are
normal and usual in its general mortgage servicing  activities.  Consistent with
the foregoing,  and without limiting the generality of the foregoing, the Master
Servicer may in its discretion  waive any late payment charge,  penalty interest
or other fees which may be collected in the  ordinary  course of servicing  such
Home Equity Loan.  The Master  Servicer may also extend the Due Date for payment
due on a Home  Equity  Loan in  accordance  with the  Program  Guide,  provided,
however,  that the Master Servicer shall first determine that any such waiver or
extension  will not impair  the  coverage  of any  related  insurance  policy or
materially  adversely  affect  the  lien  of the  related  Mortgage  (except  as
described  below)  or  the  interests  of the  Securityholders  and  the  Credit
Enhancer.  Consistent with the terms of this Servicing  Agreement and subject to
Section 3.01(a) herein, the Master Servicer may also:

(i) waive, modify or vary any term of any Home Equity Loan (including reduce the
Credit  Limit  or  extend  the  period  during  which a Draw  may be made by the
Mortgagor pursuant to the Loan Agreement with respect to any Group II Loan);

(ii) consent to the  postponement of strict  compliance with any such term or in
any manner grant indulgence to any Mortgagor;

(iii)  arrange  with a Mortgagor a schedule  for the  payment of  principal  and
interest due and unpaid;

(iv) forgive any portion of the amounts contractually owed under the Home Equity
Loan;

                                       10
<PAGE>

(v)  capitalize  any past due amounts  owed under the Home Equity Loan by adding
amounts in  arrearage  to the  existing  Loan Balance of the Home Equity Loan (a
"Capitalization Workout"), provided, however, that the Master Servicer shall not
enter into a Capitalization  Workout unless the Combined  Loan-to-Value Ratio of
the Home Equity Loan prior to the Capitalization  Workout equals or exceeds 80%;
and

(vi) reset the due date for the Home  Equity  Loan,  or any  combination  of the
foregoing,

if  in  the  Master   Servicer's   determination   such  waiver,   modification,
postponement or indulgence, arrangement or other action referred to above is not
materially  adverse  to the  interests  of  the  Securityholders  or the  Credit
Enhancer and is generally  consistent with the Master  Servicer's  policies with
respect to home equity loans  similar to Home Equity Loans;  provided,  however,
that the Master  Servicer  may not,  except in the case of an  extension  of the
period during which a Draw may be made by the Mortgagor  with respect to a Group
II Loan,  pursuant to this Section  3.02,  modify or permit any  Subservicer  to
modify any Home Equity Loan, (including without limitation any modification that
would  change the Loan Rate,  forgive the payment of any  principal  or interest
(unless in  connection  with the  liquidation  of the related Home Equity Loan),
capitalize any arrearage for the related Home Equity Loan or extend the due date
any  payment)  unless such Home Equity Loan is in default or, in the judgment of
the Master Servicer, such default is reasonably foreseeable. Notwithstanding the
foregoing,  the final maturity date of any Home Equity Loan will not be extended
beyond the Final  Scheduled  Payment  Date.  The  general  terms of any  waiver,
modification,  postponement or indulgence with respect to any of the Home Equity
Loans will be included in the Servicing Certificate,  and such Home Equity Loans
will not be considered  "delinquent"  for the purposes of the Basic Documents so
long as the  Mortgagor  complies  with the terms of such  waiver,  modification,
postponement or indulgence. In addition, if a Group II Loan is in default or, in
the judgment of the Master Servicer, such default is reasonably foreseeable, the
Master Servicer may, through modification, convert such Group II Loan to a fully
amortizing closed-end loan.  Notwithstanding the foregoing,  with respect to the
Group II Loans,  the Master  Servicer in its sole  discretion (i) may permit the
Mortgagor  (or may enter  into a  modification  agreement  which  will allow the
Mortgagor)  to make monthly  payments,  with respect to any Billing Cycle during
the related Draw Period,  in a minimum  amount that will be equal to the related
finance  charge  for such  Billing  Cycle and (ii) may  reduce the amount of the
Credit  Limit (to an amount no less than the then  current  Loan Balance of such
Group II Loan) in connection  with any  refinancing of a senior lien pursuant to
Section 3.01(b) of this Agreement.  In connection with any Curtailment of a Home
Equity Loan, the Master Servicer,  to the extent not inconsistent with the terms
of the Mortgage Note and local law and practice, may permit the Home Equity Loan
to be reamortized  such that the Minimum  Monthly  Payment is recalculated as an
amount that will fully amortize the remaining Loan Balance  thereof by the Final
Scheduled  Payment Date based on the  original  Loan Rate;  provided,  that such
re-amortization any Group I Loan shall not be permitted if it would constitute a
reissuance of such Group I Loan for federal income tax purposes.

(b) The Master Servicer shall establish a Custodial  Account,  which shall be an
Eligible  Account  in which the  Master  Servicer  shall  deposit or cause to be
deposited any amounts  representing  payments and  collections in respect of the
Home  Equity  Loans  received  by it on or after the  Cut-off  Date,  within one
Business  Day  following  receipt  thereof,  except  as  otherwise  specifically
provided herein,  including the following  payments and collections  received or
made by it (without duplication):

                                       11
<PAGE>

                      (i) all  payments  on  account  of  principal,  (including
Principal
Prepayments made by Mortgagors on the Home Equity Loans or from any REO Proceeds
received in  connection  with an REO Property for which an REO  Disposition  has
occurred);

                      (ii) All  payments on account of interest at the  Adjusted
Mortgage
Rate on the Home Equity Loans,  or from any REO Proceeds  received in connection
with an REO Property for which an REO Disposition has occurred;

                      (iii) the  aggregate  Repurchase  Price of the Home Equity
Loans
purchased  by the Master  Servicer  pursuant  to Section  3.15 or by the Limited
Repurchase  Price Holder pursuant to Section 3.16 and amounts  received from the
Seller  pursuant  to  Section 3 of the  Purchase  Agreement  in  respect  of any
liability,  penalty or expense that resulted from a breach of the representation
and   warranty   set  forth  in   Sections   3.01(b)(viii),   3.01(c)(I)(x)   or
3.01(c)(II)(x) of the Purchase Agreement;

                      (iv)  Net   Liquidation   Proceeds   net  of  any  related
Foreclosure Profit;

                      (v) all proceeds of any Home Equity Loans  repurchased  by
the Seller
pursuant to the Purchase  Agreement,  and all  Substitution  Adjustment  Amounts
required to be  deposited in  connection  with the  substitution  of an Eligible
Substitute Loan pursuant to the Purchase Agreement;

     (vi) Insurance  Proceeds,  other than Net Liquidation  Proceeds,  resulting
from any insurance policy maintained on a Mortgaged Property; and

     (vii)  amounts  required  to be paid by the  Master  Servicer  pursuant  to
Sections 3.04 and 8.08 and any payments or collections received in the nature of
prepayment charges;

provided,  however,  that with  respect to each  Collection  Period,  the Master
Servicer  shall be permitted  to retain from  payments in respect of interest on
the Home Equity Loans, the Master Servicing Fee for such Collection  Period. The
foregoing  requirements   respecting  deposits  to  the  Custodial  Account  are
exclusive,  it being  understood  that,  without  limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing  Foreclosure  Profits,  fees  (including  annual fees),  assumption
charges or late  charge  penalties  payable by  Mortgagors  (such  amounts to be
retained as additional  servicing  compensation  in accordance with Section 3.09
hereof),  or  amounts  received  by the  Master  Servicer  for the  accounts  of
Mortgagors for  application  towards the payment of taxes,  insurance  premiums,
assessments  and  similar  items.  In the event any  amount not  required  to be
deposited in the Custodial  Account is so deposited,  the Master Servicer may at
any time withdraw such amount from the Custodial  Account,  any provision herein
to the contrary  notwithstanding.  The Custodial  Account may contain funds that
belong to one or more  trusts  created  for the notes or  certificates  of other
series and may contain other funds  respecting  payments on home equity loans or
other  mortgage  loans  belonging  to the Master  Servicer or serviced or master
serviced by it on behalf of others.  Notwithstanding  such commingling of funds,

                                       12
<PAGE>

the Master  Servicer  shall keep  records that  accurately  reflect the funds on
deposit  in the  Custodial  Account  that  have been  identified  by it as being
attributable  to the Home  Equity  Loans and shall hold all  collections  in the
Custodial  Account to the extent they  represent  collections on the Home Equity
Loans for the benefit of the Trust, the Securityholders, the Credit Enhancer and
the Indenture Trustee,  as their interests may appear. The Master Servicer shall
retain all Foreclosure Profits as additional servicing compensation.

        With  respect to  Insurance  Proceeds,  Net  Liquidation  Proceeds,  REO
Proceeds and the  proceeds of the  purchase of any Home Equity Loan  received in
any calendar  month,  the Master  Servicer may elect to treat such amounts to be
deposited in the Custodial  Account for  distribution in accordance with Section
3.05 of the  Indenture  for  distribution  on the  Payment  Date in the month of
receipt,  but is not obligated to do so. If the Master Servicer so elects,  such
amounts will be deemed to have been  received (and any related  Liquidated  Loss
Amount  shall be deemed to have  occurred) on the last day of the month prior to
the receipt thereof.

        The Master Servicer may cause the institution  maintaining the Custodial
Account to invest any funds in the  Custodial  Account in Permitted  Investments
(including obligations of the Master Servicer or any of its Affiliates,  if such
obligations otherwise qualify as Permitted Investments),  which shall mature not
later than the  Business  Day  preceding  the next Payment Date and shall not be
sold or disposed of prior to its maturity.  Except as provided above, all income
and gain  realized  from any such  investment  shall inure to the benefit of the
Master  Servicer  and shall be subject to its  withdrawal  or order from time to
time.  The amount of any losses  incurred in respect of the principal  amount of
any such investments  shall be deposited in the Custodial  Account by the Master
Servicer out of its own funds immediately as realized.

(c) The  Master  Servicer  will  require  each  Subservicer  to hold  all  funds
constituting collections on the Home Equity Loans, pending remittance thereof to
the Master  Servicer,  in one or more accounts  meeting the  requirements  of an
Eligible Account, and invested in Permitted Investments.

Section  3.03  PERMITTED  WITHDRAWALS  FROM THE  CUSTODIAL  ACCOUNT.  The Master
Servicer shall, from time to time as provided herein,  make withdrawals from the
Custodial  Account of amounts on deposit  therein  pursuant to Section 3.02 that
are attributable to the Home Equity Loans for the following purposes:

(a) to deposit in the Payment Account, on the Business Day prior to each Payment
Date,  an amount equal to the Interest  Collections  and  Principal  Collections
required to be  distributed on such Payment Date and any payments or collections
in the nature of  prepayment  charges  received  during the  related  Collection
Period;

(b) prior to either an Amortization  Event or the Collection Period during which
the Revolving  Period ends, to pay to the Seller,  the amount of any  Additional
Balances as and when created  during the related  Collection  Period,  provided,
that the  aggregate  amount  so paid to the  Seller  in  respect  of  Additional
Balances at any time during any Collection Period shall not exceed the amount of
Principal Collections theretofore received for such Collection Period;

                                       13
<PAGE>

               (c)  to  the  extent  deposited  to  the  Custodial  Account,  to
reimburse itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining  individual insurance policies pursuant to Section 3.04,
or Liquidation Expenses paid pursuant to Section 3.07 or otherwise  reimbursable
pursuant  to the terms of this  Servicing  Agreement  (to the extent not payable
pursuant  to Section  3.09),  such  withdrawal  right  being  limited to amounts
received on  particular  Home Equity Loans (other than any  Repurchase  Price in
respect  thereof) which represent late recoveries of the payments for which such
advances were made, or from related Liquidation  Proceeds or the proceeds of the
purchase of such Home Equity Loan;

               (d) to pay to itself out of each  payment  received on account of
interest on a Home Equity Loan as  contemplated by Section 3.09, an amount equal
to the related  Master  Servicing  Fee (to the extent not  retained  pursuant to
Section  3.02),  and to  pay  to  any  Subservicer  any  Subservicing  Fees  not
previously withheld by the Subservicer;

               (e) to the extent  deposited in the  Custodial  Account to pay to
itself as additional  servicing  compensation any interest or investment  income
earned on funds  deposited in the Custodial  Account and Payment Account that it
is entitled to withdraw pursuant to Sections 3.02(b) and 5.01;

(f) to the  extent  deposited  in the  Custodial  Account,  to pay to  itself as
additional  servicing  compensation  any  Foreclosure  Profits  (to  the  extent
permitted by law);

               (g) to pay to itself,  a Subservicer or the Seller,  or any other
appropriate  person, as the case may be, with respect to any Home Equity Loan or
property  acquired  in respect  thereof  that has been  purchased  or  otherwise
transferred to the Seller,  the Master  Servicer,  the Limited  Repurchase Right
Holder or other  entity,  all amounts  received  thereon and not  required to be
distributed  to  Securityholders  as of the date on which the  related  Purchase
Price or Repurchase Price is determined;

               (h) to  withdraw  any other  amount  deposited  in the  Custodial
Account that was not required to be deposited therein pursuant to Section 3.02;

               (i) after the occurrence of an Amortization  Event, to pay to the
Seller, the Excluded Amount for each Group II Loan;

               (j) to reimburse  itself for amounts  expended by it (a) pursuant
to Section 3.06 in good faith in  connection  with the  restoration  of property
damaged by an Uninsured  Cause,  and (b) in connection with the liquidation of a
Home Equity Loan or  disposition  of an REO Property to the extent not otherwise
reimbursed pursuant to clause (c) above; and

               (k) to reimburse itself or the REMIC  Administrator  for expenses
incurred  by and  reimbursable  to it or the  REMIC  Administrator  pursuant  to
Sections 3.07, 6.03 or otherwise, or Section 11.01 of the Indenture.

Since, in connection with withdrawals pursuant to clauses (c), (d), (f) and (g),
the Master  Servicer's  entitlement  thereto is limited to  collections or other
recoveries on the related Home Equity Loan,  the Master  Servicer shall keep and
maintain separate  accounting,  on a Home Equity Loan by Home Equity Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant

                                       14
<PAGE>

to  such  clauses.   Notwithstanding  any  other  provision  of  this  Servicing
Agreement,  the Master  Servicer  shall be entitled to reimburse  itself for any
previously  unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable  pursuant to the terms of this Servicing  Agreement that the Master
Servicer determines to be otherwise  nonrecoverable  (except with respect to any
Home Equity Loan as to which the Repurchase  Price has been paid), by withdrawal
from the Custodial  Account of amounts on deposit  therein  attributable  to the
Home Equity Loans on any Business Day prior to the Payment Date  succeeding  the
date of such determination.

Section 3.04   MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION EXPENSES.

                 (a) The Master  Servicer  shall cause to be maintained for each
Home  Equity  Loan  hazard  insurance  naming  the  Master  Servicer  or related
Subservicer as loss payee thereunder  providing  extended  coverage in an amount
which is at least equal to the lesser of (i) the maximum  insurable value of the
improvements  securing  such  Home  Equity  Loan  from  time to time or (ii) the
combined  Loan  Balance  owing on such Home  Equity Loan and any  mortgage  loan
senior to such Home Equity Loan from time to time; provided,  however, that such
coverage may not be less than the minimum  amount  required to fully  compensate
for any loss or damage on a replacement  cost basis.  The Master  Servicer shall
also cause to be maintained on property  acquired upon  foreclosure,  or deed in
lieu of  foreclosure,  of any Home Equity Loan,  fire  insurance  with  extended
coverage in an amount  which is at least equal to the amount  necessary to avoid
the  application  of any  co-insurance  clause  contained in the related  hazard
insurance  policy.  Amounts  collected  by the  Master  Servicer  under any such
policies  (other than amounts to be applied to the  restoration or repair of the
related Mortgaged  Property or property thus acquired or amounts released to the
Mortgagor in accordance with the Master Servicer's normal servicing  procedures)
shall be deposited in the Custodial  Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located at any time during the
life of a Home  Equity  Loan in a federally  designated  flood area,  the hazard
insurance to be maintained  for the related Home Equity Loan shall include flood
insurance  (to the  extent  available).  All such  flood  insurance  shall be in
amounts  equal to the lesser of (i) the amount  required to  compensate  for any
loss or damage to the Mortgaged  Property on a  replacement  cost basis and (ii)
the  maximum  amount  of such  insurance  available  for the  related  Mortgaged
Property under the national flood insurance  program  (assuming that the area in
which such Mortgaged Property is located is participating in such program).  The
Master  Servicer  shall be under no  obligation  to require  that any  Mortgagor
maintain  earthquake  or  other  additional  insurance  and  shall  be  under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Home Equity Loan,  other than pursuant to such  applicable  laws
and  regulations  as shall at any time be in  force  and as shall  require  such
additional insurance.

        If the  Master  Servicer  shall  obtain and  maintain  a blanket  policy
consistent  with its general  mortgage  servicing  activities  insuring  against
hazard losses on all of the Home Equity Loans,  it shall  conclusively be deemed
to have  satisfied its  obligations  as set forth in the first  sentence of this
Section  3.04,  it being  understood  and agreed  that such policy may contain a
deductible  clause,  in which case the Master  Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged  Property a policy
complying with the first sentence of this Section 3.04 and there shall have been
a loss which would have been  covered by such policy,  deposit in the  Custodial
Account the amount not  otherwise  payable under the blanket  policy  because of

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<PAGE>

such deductible clause. Any such deposit by the Master Servicer shall be made on
the last Business Day of the  Collection  Period in the month in which  payments
under any such policy would have been  deposited in the  Custodial  Account.  In
connection with its activities as servicer of the Home Equity Loans,  the Master
Servicer  agrees to present,  on behalf of itself,  the Issuer and the Indenture
Trustee, claims under any such blanket policy.

Section 3.05  ENFORCEMENT OF DUE-ON-SALE  CLAUSES;  ASSUMPTION AND  MODIFICATION
AGREEMENTS;  RELEASE OR SUBSTITUTION OF LIEN.  (a)When any Mortgaged Property is
conveyed by the Mortgagor, the Master Servicer or Subservicer,  to the extent it
has knowledge of such conveyance, shall enforce any due-on-sale clause contained
in any Mortgage Note or Mortgage,  to the extent  permitted under applicable law
and governmental regulations,  but only to the extent that such enforcement will
not adversely affect or jeopardize  coverage under any Required Insurance Policy
or otherwise  adversely  affect the interests of the  Certificateholders  or the
Credit Enhancer. Notwithstanding the foregoing:

               (i) the  Master  Servicer  shall not be  deemed to be in  default
        under this Section 3.05(a) by reason of any transfer or assumption which
        the Master Servicer is restricted by law from preventing; and

               (ii) if the  Master  Servicer  determines  that it is  reasonably
        likely that any Mortgagor  will bring,  or if any Mortgagor  does bring,
        legal action to declare  invalid or  otherwise  avoid  enforcement  of a
        due-on-sale  clause  contained  in any Mortgage  Note or  Mortgage,  the
        Master Servicer shall not be required to enforce the due-on-sale  clause
        or to contest such action.

               (b)  Subject  to  the  Master  Servicer's  duty  to  enforce  any
        due-on-sale  clause to the  extent  set forth in  Section  3.05(a),  the
        Master Servicer or the related Subservicer, as the case may be, shall be
        entitled to (A) execute assumption agreements,  substitution agreements,
        and  instruments of  satisfaction  or cancellation or of partial or full
        release  or  discharge,  or any  other  document  contemplated  by  this
        Servicing Agreement and other comparable instruments with respect to the
        Home Equity Loans and with respect to the Mortgaged  Properties  subject
        to the Mortgages  (and the Issuer and the  Indenture  Trustee each shall
        promptly  execute any such documents on request of the Master  Servicer)
        and (B) approve the granting of an easement  thereon in favor of another
        Person,  any alteration or demolition of the related Mortgaged  Property
        or other similar  matters,  if it has  determined,  exercising  its good
        faith  business  judgment  in the same manner as it would if it were the
        owner of the related  Home Equity Loan,  that the security  for, and the
        timely and full  collectability  of,  such Home Equity Loan would not be
        adversely affected thereby, and that each of REMIC I, REMIC II and REMIC
        III would  continue  to  qualify  as a REMIC  under the Code as a result
        thereof and that no tax on "prohibited  transactions" or "contributions"
        after the  startup  day would be  imposed on any of REMIC I, REMIC II or
        REMIC  III as a result  thereof.  A  partial  release  pursuant  to this
        Section 3.05 shall be permitted only if the Combined Loan-to-Value Ratio
        for such Home Equity Loan after such partial release does not exceed the

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<PAGE>

        Combined Loan-to-Value Ratio for such Home Equity Loan as of the Cut-off
        Date,  and provided  further  that,  in the case of a Group I Loan,  the
        Master  Servicer,  the  Indenture  Trustee and the Credit  Enhancer have
        received an Opinion of Counsel to the effect that such  partial  release
        will not result in an Adverse  REMIC  Event.  Any fee  collected  by the
        Master  Servicer or the related  Subservicer for processing such request
        will  be  retained  by  the  Master  Servicer  or  such  Subservicer  as
        additional servicing compensation.

               (c) The  Master  Servicer  may  enter  into an  agreement  with a
        Mortgagor to release the lien on the  Mortgaged  Property  relating to a
        Group II Loan (the  "Existing  Lien"),  if at the time of such agreement
        the Group II Loan is current in payment of principal and interest, under
        any of the following circumstances:

(i) in any case in which,  simultaneously with the release of the Existing Lien,
the  Mortgagor  executes  and  delivers  to the Master  Servicer a Mortgage on a
substitute Mortgaged Property, provided that the Combined Loan-to-Value Ratio of
the Group II Loan  (calculated  based on the Appraised  Value of the  substitute
Mortgaged  Property) is not greater than the Combined  Loan-to-Value Ratio prior
to releasing the Existing Lien;

(ii) in any case in which, simultaneously with the release of the Existing Lien,
the  Mortgagor  executes  and  delivers  to the Master  Servicer a Mortgage on a
substitute  Mortgaged  Property,  provided that: (A) the Combined  Loan-to-Value
Ratio of the  Group II Loan  (calculated  based  on the  Appraised  Value of the
substitute  Mortgaged  Property)  is not greater than the lesser of (1) 100% and
(2) 105% of the Combined  Loan-to-Value  Ratio prior to  releasing  the Existing
Lien;  and (B) the  Master  Servicer  determines  that at least two  appropriate
compensating  factors are present  (compensating  factors may  include,  without
limitation, an increase in the Mortgagor's monthly cash flow after debt service,
the Mortgagor's debt-to-income ratio has not increased since origination,  or an
increase in the Mortgagor's credit score); or

(iii) in any case in which,  at the time of release of the  Existing  Lien,  the
Mortgagor  does not provide the Master  Servicer with a Mortgage on a substitute
Mortgaged  Property  (any Group II Loan that  becomes and remains  unsecured  in
accordance with this subsection,  an "Unsecured  Loan"),  provided that: (A) the
current  Combined  Loan-to-Value  Ratio is greater than or equal to 85%; (B) the
Master  Servicer  shall not permit the  release of an  Existing  Lien under this
clause (iii) as to more than 100 Group II Loans in any calendar  year; (C) at no
time shall the aggregate Loan Balance of Unsecured Loans exceed 2.5% of the then
Pool Balance;  (D) the Mortgagor  agrees to an automatic debit payment plan; and
(E) the Master  Servicer  shall  provide  notice to each Rating  Agency that has
requested notice of such releases.

        In connection  with any Unsecured  Loan, the Master Servicer may require
the Mortgagor to enter into an agreement  under which:  (i) the Loan Rate may be
increased  effective until a substitute  Mortgage meeting the criteria under (i)
or (ii) above is  provided;  or (ii) any other  provision  may be made which the
Master  Servicer  considers to be appropriate.  Thereafter,  the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute  Mortgaged Property as security for the Group II Loan, and the Master
Servicer may require the Mortgagor to agree to any further  conditions which the
Master  Servicer  considers  appropriate in connection  with such  substitution,
which may include a  reduction  of the Loan Rate (but not below the Loan Rate in
effect  at the  Closing  Date).  Any Group II Loan as to which a  Mortgage  on a
substitute  Mortgaged  Property  is provided in  accordance  with the  preceding
sentence shall no longer be deemed to be an Unsecured Loan.

                                       17
<PAGE>

               (d) Subject to any other  applicable terms and conditions of this
Agreement,  the Master  Servicer  shall be entitled to approve an  assignment in
lieu of satisfaction with respect to any Home Equity Loan,  provided the obligee
with  respect  to such Home  Equity  Loan  following  such  proposed  assignment
provides the Master Servicer with a "Lender Certification for Assignment of Home
Equity  Loan" in the form  attached  hereto as Exhibit D, in form and  substance
satisfactory  to the  Indenture  Trustee  and  Master  Servicer,  providing  the
following:  (i) that the Home  Equity  Loan is  secured  by  Mortgaged  Property
located in a  jurisdiction  in which an  assignment in lieu of  satisfaction  is
required to preserve lien priority,  minimize or avoid mortgage  recording taxes
or otherwise  comply with, or facilitate a refinancing  under,  the laws of such
jurisdiction;  (ii) that the substance of the  assignment is, and is intended to
be, a refinancing of such Home Equity Loan and that the form of the  transaction
is solely to comply with, or facilitate the transaction  under, such local laws;
(iii) that the Home Equity Loan  following the proposed  assignment  will have a
rate of  interest at least 0.25  percent  below or above the rate of interest on
such Home  Equity  Loan prior to such  proposed  assignment;  and (iv) that such
assignment is at the request of the borrower under the related Home Equity Loan.
Upon approval of an assignment in lieu of satisfaction  with respect to any Home
Equity Loan,  the Master  Servicer  shall receive cash in an amount equal to the
unpaid  Loan  Balance of and  accrued  interest on such Home Equity Loan and the
Master  Servicer shall treat such amount as a Principal  Prepayment in Full with
respect to such Home Equity Loan for all purposes hereof.

Section 3.06 TRUST ESTATE; RELATED DOCUMENTS (a) When required by the provisions
of this Servicing  Agreement,  the Issuer or the Indenture Trustee shall execute
instruments to release property from the terms of the Trust Agreement, Indenture
or Custodial Agreement,  as applicable,  or convey the Issuer's or the Indenture
Trustee's  interest in the same, in a manner and under  circumstances  which are
not  inconsistent  with the  provisions of this  Servicing  Agreement.  No party
relying upon an instrument  executed by the Issuer or the  Indenture  Trustee as
provided in this Section  3.06 shall be bound to  ascertain  the Issuer's or the
Indenture Trustee's  authority,  inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.

               (b) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance,  assumption agreement or substitution
agreement or other similar  agreement  pursuant to Section  3.05,  the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original  executed  document if the original executed copy has
been  submitted for recording and has not yet been  returned)  and, if so, shall
file such  documents,  and upon receipt of the original  executed  copy from the
applicable  recording  office or  receipt  of a copy  thereof  certified  by the
applicable  recording  office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications,  such documents shall promptly be returned by
the Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.

               (c) Upon  receipt  of a  Request  for  Release  from  the  Master
Servicer,  substantially  in the form of  Exhibit  C to the  effect  that a Home
Equity Loan has been the subject of a final  payment or a prepayment in full and
the related  Home  Equity Loan has been  terminated  or that  substantially  all
Liquidation  Proceeds which have been  determined by the Master  Servicer in its
reasonable  judgment to be finally  recoverable  have been  recovered,  and upon
deposit to the Custodial  Account of such final monthly  payment,  prepayment in
full together with accrued and unpaid  interest to the date of such payment with
respect to such Home Equity Loan or, if applicable,  Liquidation  Proceeds,  the

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<PAGE>

Custodian shall promptly  release the Related  Documents to the Master Servicer,
which the Indenture  Trustee  shall  execute,  along with such  documents as the
Master  Servicer  or the  Mortgagor  may request to  evidence  satisfaction  and
discharge of such Home Equity Loan, upon request of the Master Servicer. If from
time to time and as  appropriate  for the servicing or  foreclosure  of any Home
Equity Loan, the Master  Servicer  requests the Custodian to release the Related
Documents and delivers to the Custodian a trust receipt reasonably  satisfactory
to the Custodian and signed by a Responsible Officer of the Master Servicer, the
Custodian shall release the Related  Documents to the Master  Servicer.  If such
Home Equity Loans shall be liquidated  and the Custodian  receives a certificate
from the Master  Servicer as provided  above,  then,  upon request of the Master
Servicer, the Custodian shall release the trust receipt to the Master Servicer.

Section 3.07 REALIZATION UPON DEFAULTED HOME EQUITY LOANS; LOSS MITIGATION. With
respect to such of the Home Equity  Loans as come into and  continue in default,
the Master  Servicer  will decide  whether to (i)  foreclose  upon the Mortgaged
Properties  securing  such Home  Equity  Loans,  (ii) write off the unpaid  Loan
Balance  of the Home  Equity  Loans as bad  debt,  (iii)  take a deed in lieu of
foreclosure,  (iv)  accept a short sale (a payoff of the Home Equity Loan for an
amount less than the total amount  contractually  owed in order to  facilitate a
sale of the Mortgaged  Property by the Mortgagor) or permit a short  refinancing
(a  payoff of the Home  Equity  Loan for an  amount  less than the total  amount
contractually  owed in  order  to  facilitate  refinancing  transactions  by the
Mortgagor  not involving a sale of the  Mortgaged  Property),  (v) arrange for a
repayment  plan,  (vi) agree to a modification in accordance with this Servicing
Agreement,  or (vii) in the case of a Group II Loan,  take an unsecured note, in
connection  with a  negotiated  release of the lien of the  Mortgage in order to
facilitate a settlement  with the Mortgagor;  in each case subject to the rights
of any related first lien holder; provided that in connection with the foregoing
if the Master  Servicer  has actual  knowledge  that any  Mortgaged  Property is
affected by hazardous or toxic wastes or substances and that the  acquisition of
such Mortgaged  Property would not be commercially  reasonable,  then the Master
Servicer will not cause the Issuer or the Indenture  Trustee to acquire title to
such Mortgaged  Property in a foreclosure or similar  proceeding.  In connection
with such decision,  the Master Servicer shall follow such practices (including,
in the case of any default on a related  senior  mortgage loan, the advancing of
funds to  correct  such  default  if  deemed  to be  appropriate  by the  Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general  mortgage  servicing  activities and as shall be
required or permitted by the Program  Guide;  provided that the Master  Servicer
shall not be liable in any respect hereunder if the Master Servicer is acting in
connection  with any such  foreclosure  or  attempted  foreclosure  which is not
completed or other conversion in a manner that is consistent with the provisions
of this  Servicing  Agreement.  The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or attempted  foreclosure  which is not completed or towards the
correction of any default on a related  senior  mortgage loan or  restoration of
any property unless it shall determine that such  expenditure  will increase Net
Liquidation  Proceeds.  In the event of a  determination  by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.07 will not
be  reimbursable  from Net  Liquidation  Proceeds,  the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.03.

                                       19
<PAGE>

               In addition, the Master Servicer may pursue any remedies that may
be available in connection with a breach of a  representation  and warranty with
respect to any such Home Equity Loan in accordance  with Section 2.03.  However,
the Master  Servicer is not required to continue to pursue both  foreclosure (or
similar  remedies)  with  respect  to the Home  Equity  Loans  and  remedies  in
connection with a breach of a representation and warranty if the Master Servicer
determines in its reasonable  discretion  that one such remedy is more likely to
result in a greater  recovery as to the Home Equity Loan. Upon the occurrence of
a Cash  Liquidation or REO  Disposition,  following the deposit in the Custodial
Account of all Insurance Proceeds,  Liquidation  Proceeds and other payments and
recoveries  referred  to  in  the  definition  of  "Cash  Liquidation"  or  "REO
Disposition,"  as applicable,  upon receipt by the Indenture  Trustee of written
notification  of such  deposit  signed by a  Servicing  Officer,  the  Indenture
Trustee  or any  Custodian,  as the case may be,  shall  release  to the  Master
Servicer the related  Mortgage File and the Indenture  Trustee shall execute and
deliver  such  instruments  of  transfer  or  assignment  prepared by the Master
Servicer, in each case without recourse,  representation or warranty as shall be
necessary to vest in the Master  Servicer or its  designee,  as the case may be,
the related Home Equity Loan, and thereafter  such Home Equity Loan shall not be
part of the Trust.  Notwithstanding the foregoing or any other provision of this
Agreement,  in  the  Master  Servicer's  sole  discretion  with  respect  to any
defaulted  Home  Equity  Loan or REO  Property  as to  either  of the  following
provisions,  (i) a Cash  Liquidation  or REO  Disposition  may be deemed to have
occurred  if  substantially  all amounts  expected by the Master  Servicer to be
received  in  connection  with the  related  defaulted  Home  Equity Loan or REO
Property  have been  received;  provided,  however,  a Cash  Liquidation  or REO
Disposition shall be deemed to have occurred with respect to any Group I Loan or
Group II Loan that is 180 days or more  delinquent  as of the end of the related
Collection Period;  provided further,  however, any subsequent  collections with
respect  to any such  Group I Loan or Group II Loan  shall be  deposited  to the
Custodial  Account,  and (ii) for  purposes  of  determining  the  amount of any
Liquidation Proceeds,  Insurance Proceeds, REO Proceeds or any other unscheduled
collections or the amount of any  Liquidation  Loss Amount,  the Master Servicer
may take into account  minimal  amounts of  additional  receipts  expected to be
received  or  any  estimated  additional  liquidation  expenses  expected  to be
incurred in connection with the related  defaulted Group I Loan or Group II Loan
or REO Property.

        In the  event  that  title to any  Mortgaged  Property  is  acquired  in
foreclosure  by the  Trust  or by  deed  in lieu  of  foreclosure,  the  deed or
certificate  of sale shall be issued in the name of the  Indenture  Trustee or a
nominee  thereof,  who shall hold the same on behalf of the Issuer in accordance
with Section 3.13 of the  Indenture.  Notwithstanding  any such  acquisition  of
title and cancellation of the related Home Equity Loan, such Mortgaged  Property
shall  (except as otherwise  expressly  provided  herein) be considered to be an
outstanding  Home Equity Loan held as an asset of the Issuer  until such time as
such property shall be sold.  Consistent  with the foregoing for purposes of all
calculations  hereunder,  so long as such Mortgaged Property shall be considered
to be an outstanding Home Equity Loan it shall be assumed that,  notwithstanding
that the  indebtedness  evidenced by the related Loan Agreement  shall have been
discharged, such Loan Agreement in effect at the time of any such acquisition of
title  before  any  adjustment  thereto by reason of any  bankruptcy  or similar
proceeding or any  moratorium  or similar  waiver or grace period will remain in
effect.

        In the event that the Trust  acquires  any REO  Property as aforesaid or
otherwise in  connection  with a default or imminent  default on a Group I Loan,
the Master  Servicer on behalf the Trust shall  dispose of such REO  Property as
soon  as  practicable,   giving  due  consideration  to  the  interests  of  the

                                       20
<PAGE>

Noteholders and the Certificateholders, but in all cases within three full years
after the taxable year of its  acquisition  by the Trust for purposes of Section
860G(a)(8)  of the  Code (or  such  shorter  period  as may be  necessary  under
applicable  state (including any state in which such property is located) law to
maintain  the status of any of REMIC I,  REMIC II or REMIC III as a REMIC  under
applicable  state law and avoid taxes resulting from such property failing to be
foreclosure  property  under  applicable  state  law) or, at the  expense of the
Trust,  request,  more than 60 days  before the day on which  such grace  period
would  otherwise  expire,  an extension  of such grace period  unless the Master
Servicer obtains for the Indenture  Trustee an Opinion of Counsel,  addressed to
the Indenture Trustee and the Master Servicer, to the effect that the holding by
the Trust of such REO Property  subsequent to such period will not result in the
imposition of taxes on "prohibited  transactions"  as defined in Section 860F of
the Code or cause the Trust to fail to qualify as a REMIC (for  federal  (or any
applicable   State  or  local)  income  tax  purposes)  at  any  time  that  any
Certificates are outstanding,  in which case the Trust may continue to hold such
REO Property  (subject to any conditions  contained in such Opinion of Counsel).
The Master  Servicer  shall be  entitled  to be  reimbursed  from the  Custodial
Account for any costs incurred in obtaining such Opinion of Counsel, as provided
in Section 3.03.  Notwithstanding any other provision of this Agreement,  no REO
Property  acquired  by the Trust  shall be rented (or  allowed to continue to be
rented)  or  otherwise  used by or on  behalf  of the  Trust in such a manner or
pursuant to any terms that would (i) cause such REO  Property to fail to qualify
as "foreclosure  property" within the meaning of Section  860G(a)(8) of the Code
or (ii) subject REMIC I, REMIC II or REMIC III to the  imposition of any federal
income taxes on the income  earned from such REO  Property,  including any taxes
imposed by reason of Section 860G(c) of the Code, unless the Master Servicer has
agreed to indemnify and hold  harmless the Trust with respect to the  imposition
of any such taxes.

        Any  proceeds  from the purchase or  repurchase  of any Home Equity Loan
pursuant to the terms of this Servicing Agreement  (including without limitation
Sections  2.03,  3.15  and  3.16)  will be  applied  in the  following  order of
priority:  first,  to the  Master  Servicer  or  the  related  Subservicer,  all
Servicing  Fees payable  therefrom to the Payment Date on which such amounts are
to be deposited in the Payment Account; second, as Interest Collections, accrued
and unpaid interest on the related Home Equity Loan, at the Net Loan Rate to the
Payment Date on which such  amounts are to be deposited in the Payment  Account;
and third,  as  Principal  Collections,  as a recovery of  principal on the Home
Equity Loan.

        Liquidation  Proceeds with respect to a Liquidated Home Equity Loan will
be applied in the following  order of priority:  first,  to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid  Servicing Fees through the date of receipt of the final  Liquidation
Proceeds;  third,  as Principal  Collections,  as a recovery of principal on the
Home Equity Loan,  up to an amount equal to the Loan Balance of the related Home
Equity Loan  immediately  prior to the date it became a  Liquidated  Home Equity
Loan;  fourth,  as  Interest  Collections,  accrued  and unpaid  interest on the
related Home Equity Loan at the Net Loan Rate through the date of receipt of the
final Liquidation Proceeds; and fifth, to Foreclosure Profits.

        Proceeds and other recoveries from a Home Equity Loan after it becomes a
Liquidated  Home Equity Loan will be applied in the following order of priority:
first, to reimburse the Master Servicer or the related Subservicer in accordance

                                       21
<PAGE>

with this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds  or  otherwise;   second,   to  the  Master  Servicer  or  the  related
Subservicer,  all unpaid  Servicing  Fees  payable  thereto  through the date of
receipt of the proceeds  previously  unreimbursed  from Liquidation  Proceeds or
otherwise;  third, as Interest Collections,  up to an amount equal to the sum of
(a) the Loan  Balance of the related Home Equity Loan  immediately  prior to the
date it became a Liquidated Home Equity Loan, less any Net Liquidation  Proceeds
previously  received  with  respect to such Home  Equity  Loan and  applied as a
recovery of principal,  and (b) accrued and unpaid  interest on the related Home
Equity Loan at the Net Loan Rate  through  the date of receipt of the  proceeds;
and fourth, to Foreclosure Profits.

        In the event of a  default  on a Home  Equity  Loan one or more of whose
obligors is a Non-United  States Person,  in connection  with any foreclosure or
acquisition  of a deed in  lieu  of  foreclosure  (together,  "foreclosure")  in
respect of such Home Equity Loan, the Master Servicer will cause compliance with
the provisions of Treasury  Regulation Section  1.1445-2(d)(3) (or any successor
thereto)  necessary to assure that no  withholding  tax  obligation  arises with
respect to the proceeds of such foreclosure  except to the extent,  if any, that
proceeds of such foreclosure are required to be remitted to the obligors on such
Home Equity Loan.

Section  3.08  ISSUER AND  INDENTURE  TRUSTEE TO  COOPERATE.  On or before  each
Payment  Date,  the Master  Servicer  will notify the  Indenture  Trustee or the
Custodian,  with a copy to the Issuer,  of the  termination of or the payment in
full and the termination of any Home Equity Loan during the preceding Collection
Period.  Upon receipt of payment in full,  the Master  Servicer is authorized to
execute,  pursuant  to the  authorization  contained  in  Section  3.01,  if the
assignments  of Mortgage  have been  recorded to the extent  required  under the
Purchase  Agreement,   an  instrument  of  satisfaction  regarding  the  related
Mortgage,  which  instrument  of  satisfaction  shall be  recorded by the Master
Servicer if required by applicable  law and be delivered to the Person  entitled
thereto and cause the removal  from the  registration  of the MERS(R)  System of
such  Mortgage.  It is  understood  and agreed  that any  expenses  incurred  in
connection  with such instrument of satisfaction or transfer shall be reimbursed
from  amounts  deposited  in the  Custodial  Account.  From  time to time and as
appropriate  for the  servicing  or  foreclosure  of any Home Equity  Loan,  the
Indenture  Trustee or the Custodian  shall,  upon request of the Master Servicer
and delivery to the Indenture  Trustee or Custodian,  with a copy to the Issuer,
of a Request for Release,  in the form annexed  hereto as Exhibit C, signed by a
Servicing Officer,  release or cause to be released the related Mortgage File to
the Master Servicer and the Issuer or Indenture  Trustee shall promptly  execute
such  documents,  in the forms  provided  by the  Master  Servicer,  as shall be
necessary for the  prosecution  of any such  proceedings  or the taking of other
servicing  actions.  Such trust  receipt shall  obligate the Master  Servicer to
return the Mortgage File to the Indenture Trustee or the Custodian (as specified
in such receipt) when the need therefor by the Master  Servicer no longer exists
unless the Home Equity Loan shall be liquidated,  in which case, upon receipt of
a certificate of a Servicing Officer similar to that hereinabove specified,  the
trust receipt shall be released to the Master Servicer.

        In order to facilitate the foreclosure of the Mortgage securing any Home
Equity  Loan that is in default  following  recordation  of the  assignments  of
Mortgage in  accordance  with the  provisions  of the  Purchase  Agreement,  the
Indenture  Trustee or the Issuer shall, if so requested in writing by the Master
Servicer, promptly execute an appropriate assignment in the form provided by the

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Master Servicer to assign such Home Equity Loan for the purpose of collection to
the Master Servicer (any such assignment shall  unambiguously  indicate that the
assignment is for the purpose of collection  only),  and, upon such  assignment,
such assignee for collection  will thereupon  bring all required  actions in its
own name and otherwise  enforce the terms of the Home Equity Loan and deposit or
credit the Net Liquidation Proceeds,  exclusive of Foreclosure Profits, received
with respect thereto in the Custodial Account.  In the event that all delinquent
payments due under any such Home Equity Loan are paid by the  Mortgagor  and any
other  defaults  are cured,  then the  assignee for  collection  shall  promptly
reassign such Home Equity Loan to the  Indenture  Trustee and return all Related
Documents to the place where the related Mortgage File was being maintained.

        In connection  with the Issuer's  obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Servicing Agreement requiring
the Issuer to  authorize  or permit any actions to be taken with  respect to the
Home Equity Loans,  the Indenture  Trustee,  as pledgee of the Home Equity Loans
and as  assignee  of record  of the Home  Equity  Loans on behalf of the  Issuer
pursuant to Section 3.13 of the Indenture,  expressly  agrees,  on behalf of the
Issuer, to take all such actions on behalf of the Issuer and to promptly execute
and  return all  instruments  reasonably  required  by the  Master  Servicer  in
connection  therewith;  provided,  that if the Master  Servicer  shall request a
signature of the Indenture Trustee, on behalf of the Issuer, the Master Servicer
will deliver to the Indenture Trustee an Officer's Certificate stating that such
signature is necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Servicing Agreement.

Section  3.09  SERVICING  COMPENSATION;  PAYMENT OF CERTAIN  EXPENSES  BY MASTER
SERVICER.  The Master Servicer shall be entitled to receive the Master Servicing
Fee in accordance with Sections 3.02 and 3.03 as  compensation  for its services
in connection with servicing the Home Equity Loans.  Subject to Section 3.07, in
the event that  Liquidation  Proceeds,  Insurance  Proceeds  and REO Proceeds in
respect of a Cash Liquidation or REO Disposition  exceed the unpaid Loan Balance
of such Home Equity Loan plus unpaid  interest  accrued  thereon  (including REO
Imputed  Interest) at the related Net Loan Rate,  the Master  Servicer  shall be
entitled  to  retain   therefrom  and  to  pay  to  itself  and/or  the  related
Subservicer,  any Foreclosure Profits.  Additional servicing compensation in the
form of assumption fees,  investment  income on amounts in the Custodial Account
or the  Certificate  Distribution  Account or otherwise shall be retained by the
Master  Servicer or the  Subservicer to the extent  provided  herein.  Moreover,
additional  servicing   compensation  in  the  form  of  late  payment  charges,
investment  income on amounts in the  Payment  Account  and other  receipts  not
required  to be  deposited  in the  Custodial  Account as  specified  in Section
3.02(b) shall be retained by the Master  Servicer.  The Master Servicer shall be
required to pay all expenses  incurred by it in connection  with its  activities
hereunder (including payment of all other fees and expenses not expressly stated
hereunder  to be for the  account  of the  Securityholders,  including,  without
limitation,  the fees and expenses of the Owner Trustee,  Indenture  Trustee and
any Custodian) and shall not be entitled to reimbursement therefor.

Section 3.10 ANNUAL  STATEMENT AS TO  COMPLIANCE.  (a) The Master  Servicer will
deliver to the Issuer,  each Underwriter and the Indenture Trustee,  with a copy
to the Credit  Enhancer,  on or before the earlier of (a) March 31 of each year,
beginning  with the first  March 31 that  occurs at least six  months  after the
Cut-off  Date  or (b)  with  respect  to any  calendar  year  during  which  the
Depositor'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 date
on which the annual  report on Form 10-K is required  to be filed in  accordance

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<PAGE>

with the  Exchange  Act and the  rules and  regulations  of the  Commission,  an
Officer's  Certificate stating that (i) a review of the activities of the Master
Servicer  during  the  preceding  calendar  year  and of its  performance  under
servicing  agreements,  including this  Servicing  Agreement has been made under
such officer's  supervision  and (ii) to the best of such  officer's  knowledge,
based on such review,  the Master Servicer has complied in all material respects
with the minimum servicing standards set forth in the Uniform Single Attestation
Program for Mortgage  Bankers and has fulfilled all of its material  obligations
in all material  respects  throughout  such year, or, if there has been material
noncompliance  with such servicing  standards or a default in the fulfillment in
all  material  respects  of any  such  obligation  relating  to  this  Servicing
Agreement,  such statement shall include a description of such  noncompliance or
specify  each such  default,  as the case may be,  known to such officer and the
nature and status thereof.

               (b) The  Master  Servicer  shall  deliver  to the  Issuer and the
Indenture  Trustee,  with a copy to the Credit  Enhancer,  promptly after having
obtained  knowledge  thereof,  but in no event  later  than five  Business  Days
thereafter,  written  notice by means of an Officer's  Certificate  of any event
which  with the  giving of notice or the lapse of time or both,  would  become a
Servicing Default.

Section 3.11 ANNUAL SERVICING  REPORT.  On or before the earlier of (a) March 31
of each year,  beginning with the first March 31 that occurs at least six months
after the Cut-off  Date,  or (b) with respect to any calendar  year during which
the Depositor'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 date
on which  the  annual  report is  required  to be filed in  accordance  with the
Exchange  Act and the  rules  and  regulations  of the  Commission,  the  Master
Servicer at its expense shall cause a firm of nationally recognized  independent
public  accountants  (who may also render other services to the Master Servicer)
to furnish a report to the Issuer,  the Indenture Trustee,  the Depositor,  each
Underwriter,  the Credit  Enhancer  and each Rating  Agency  stating its opinion
that, on the basis of an  examination  conducted by such firm  substantially  in
accordance  with standards  established  by the American  Institute of Certified
Public  Accountants,  the  assertions  made  pursuant to Section 3.10  regarding
compliance with the minimum servicing  standards set forth in the Uniform Single
Attestation  Program for Mortgage Bankers during the preceding calendar year are
fairly stated in all material  respects,  subject to such  exceptions  and other
qualifications  that,  in the opinion of such firm,  such  accounting  standards
require it to report.  In rendering  such  statement,  such firm may rely, as to
matters  relating to the direct  servicing of Home Equity Loans by Subservicers,
upon  comparable  statements for  examinations  conducted by independent  public
accountants  substantially  in  accordance  with  standards  established  by the
American Institute of Certified Public Accountants  (rendered within one year of
such statement) with respect to such Subservicers.

Section 3.12 ACCESS TO CERTAIN  DOCUMENTATION AND INFORMATION REGARDING THE HOME
EQUITY Loans.  Whenever  required by statute or regulation,  the Master Servicer
shall provide to the Credit Enhancer, any Securityholder upon reasonable request
(or a regulator  for a  Securityholder)  or the  Indenture  Trustee,  reasonable
access to the  documentation  regarding  the Home Equity Loans such access being
afforded  without  charge but only upon  reasonable  request  and during  normal
business  hours at the offices of the Master  Servicer.  Nothing in this Section

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<PAGE>

3.12 shall  derogate from the  obligation of the Master  Servicer to observe any
applicable law  prohibiting  disclosure of information  regarding the Mortgagors
and the  failure of the Master  Servicer  to provide  access as provided in this
Section  3.12 as a result of such  obligation  shall not  constitute a breach of
this Section 3.12.

Section 3.13 MAINTENANCE OF CERTAIN  SERVICING  INSURANCE  POLICIES.  The Master
Servicer shall during the term of its service as servicer  maintain in force (i)
a  policy  or  policies  of  insurance  covering  errors  and  omissions  in the
performance of its obligations as master servicer  hereunder and (ii) a fidelity
bond in respect  of its  officers,  employees  or  agents.  Each such  policy or
policies and bond shall be at least equal to the coverage that would be required
by Fannie Mae or Freddie  Mac,  whichever  is greater,  for  Persons  performing
servicing for Home Equity Loans purchased by such entity. Coverage of the Master
Servicer under a policy or bond obtained by an Affiliate of the Master  Servicer
and  providing  the coverage  required by this  Section  3.13 shall  satisfy the
requirements of this Section 3.13.

Section 3.14 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND REPORTS OF
FORECLOSURES AND ABANDONMENTS OF MORTGAGED  PROPERTY.  The Master Servicer shall
prepare and deliver all federal and state  information  reports  with respect to
the Home Equity Loans when and as required by all  applicable  state and federal
income tax laws. In particular,  with respect to the  requirement  under Section
6050J of the Code to the effect that the Master  Servicer or  Subservicer  shall
make reports of foreclosures and abandonments of any mortgaged property for each
year  beginning in 2003, the Master  Servicer or Subservicer  shall file reports
relating to each instance  occurring during the previous  calendar year in which
the Master  Servicer  (i) on behalf of the  Issuer,  acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full or
partial  satisfaction of a Home Equity Loan, or (ii) knows or has reason to know
that any  Mortgaged  Property  has been  abandoned.  The reports from the Master
Servicer or  Subservicer  shall be in form and substance  sufficient to meet the
reporting  requirements  imposed by Section  6050J and  Section  6050H  (reports
relating to mortgage interest received) of the Code.

Section 3.15   OPTIONAL REPURCHASE OR TRANSFER OF HOME EQUITY LOANS.

               (a)   Notwithstanding  any  provision  in  Section  3.07  to  the
contrary,  the Master Servicer,  at its option and in its sole  discretion,  may
repurchase any Home Equity Loan that is delinquent in payment for a period of 90
days or longer for a price equal to the  Repurchase  Price;  provided,  that any
such Home Equity Loan that becomes 90 days or more  delinquent  during any given
Calendar  Quarter  shall only be eligible for purchase  pursuant to this Section
3.15(a)  during the period  beginning on the first Business Day of the following
Calendar  Quarter,  and ending at the close of  business  on the  second-to-last
Business Day of such following Calendar Quarter; and provided further, that such
Home Equity Loan is 90 days or more  delinquent at the time of repurchase.  Such
option if not exercised shall not thereafter be reinstated as to any Home Equity
Loan,  unless the delinquency is cured and the Home Equity Loan thereafter again
becomes  delinquent  in  payment  by 90 days or  more in a  subsequent  Calendar
Quarter.  If at any time the  Master  Servicer  makes a payment  to the  Payment
Account covering the amount of the Repurchase Price for such a Home Equity Loan,
and the Master Servicer provides to the Indenture Trustee a certification signed
by a  Servicing  Officer  stating  that  the  amount  of such  payment  has been

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<PAGE>

deposited in the Payment Account,  then the Indenture  Trustee shall execute the
assignment  of such Home  Equity  Loan at the  request  of the  Master  Servicer
without recourse,  representation or warranty to the Master Servicer which shall
succeed to all the Indenture  Trustee's right, title and interest in and to such
Loan, and all security and documents relative thereto.  Such assignment shall be
an assignment outright and not for security.  The Master Servicer will thereupon
own such Home Equity  Loan,  and all such  security and  documents,  free of any
further obligation to the Indenture Trustee or the Securityholders  with respect
thereto.

               (b)  Subject  to the  conditions  set  forth  below,  the  Master
Servicer,  upon receipt of written notice and direction  from the Issuer,  shall
cause the retransfer of Group II Loans from the Indenture  Trustee to the Issuer
as of the close of  business on a Payment  Date (the  "Transfer  Date").  On the
fifth  Business Day (the  "Transfer  Notice  Date")  prior to the Transfer  Date
designated in such notice, the Master Servicer shall give the Indenture Trustee,
the Rating Agencies and the Credit Enhancer a notice of the proposed  retransfer
that  contains  a list  of the  Home  Equity  Loans  to be  retransferred.  Such
retransfers  of Group  II Loans  shall be  permitted  upon  satisfaction  of the
following conditions:

(i) No Amortization Event has occurred or will result from such retransfer;

     On the Transfer  Date,  the Group II  Overcollateralization  Amount  (after
giving effect to the removal from the Trust of the Group II Loans proposed to be
transferred)  will  equal  or  exceed  Group II  Required  Overcollateralization
Amount;

                      On or before the Transfer Date, the Master  Servicer shall
have
delivered to the Indenture  Trustee a revised Home Equity Loan Schedule  showing
that the Home Equity Loans are no longer owned by the Trust;

                      The Master  Servicer shall  represent and warrant that the
Group II Loans
to be removed  from the Trust were  selected  at random and the Master  Servicer
shall have  received the consent of the Credit  Enhancer as to the  selection of
the particular Group II Loans to be removed; and

     The Master  Servicer shall have delivered to the Indenture  Trustee and the
Credit Enhancer an officer's certificate  certifying that the items set forth in
subparagraphs (i) through (iv),  inclusive,  have been performed or are true and
correct, as the case may be. The Indenture Trustee may conclusively rely on such
officer's  certificate,  shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.

        The Master  Servicer  shall not be permitted to effect the retransfer of
any Group II Loan except under the conditions  specified  above.  Upon receiving
the requisite  notice and direction from the Issuer,  the Master  Servicer shall
perform in a timely manner those acts required of it, as specified  above.  Upon
satisfaction of the above conditions, on the Transfer Date the Indenture Trustee
shall deliver, or cause to be delivered,  to the Issuer a written itemization of
each Group II Loan being  transferred,  together with the Mortgage File for each
such Home Equity Loan,  and the  Indenture  Trustee shall execute and deliver to
the Issuer or its designee such other documents  prepared by the Master Servicer

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<PAGE>

as shall be reasonably necessary to transfer such Group II Loans to the Group II
Certificateholders.  Any such transfer of the Trust's right,  title and interest
in and to the  Group  II Loans  shall be  without  recourse,  representation  or
warranty  by or of the  Indenture  Trustee  or the  Trust to the  Issuer  or its
designee.

Section 3.16 LIMITED HOME EQUITY LOAN REPURCHASE  RIGHT. The Limited  Repurchase
Right Holder will have the irrevocable option at any time to purchase any of the
Home Equity Loans at the Repurchase  Price,  up to a maximum of five Home Equity
Loans.  In the event that this  option is  exercised  as to any five Home Equity
Loans in the aggregate, this option will thereupon terminate. If at any time the
Limited  Repurchase  Right  Holder  makes a  payment  to the  Custodial  Account
covering the amount of the Repurchase Price for such a Home Equity Loan, and the
Limited   Repurchase   Right  Holder   provides  to  the  Indenture   Trustee  a
certification  signed by a  Servicing  Officer  stating  that the amount of such
payment has been deposited in the Custodial Account,  then the Indenture Trustee
shall  execute  the  assignment  of such Home  Equity Loan at the request of the
Limited Repurchase Right Holder without recourse to the Limited Repurchase Right
Holder  which shall  succeed to all the  Indenture  Trustee's  right,  title and
interest  in and to such  Home  Equity  Loan,  and all  security  and  documents
relative  thereto.  Such assignment shall be an assignment  outright and not for
security.  The Limited Repurchase Right Holder will thereupon own such Mortgage,
and all such  security  and  documents,  free of any further  obligation  to the
Indenture Trustee with respect thereto.

                                   ARTICLE IV

                              SERVICING CERTIFICATE

Section 4.01  STATEMENTS  TO  SECURITYHOLDERS.  (a) With respect to each Payment
Date, on the Business Day following the related  Determination  Date, the Master
Servicer  shall  forward to the  Indenture  Trustee  and the  Indenture  Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by   mail   or   made   available   on  its   website   initially   located   at
"www.jpmorgam.com/sfr,"  to  each  Certificateholder,   Noteholder,  the  Credit
Enhancer,  the Depositor,  the Owner Trustee,  the Certificate  Paying Agent and
each Rating Agency,  a statement  setting forth the following  information  (the
"Servicing  Certificate")  as to the  Notes  and  Certificates,  to  the  extent
applicable:

(i) for each of Loan Group I, Loan Group II-A and Loan Group II-B, the aggregate
amount  of  (a)  Interest   Collections,   (b)  Principal  Collections  and  (c)
Substitution Adjustment Amounts for such Collection Period;

(ii) the amount paid as principal to the Noteholders of each Class of Notes;

(iii) for each of Loan Group I, Loan Group II-A and Loan Group II-B,  the amount
paid as interest to the Noteholders of each Class of Notes,  separately  stating
the portion  thereof in respect of Prepayment  Interest  Shortfalls,  Relief Act
Shortfalls,  Group II-A Relief Act Shortfalls, Group II-B Relief Act Shortfalls,
Group I Net WAC Cap Shortfalls,  Group II-A Net WAC Cap Shortfalls or Group II-B
Net WAC Cap Shortfalls, if any;

                                       27
<PAGE>

(iv) for each of Loan  Group I,  Loan  Group  II-A  and  Loan  Group  II-B,  the
aggregate Interest  Distribution Amount remaining unpaid, if any, for each Class
of Class I Notes and Class II Notes, after giving effect to the payments made on
such Payment Date;

(v) [Reserved];

(vi) the  amount of any draw on the  Group I Policy  or the Group II Policy  for
such Payment Date, the amount paid to the Credit Enhancer in  reimbursement  for
prior draws and the  aggregate  amount of prior draws under the Policies not yet
reimbursed;

(vii) for each of Loan Group I, Loan Group II-A and Loan Group II-B,  the amount
of such distribution as principal and interest to the  Certificateholders of the
Certificates,  separately  stating  the  portion  thereof  which  resulted  in a
reduction of the Certificate Loan Balance thereof;

(viii) the aggregate Loan Balance of the Home Equity Loans in each Loan Group as
of the end of the preceding Collection Period;

(ix) the aggregate  amount of Additional  Balances on the Group II Loans created
during the previous Collection Period conveyed to the Issuer;

(x) for each of Loan Group I, Loan Group  II-A and Loan Group  II-B,  the number
and  aggregate  Loan  Balances of Home Equity  Loans (a) as to which the Minimum
Monthly  Payment is Delinquent  for 30-59 days,  60-89 days and 90 or more days,
respectively, (b) that are foreclosed and (c) that have become REO, in each case
as of the end of the related Collection  Period;  provided,  however,  that such
information will not be provided on the statements relating to the first Payment
Date;

(xi) the Note Rate for each Class of Class I Notes and Class II Notes, the Group
I Net WAC Rate,  the Group II-A Net WAC Rate and the Group II-B Net WAC Rate for
the related Collection Period;

(xii)  for each of Loan  Group I,  Loan  Group  II-A and Loan  Group  II-B,  the
aggregate  Liquidation  Loss  Amounts  with  respect to the  related  Collection
Period, the amount of any Liquidation Loss Distribution  Amounts with respect to
the Notes, and the aggregate of the Liquidation Loss Amounts from all Collection
Periods  to date  expressed  as dollars  and as a  percentage  of the  aggregate
Cut-off Date Loan Balance for such Loan Group;

(xiii) the  aggregate  Excess Loss Amounts with respect to the Group I Loans and
the  Group II Loans  with  respect  to the  related  Collection  Period  and the
aggregate  of the Excess Loss  Amounts with respect to the Group I Loans and the
Group II Loans from all Collection Periods to date;

(xiv) for each Loan Group,  the aggregate  Special Hazard Losses,  Fraud Losses,
Bankruptcy Losses and losses caused by or resulting from an Extraordinary  Event
with respect to the related  Collection Period and the aggregate of each of such
losses from all Collection Periods to date;

                                       28
<PAGE>

(xv) for each of Loan Group I, Loan Group II-A and Loan Group II-B, the Security
Balance of each related Class of Notes and the Certificate  Principal Balance of
the related Certificates after giving effect to the distribution of principal on
such Payment Date;

(xvi) the aggregate  Servicing  Fees for the related  Collection  Period and the
aggregate amount of Draws for the related Collection Period;

(xvii) the number and amount of any  increases in the Credit  Limits of the Home
Equity Loans during the related Collection Period;

(xviii)   the   Group   I    Overcollateralization    Amount,   the   Group   II
Overcollateralization  Amount,  the  Undercollateralization  Amount, the Special
Hazard  Amount for each Loan  Group,  the Fraud Loss Amount for each Loan Group,
the  Bankruptcy  Loss  Amount  for  each  Loan  Group,   the  Group  I  Required
Overcollateralization  Amount  immediately  following  such Payment Date and the
Group  II  Required  Overcollateralization  Amount  immediately  following  such
Payment Date; and

(xix) the number and principal amount of release agreements  pursuant to Section
3.05(c) entered into during the calendar year and since the Closing Date, stated
separately,  for the Group II Loans and,  the  aggregate  outstanding  principal
amount of such release agreements  expressed as a percentage of the Pool Balance
for Loan  Group II with  information  provided  separately  with  respect to all
Unsecured  Loans and (2) the  number  and  principal  amount  of  Capitalization
Workouts  pursuant to Section  3.02(a)(v)  entered into during the calendar year
and since the Closing  Date,  stated  separately  for each of Loan Group I, Loan
Group  II-A and Loan  Group  II-B and the  aggregate  outstanding  amount of the
Capitalization  Workouts  expressed  as a  percentage  of  the  respective  Pool
Balance.

        In the case of information  furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Variable
Funding  Note,  Term  Note  or  Certificate,   as  applicable,   with  a  $1,000
denomination.

        If an  Amortization  Event or  Servicing  Default  shall  occur,  on the
Business Day following the related Determination Date, the Master Servicer shall
forward to the  Indenture  Trustee,  a statement of such effect,  including  the
nature of such Amortization  Event or Servicing  Default.  The Indenture Trustee
shall deliver or cause to be delivered by mail to the Credit  Enhancer notice of
such Amortization  Event or Servicing  Default,  including,  the nature thereof.
Such statement may be included in, or separate  from,  the regular  statement to
Securityholders.

        In addition,  the Master Servicer shall forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next  succeeding  each  Determination  Date, the
Master  Servicer  shall furnish a written  statement to the  Certificate  Paying
Agent and the Indenture  Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial  Account and deposited into the Payment  Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The  determination by the Master Servicer of such amounts shall be presumptively
deemed to be  correct  for all  purposes  hereunder  and the Owner  Trustee  and

                                       29
<PAGE>

Indenture  Trustee  shall be  protected  in relying  upon the same  without  any
independent  check or  verification.  In  addition,  upon the  Issuer's  written
request,  the Master  Servicer shall  promptly  furnish  information  reasonably
requested by the Issuer that is reasonably  available to the Master  Servicer to
enable  the  Issuer to  perform  its  federal  and state  income  tax  reporting
obligations.

        (b) The Master Servicer shall, on behalf of the Depositor and in respect
of the  Trust,  sign and  cause to be filed  with the  Commission  any  periodic
reports  required to be filed under the  provisions of the Exchange Act, and the
rules and  regulations  of the  Commission  thereunder.  In connection  with the
preparation  and filing of such periodic  reports,  the Indenture  Trustee shall
timely  provide  to the  Master  Servicer  (I) a list of Holders as shown on the
Certificate  Register and the Note Register as of the end of each calendar year,
(II)  copies of all  pleadings,  other  legal  process  and any other  documents
relating to any claims,  charges and complaints involving the Indenture Trustee,
as indenture trustee hereunder,  or the Trust that are received by the Indenture
Trustee,  (III)  notice  of all  matters  that,  to the  actual  knowledge  of a
Responsible  Officer of the Indenture Trustee,  have been submitted to a vote of
the Holders,  other than those matters that have been submitted to a vote of the
Holders at the request of the Depositor or the Master Servicer,  and (IV) notice
of any failure of the Indenture  Trustee to make any distribution to the Holders
as required  pursuant to this  Agreement.  Neither the Master  Servicer  nor the
Indenture Trustee shall have any liability with respect to the Master Servicer's
failure to properly  prepare or file such  periodic  reports  resulting  from or
relating to the Master Servicer's inability or failure to obtain any information
not resulting from the Master  Servicer's own negligence or willful  misconduct.
Any Form 10-K filed with the Commission in connection with this clause (b) shall
include a certification, signed by the senior officer in charge of the servicing
functions of the Master  Servicer,  in the form  attached as Exhibit E hereto or
such other form as may be required or  permitted  by the  Commission  (the "Form
10-K  Certification"),  in  compliance  with Rules  13a-14 and 15d-14  under the
Exchange Act and any additional directives of the Commission. In connection with
the Form 10-K  Certification,  the  Indenture  Trustee  shall provide the Master
Servicer with a back-up certification  substantially in the form attached hereto
as Exhibit F. This  Section  4.01(b)  may be  amended  in  accordance  with this
Agreement,  but without the Rating Agency  confirmations  otherwise  required by
Section 8.01, and without the consent of the Holders.

Section 4.02 TAX REPORTING.  So long as Residential  Funding  Corporation or any
Affiliate  thereof owns 100% of the  Certificates,  then no separate federal and
state income tax returns and  information  returns or reports will be filed with
respect to the Issuer,  and the Issuer will be treated as an entity wholly owned
by Residential Funding Corporation or an affiliate thereof.

Section 4.03 STATEMENTS TO CREDIT  ENHANCER.  With respect to each Payment Date,
on the  Business  Day  following  the  related  Determination  Date,  the Master
Servicer  shall forward to the Credit  Enhancer,  a statement  setting forth the
following information:

(i) the number  derived under the Group I Rolling Three Month  Liquidation  Loss
Amount Test for such Payment Date;

(ii) the Group I Excess  Spread Amount and the Group II Excess Spread Amount for
such Payment Date;

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(iii) the Group II Excess Spread Percentage for such Payment Date; and

(iv) the Group II Rolling Three Month Excess Spread  Percentage for such Payment
Date.

(v) the number of Home  Equity  Loans which are 180 days or more  delinquent  on
such Payment Date.

                                   ARTICLE V

                                 PAYMENT ACCOUNT

Section 5.01 PAYMENT ACCOUNT. The Indenture Trustee shall establish and maintain
a Payment  Account titled  "JPMorgan Chase Bank, as Indenture  Trustee,  for the
benefit of the  Securityholders,  the  Certificate  Paying  Agent and the Credit
Enhancer pursuant to the Indenture, dated as of September 29, 2003, between Home
Equity Loan Trust 2003-HS3 and JPMorgan Chase Bank".  The Payment  Account shall
be an Eligible Account.  On each Payment Date, amounts on deposit in the Payment
Account will be distributed by the Indenture  Trustee in accordance with Section
3.05 of the Indenture.  The Indenture  Trustee shall,  upon written request from
the Master  Servicer,  invest or cause the  institution  maintaining the Payment
Account to invest the funds in the  Payment  Account  in  Permitted  Investments
designated  in the name of the Indenture  Trustee,  which shall mature not later
than the Business Day next preceding the Payment Date next following the date of
such investment  (except that (i) any investment in the  institution  with which
the Payment  Account is  maintained  or any  investment  in a fund for which the
institution  acts as a  custodian,  may mature on such Payment Date and (ii) any
other investment may mature on such Payment Date if the Indenture  Trustee shall
advance funds on such Payment Date to the Payment  Account in the amount payable
on such  investment on such Payment Date,  pending receipt thereof to the extent
necessary  to make  distributions  on the  Securities)  and shall not be sold or
disposed  of prior to  maturity.  All  income  and gain  realized  from any such
investment  shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses  incurred
in respect of any such investments  shall be deposited in the Payment Account by
the Master Servicer out of its own funds immediately as realized.

                                   ARTICLE VI

                               THE MASTER SERVICER

Section 6.01  LIABILITY OF THE MASTER  SERVICER.  The Master  Servicer  shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.

Section 6.02 MERGER OR  CONSOLIDATION  OF, OR ASSUMPTION OF THE  OBLIGATIONS OF,
THE MASTER  SERVICER.  Any  corporation  into which the Master  Servicer  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 Master

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Servicer shall be a party, or any corporation  succeeding to the business of the
Master  Servicer,  shall be the  successor  of the Master  Servicer,  hereunder,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

        The Master  Servicer  may assign its rights and  delegate its duties and
obligations under this Servicing Agreement;  provided, that the Person accepting
such  assignment or  delegation  shall be a Person which is qualified to service
Home Equity Loans,  is  reasonably  satisfactory  to the  Indenture  Trustee (as
pledgee of the Home  Equity  Loans),  the Issuer  and the  Credit  Enhancer,  is
willing to service  the Home  Equity  Loans and  executes  and  delivers  to the
Indenture Trustee and the Issuer an agreement,  in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an  assumption by such Person of the due and punctual  performance  and
observance  of each  covenant  and  condition to be performed or observed by the
Master Servicer under this Servicing  Agreement;  provided,  further,  that each
Rating  Agency's  rating of the Securities in effect  immediately  prior to such
assignment  and  delegation  will not be qualified,  reduced,  or withdrawn as a
result of such  assignment  and  delegation  (as  evidenced  by a letter to such
effect from each Rating Agency),  if determined  without regard to the Policies;
and provided,  further, that the Owner Trustee receives an Opinion of Counsel to
the effect that such  assignment or  delegation  shall not cause the Trust to be
treated as a corporation for federal or state income tax purposes.

Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.  Neither
the Master  Servicer nor any of the directors or officers or employees or agents
of the Master  Servicer  shall be under any  liability to the Issuer,  the Owner
Trustee,  the Indenture Trustee or the  Securityholders  for any action taken or
for  refraining  from the taking of any action in good  faith  pursuant  to this
Servicing Agreement,  provided,  however,  that this provision shall not protect
the Master  Servicer  or any such  Person  against  any  liability  which  would
otherwise  be imposed by reason of its willful  misfeasance,  bad faith or gross
negligence  in the  performance  of its  duties  hereunder  or by  reason of its
reckless disregard of its obligations and duties hereunder.  The Master Servicer
and any director or officer or employee or agent of the Master Servicer may rely
in good faith on any  document of any kind prima  facie  properly  executed  and
submitted by any Person  respecting any matters  arising  hereunder.  The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or  expense  incurred  in  connection  with any legal  action  relating  to this
Servicing  Agreement or the  Securities,  including any amount paid to the Owner
Trustee or the Indenture  Trustee  pursuant to Section  6.06(b),  other than any
loss,  liability or expense incurred by reason of its willful  misfeasance,  bad
faith or gross  negligence  in the  performance  of its duties  hereunder  or by
reason of its reckless  disregard of its obligations and duties  hereunder.  The
Master  Servicer  shall not be under any  obligation to appear in,  prosecute or
defend any legal  action  which is not  incidental  to its duties to service the
Home Equity Loans in accordance with this Servicing Agreement,  and which in its
opinion may involve it in any expense or liability;  provided, however, that the
Master  Servicer may in its sole  discretion  undertake any such action which it
may deem necessary or desirable in respect of this Servicing Agreement,  and the
rights  and  duties  of  the   parties   hereto   and  the   interests   of  the
Securityholders.  In such event, the reasonable legal expenses and costs of such
action  and any  liability  resulting  therefrom  shall be  expenses,  costs and
liabilities  of the  Issuer,  and the Master  Servicer  shall be  entitled to be

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reimbursed  therefor.  The Master Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any  resignation  or  termination of
the Master Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses,  costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).

Section 6.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions of Section
6.02,  the Master  Servicer  shall not resign  from the  obligations  and duties
hereby imposed on it except (i) upon  determination  that the performance of its
obligations or duties hereunder are no longer  permissible  under applicable law
or are in  material  conflict  by  reason  of  applicable  law  with  any  other
activities  carried  on by it or  its  subsidiaries  or  Affiliates,  the  other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master  Servicer or its  subsidiaries  or Affiliates at
the date of this Servicing  Agreement or (ii) upon satisfaction of the following
conditions:  (a) the Master  Servicer has  proposed a successor  servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is  reasonably  acceptable to the Issuer,  the Indenture  Trustee and the Credit
Enhancer;  (b) each Rating  Agency shall have  delivered a letter to the Issuer,
the Credit  Enhancer and the Indenture  Trustee prior to the  appointment of the
successor  servicer  stating that the  proposed  appointment  of such  successor
servicer  as Master  Servicer  hereunder  will not  result in the  reduction  or
withdrawal of the then current rating of the Securities,  if determined  without
regard to the Policies;  and (c) such proposed  successor servicer is reasonably
acceptable  to the Credit  Enhancer,  as evidenced by a letter to the Issuer and
the Indenture Trustee; provided, however, that no such resignation by the Master
Servicer shall become effective until such successor servicer or, in the case of
(i) above,  the Indenture  Trustee,  as pledgee of the Home Equity Loans,  shall
have assumed the Master Servicer's responsibilities and obligations hereunder or
the  Indenture  Trustee,  as  pledgee  of the  Home  Equity  Loans,  shall  have
designated  a successor  servicer in  accordance  with  Section  7.02.  Any such
resignation shall not relieve the Master Servicer of  responsibility  for any of
the obligations  specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Master  Servicer.  Any such  determination
permitting  the  resignation  of the Master  Servicer  shall be  evidenced by an
Opinion of Counsel to such effect  delivered  to the  Indenture  Trustee and the
Credit Enhancer.

Section  6.05  DELEGATION  OF DUTIES.  In the ordinary  course of business,  the
Master  Servicer at any time may  delegate  any of its duties  hereunder  to any
Person,  including any of its  Affiliates,  who agrees to conduct such duties in
accordance  with  standards  comparable to those with which the Master  Servicer
complies  pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.

Section 6.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER TRUSTEE'S FEES
AND EXPENSES;  INDEMNIFICATION.  (a) The Master Servicer covenants and agrees to
pay to the Owner  Trustee,  the  Indenture  Trustee  and any  co-trustee  of the
Indenture Trustee or the Owner Trustee from time to time, and the Owner Trustee,
the Indenture  Trustee and any such co-trustee shall be entitled to,  reasonable
compensation  (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
each of them in the execution of the trusts  created  under the Trust  Agreement
and the Indenture and in the exercise and  performance  of any of the powers and
duties under the Trust  Agreement or the  Indenture,  as the case may be, of the

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Owner Trustee, the Indenture Trustee and any co-trustee, and the Master Servicer
will pay or reimburse the Indenture  Trustee and any co-trustee upon request for
all  reasonable  expenses,  disbursements  and advances  incurred or made by the
Indenture  Trustee or any co-trustee in accordance with any of the provisions of
this Servicing Agreement except any such expense, disbursement or advance as may
arise from its negligence, willful misfeasance or bad faith.

               (b) The Master Servicer agrees to indemnify the Indenture Trustee
and the Owner  Trustee  for,  and to hold the  Indenture  Trustee  and the Owner
Trustee,  as the case may be, harmless against,  any loss,  liability or expense
incurred without negligence,  bad faith or willful misconduct on the part of the
Indenture  Trustee or the Owner Trustee,  as the case may be, arising out of, or
in connection  with,  the acceptance  and  administration  of the Issuer and the
assets thereof,  including the costs and expenses  (including  reasonable  legal
fees and expenses) of defending the Indenture  Trustee or the Owner Trustee,  as
the  case  may be,  against  any  claim  in  connection  with  the  exercise  or
performance  of any of its powers or duties under any Basic  Document,  provided
that:

(i) with respect to any such claim, the Indenture  Trustee or Owner Trustee,  as
the case may be, shall have given the Master  Servicer  written  notice  thereof
promptly after the Indenture Trustee or Owner Trustee, as the case may be, shall
have actual knowledge thereof;

(ii) while maintaining  control over its own defense,  the Issuer, the Indenture
Trustee or Owner Trustee,  as the case may be, shall cooperate and consult fully
with the Master Servicer in preparing such defense; and

(iii) notwithstanding  anything in this Servicing Agreement to the contrary, the
Master Servicer shall not be liable for settlement of any claim by the Indenture
Trustee or the Owner Trustee, as the case may be, entered into without the prior
consent of the Master Servicer.

        No termination of this Servicing  Agreement shall affect the obligations
created by this Section 6.06 of the Master  Servicer to indemnify  the Indenture
Trustee and the Owner Trustee under the  conditions  and to the extent set forth
herein.

        Notwithstanding  the  foregoing,  the  indemnification  provided  by the
Master Servicer in this Section 6.06(b) shall not pertain to any loss, liability
or expense of the Indenture  Trustee or the Owner  Trustee,  including the costs
and expenses of defending itself against any claim,  incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the direction
of the  Noteholders or  Certificateholders,  as the case may be, pursuant to the
terms of this Servicing Agreement.

                                  ARTICLE VII

                                     DEFAULT

Section 7.01 SERVICING  DEFAULT.  If any one of the following events ("Servicing
Default") shall occur and be continuing:

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               (a)  Any  failure  by  the  Master  Servicer  to  deposit  in the
Custodial  Account or Payment Account any deposit  required to be made under the
terms of this Servicing  Agreement  which  continues  unremedied for a period of
five  Business  Days after the date upon which  written  notice of such  failure
shall  have been  given to the Master  Servicer  by the Issuer or the  Indenture
Trustee, or to the Master Servicer,  the Issuer and the Indenture Trustee by the
Credit Enhancer; or

               (b) Failure on the part of the Master Servicer duly to observe or
perform in any material  respect any other covenants or agreements of the Master
Servicer  set forth in the  Securities  or in this  Servicing  Agreement,  which
failure,  in each case,  materially  and  adversely  affects  the  interests  of
Securityholders  or the Credit  Enhancer and which  continues  unremedied  for a
period  of 45 days  after  the date on which  written  notice  of such  failure,
requiring the same to be remedied,  and stating that such notice is a "Notice of
Default"  hereunder,  shall have been given to the Master Servicer by the Issuer
or the  Indenture  Trustee,  or to the  Master  Servicer,  the  Issuer  and  the
Indenture Trustee by the Credit Enhancer; or

               (c) The entry against the Master Servicer of a decree or order by
a court or agency or supervisory  authority having  jurisdiction in the premises
for the  appointment  of a trustee,  conservator,  receiver or liquidator in any
insolvency, conservatorship,  receivership, readjustment of debt, marshalling of
assets  and  liabilities  or  similar  proceedings,  or for  the  winding  up or
liquidation  of its  affairs,  and the  continuance  of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or

               (d) The Master  Servicer shall  voluntarily go into  liquidation,
consent to the  appointment  of a conservator,  receiver,  liquidator or similar
person in any  insolvency,  readjustment  of debt,  marshalling  of  assets  and
liabilities or similar  proceedings of or relating to the Master  Servicer or of
or relating to all or substantially all of its property, or a decree or order of
a court, agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator,  receiver, liquidator or similar person in any
insolvency,  readjustment  of debt,  marshalling  of assets and  liabilities  or
similar proceedings,  or for the winding-up or liquidation of its affairs, shall
have been  entered  against the Master  Servicer  and such decree or order shall
have  remained in force  undischarged,  unbonded or unstayed  for a period of 60
days;  or the Master  Servicer  shall admit in writing its  inability to pay its
debts  generally  as they become due,  file a petition to take  advantage of any
applicable  insolvency or  reorganization  statute,  make an assignment  for the
benefit of its creditors or voluntarily suspend payment of its obligations,

then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master  Servicer,  either the Issuer or the  Indenture  Trustee,
with the consent of the Credit Enhancer,  or the Credit Enhancer, by notice then
given in  writing to the Master  Servicer  (and to the Issuer and the  Indenture
Trustee if given by the Credit  Enhancer)  may  terminate  all of the rights and
obligations of the Master  Servicer as servicer  under this Servicing  Agreement
other  than  its  right to  receive  servicing  compensation  and  expenses  for
servicing the Home Equity Loans hereunder during any period prior to the date of
such  termination and the Issuer or the Indenture  Trustee,  with the consent of
the Credit  Enhancer,  or the Credit  Enhancer  may  exercise  any and all other

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<PAGE>

remedies  available  at law or equity.  Any such  notice to the Master  Servicer
shall also be given to each Rating Agency,  the Credit  Enhancer and the Issuer.
On or after the  receipt by the Master  Servicer  of such  written  notice,  all
authority  and power of the  Master  Servicer  under this  Servicing  Agreement,
whether with respect to the  Securities  or the Home Equity Loans or  otherwise,
shall  pass to and be vested in the  Indenture  Trustee  as  pledgee of the Home
Equity Loans, as successor  Master  Servicer  pursuant to and under this Section
7.01; and, without  limitation,  the Indenture  Trustee is hereby authorized and
empowered  to  execute  and  deliver,  on  behalf  of the  Master  Servicer,  as
attorney-in-fact or otherwise, any and all documents and other instruments,  and
to do or accomplish all other acts or things  necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Home Equity Loan and related  documents,  or otherwise.  The
Master Servicer agrees to cooperate with the Indenture  Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer hereunder,
including,  without  limitation,  the transfer to the Indenture  Trustee for the
administration  by it of all cash amounts relating to the Home Equity Loans that
shall at the time be held by the Master  Servicer  and to be  deposited by it in
the Custodial Account, or that have been deposited by the Master Servicer in the
Custodial Account or thereafter  received by the Master Servicer with respect to
the Home Equity Loans.  All reasonable  costs and expenses  (including,  but not
limited to, attorneys' fees) incurred in connection with amending this Servicing
Agreement to reflect such succession as Master Servicer pursuant to this Section
7.01 shall be paid by the  predecessor  Master  Servicer (or if the  predecessor
Master  Servicer is the Indenture  Trustee,  the initial  Master  Servicer) upon
presentation of reasonable documentation of such costs and expenses.

        Notwithstanding any termination of the activities of the Master Servicer
hereunder,  the Master  Servicer  shall be entitled to receive,  out of any late
collection  of a payment on a Home Equity Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations  hereunder and received
after such  notice,  that portion to which the Master  Servicer  would have been
entitled  pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in  respect  thereof,  and any other  amounts  payable  to the  Master  Servicer
hereunder  the  entitlement  to  which  arose  prior to the  termination  of its
activities hereunder.

        Notwithstanding  the  foregoing,  a delay in or failure  of  performance
under  Section  7.01(a) or under  Section  7.01(b)  after the  applicable  grace
periods specified in such Sections,  shall not constitute a Servicing Default if
such delay or failure  could not be  prevented  by the  exercise  of  reasonable
diligence by the Master  Servicer and such delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or  sabotage,  epidemics,  landslides,  lightning,  fire,  hurricanes,
earthquakes,  floods or similar causes. The preceding sentence shall not relieve
the Master  Servicer  from using  reasonable  efforts to perform its  respective
obligations  in a timely manner in accordance  with the terms of this  Servicing
Agreement  and the Master  Servicer  shall provide the  Indenture  Trustee,  the
Credit Enhancer and the Securityholders  with notice of such failure or delay by
it,  together with a description  of its efforts to so perform its  obligations.
The Master Servicer shall immediately notify the Indenture  Trustee,  the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.

Section 7.02   INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Master  Servicer  receives a notice of termination
pursuant  to  Section  7.01 or sends a notice  pursuant  to  Section  6.04,  the
Indenture  Trustee as pledgee of the Home Equity Loans shall be the successor in
all  respects  to the Master  Servicer in its  capacity  as servicer  under this
Servicing  Agreement and the  transactions  set forth or provided for herein and

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<PAGE>

shall be subject to all the  responsibilities,  duties and liabilities  relating
thereto  placed on the  Master  Servicer  by the terms  and  provisions  hereof.
Nothing in this Servicing Agreement or in the Trust Agreement shall be construed
to permit or require the Indenture  Trustee as successor  Master Servicer to (i)
succeed to the  responsibilities,  duties and  liabilities of the initial Master
Servicer  in its  capacity  as Seller  under  the  Purchase  Agreement,  (ii) be
responsible or accountable  for any act or omission of the Master Servicer prior
to the issuance of a notice of termination hereunder,  (iii) require or obligate
the  Indenture  Trustee,  in its  capacity  as  successor  Master  Servicer,  to
purchase,  repurchase  or  substitute  any  Home  Equity  Loan,  (iv)  fund  any
Additional Balances with respect to any Home Equity Loan, (v) fund any losses on
any  Permitted  Investment  directed by any other  Master  Servicer,  or (vi) be
responsible for the  representations  and warranties of the Master Servicer.  As
compensation  therefor, the Indenture Trustee as successor Master Servicer shall
be entitled to such compensation as the Master Servicer would have been entitled
to hereunder if no such notice of  termination  had been given.  Notwithstanding
the above, (i) if the Indenture  Trustee is unwilling to act as successor Master
Servicer,  or (ii) if the  Indenture  Trustee is legally  unable so to act,  the
Indenture  Trustee  as pledgee of the Home  Equity  Loans may (in the  situation
described  in clause (i)) or shall (in the  situation  described in clause (ii))
appoint or petition a court of competent jurisdiction to appoint any established
housing and home finance institution, bank or other mortgage loan or home equity
loan servicer  having a net worth of not less than  $10,000,000 as the successor
to the Master  Servicer  hereunder in the  assumption  of all or any part of the
responsibilities,  duties  or  liabilities  of the  Master  Servicer  hereunder;
provided,  that any such  successor  Master  Servicer shall be acceptable to the
Credit  Enhancer,  as evidenced by the Credit  Enhancer's  prior written consent
which consent shall not be unreasonably  withheld and provided further, that the
appointment  of any  such  successor  Master  Servicer  will not  result  in the
qualification, reduction or withdrawal of the ratings assigned to the Securities
by the Rating Agencies,  if determined  without regard to the Policies.  Pending
appointment  of a  successor  to the  Master  Servicer  here  under,  unless the
Indenture  Trustee is  prohibited by law from so acting,  the Indenture  Trustee
shall act in such capacity as  hereinabove  provided.  In  connection  with such
appointment  and  assumption,   the  successor  shall  be  entitled  to  receive
compensation  out of  payments on Home  Equity  Loans in an amount  equal to the
compensation which the Master Servicer would otherwise have received pursuant to
Section  3.09 (or such lesser  compensation  as the  Indenture  Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall not
affect any liability of the  predecessor  Master  Servicer which may have arisen
under this  Servicing  Agreement  prior to its  termination  as Master  Servicer
(including,  without  limitation,  the  obligation to purchase Home Equity Loans
pursuant  to Section  3.01,  to pay any  deductible  under an  insurance  policy
pursuant to Section  3.04 or to  indemnify  the  Indenture  Trustee  pursuant to
Section 6.06), nor shall any successor Master Servicer be liable for any acts or
omissions of the  predecessor  Master  Servicer or for any breach by such Master
Servicer of any of its representations or warranties  contained herein or in any
related  document or agreement.  The Indenture  Trustee and such successor shall
take  such  action,  consistent  with  this  Servicing  Agreement,  as  shall be
necessary to effectuate any such succession.

               (b) Any successor, including the Indenture Trustee, to the Master
Servicer  as  servicer  shall  during the term of its  service as  servicer  (i)
continue to service and  administer the Home Equity Loans for the benefit of the
Securityholders,  (ii)  maintain  in force a policy  or  policies  of  insurance

                                       37
<PAGE>

covering  errors and omissions in the  performance of its  obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same  extent as the Master  Servicer  is so  required  pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.

               (c)  Any  successor  Master  Servicer,  including  the  Indenture
Trustee, shall not be deemed in default or to have breached its duties hereunder
if the predecessor Master Servicer shall fail to deliver any required deposit to
the  Custodial  Account  or  otherwise  cooperate  with any  required  servicing
transfer or succession hereunder.
               (d) In connection  with the  termination  or  resignation  of the
Master Servicer hereunder,  either (i) the successor Master Servicer,  including
the  Indenture  Trustee if the Indenture  Trustee is acting as successor  Master
Servicer,  shall  represent  and  warrant  that it is a  member  of MERS in good
standing and shall agree to comply in all material  respects  with the rules and
procedures  of MERS in  connection  with the  servicing of the Home Equity Loans
that are registered  with MERS, in which case the  predecessor  Master  Servicer
shall cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as
necessary  under MERS' rules and  regulations,  or (ii) the  predecessor  Master
Servicer shall  cooperate with the successor  Master Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage  from MERS to the  Indenture  Trustee and to execute  and deliver  such
other notices,  documents and other instruments as may be necessary or desirable
to effect a transfer of such Home Equity Loan or  servicing  of such Home Equity
Loan on the MERS(R) System to the successor  Master  Servicer.  The  predecessor
Master  Servicer  shall  file or cause to be filed  any such  assignment  in the
appropriate recording office. The predecessor Master Servicer shall bear any and
all fees of MERS,  costs of preparing any assignments of Mortgage,  and fees and
costs of filing any  assignments  of Mortgage  that may be  required  under this
subsection (d). The successor  Master Servicer shall cause such assignment to be
delivered to the Indenture Trustee or the Custodian promptly upon receipt of the
original  with evidence of recording  thereon or a copy  certified by the public
recording office in which such assignment was recorded.

Section  7.03  NOTIFICATION  TO  SECURITYHOLDERS.  Upon  any  termination  of or
appointment of a successor to the Master  Servicer  pursuant to this Article VII
or Section 6.04, the Indenture  Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

Section 8.01  AMENDMENT.  This  Servicing  Agreement may be amended from time to
time by the parties  hereto,  provided  that any amendment be  accompanied  by a
letter  from the  Rating  Agencies  that the  amendment  will not  result in the
downgrading  or  withdrawal of the rating then  assigned to the  Securities,  if
determined without regard to the Policies,  and a tax opinion to the effect that
neither  such  amendment  nor any action  permitted  by such  amendment  and not
otherwise  permitted  by this  Agreement  will cause any of REMIC I, REMIC II or

                                       38
<PAGE>

REMIC III to fail to qualify as a REMIC or, except as permitted  pursuant to the
provisions of Section 11.01(f) of the Indenture,  give rise to the imposition of
a tax on "prohibited  transactions" of a REMIC, or prohibited contributions to a
REMIC,  on any REMIC I,  REMIC II or REMIC III and  provided  further,  that the
Credit Enhancer and the Indenture Trustee shall consent thereto.

Section 8.02  GOVERNING  LAW.  THIS  SERVICING  AGREEMENT  SHALL BE CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK AND THE  OBLIGATIONS,  RIGHTS
AND REMEDIES OF THE PARTIES  HEREUNDER  SHALL BE DETERMINED  IN ACCORDANCE  WITH
SUCH LAWS.

Section 8.03 NOTICES. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if  personally  delivered
at or mailed by certified mail, return receipt requested,  to (a) in the case of
the Master Servicer, 2255 North Ontario Street, Burbank,  California 91504-3120,
Attention:  Director - Bond  Administration,  (b) in the case of the  Depositor,
8400  Normandale  Lake  Boulevard,  Suite  250,  Minneapolis,  Minnesota  55437,
Attention:  President,  (c) in the case of the Credit  Enhancer,  MBIA Insurance
Corporation,  113 King  Street,  Armonk,  New  York  10504,  Attention:  Insured
Portfolio  Management-Structured  Finance  ("IPM-SF")  (Home  Equity  Loan Trust
2003-HS3),  (d) in the case of Standard & Poor's, 55 Water Street, New York, New
York 10041, Attention:  Residential Mortgage Surveillance Group, (e) in the case
of  Moody's,  99  Church  Street,  New  York,  New York  10007,  Attention:  ABS
Monitoring  Department,  (f) in the case of the Owner Trustee,  Wilmington Trust
Company,  Rodney Square North,  1100 North Market Street,  Wilmington,  Delaware
19890-0001,  Attention:  Corporate Trust Administration,  (g) in the case of the
Issuer, to Home Equity Loan Trust 2003-HS3, c/o Owner Trustee,  Wilmington Trust
Company,  Rodney Square North,  1100 North Market Street,  Wilmington,  Delaware
19890-0001,  Attention:  Corporate Trust Administration,  (h) in the case of the
Indenture  Trustee,  JPMorgan Chase Bank, 4 New York Plaza, 6th Floor, New York,
New York, 10004,  Attention:  Institutional  Trust  Services/Structured  Finance
Services--2003-HS3  and (i) in the case of the  Underwriters,  to Deutsche  Bank
Securities Inc., 60 Wall Street,  New York, New York 10005,  Attention:  General
Counsel,  and to  Residential  Funding  Securities  Corporation,  7501 Wisconsin
Avenue,  Suite  900,  Bethesda,  Maryland  20814-6528,  Attention:  Director  of
Compliance;  or, as to each party,  at such other address as shall be designated
by such party in a written  notice to each other party.  Any notice  required or
permitted to be mailed to a  Securityholder  shall be given by first class mail,
postage prepaid, at the address of such Securityholder as shown in the Register.
Any notice so mailed  within the time  prescribed  in this  Servicing  Agreement
shall be  conclusively  presumed  to have been duly  given,  whether  or not the
Securityholder receives such notice. Any notice or other document required to be
delivered or mailed by the Indenture Trustee to any Rating Agency shall be given
on a reasonable efforts basis and only as a matter of courtesy and accommodation
and the  Indenture  Trustee shall have no liability for failure to delivery such
notice or document to any Rating Agency.

Section 8.04  SEVERABILITY  OF PROVISIONS.  If any one or more of the covenants,
agreements,  provisions or terms of this  Servicing  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  Servicing  Agreement and shall in no way affect the
validity or enforceability  of the other provisions of this Servicing  Agreement
or of the Securities or the rights of the Securityholders thereof.

                                       39
<PAGE>

Section 8.05 THIRD-PARTY  BENEFICIARIES.  This Servicing Agreement will inure to
the benefit of and be binding upon the parties hereto, the Securityholders,  the
Credit Enhancer, the Owner Trustee and their respective successors and permitted
assigns.  Except as otherwise  provided in this  Servicing  Agreement,  no other
Person will have any right or obligation hereunder.

Section  8.06  COUNTERPARTS.  This  instrument  may be executed in any number of
counterparts,  each of which so executed shall be deemed to be an original,  but
all such counterparts shall together constitute but one and the same instrument.

Section 8.07 EFFECT OF 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 8.08  TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR LIQUIDATION OF
HOME EQUITY LOANS. (a) The respective  obligations and  responsibilities  of the
Master  Servicer,  the Issuer and the  Indenture  Trustee  created  hereby shall
terminate  upon the last action  required to be taken by the Issuer  pursuant to
the Trust  Agreement  and by the  Indenture  Trustee  pursuant to the  Indenture
following the earlier of:

(i) the date on or before which the Indenture or Trust  Agreement is terminated;
or

(ii) the  purchase  by the  Master  Servicer  of all Home  Equity  Loans and all
property  acquired  in respect of any Home Equity  Loan  remaining  in the Trust
(other than the Policies).

               (b) The right of the  Master  Servicer  to  purchase  the Group I
Loans is  conditioned  upon the Pool  Balance  for Loan  Group I as of such date
(after  application of payments received during the related  Collection  Period)
being less than ten percent of the  aggregate of the Cut-off Date Loan  Balances
of the Group I Loans; provided, however, that no such purchase will be permitted
if it would  result  in a draw  under  the Group I  Policy,  unless  the  Credit
Enhancer  consents in writing to the purchase.  The right of the Master Servicer
to purchase  the Group II Loans is  conditioned  upon the Pool  Balance for Loan
Group II as of such date  (after  application  of payments  received  during the
related  Collection  Period) being less than ten percent of the aggregate of the
Cut-off Date Loan  Balances of the Group II Loans;  provided,  however,  that no
such  purchase will be permitted if it would result in a draw under the Group II
Policy,  unless the Credit  Enhancer  consents in writing to the  purchase.  The
purchase  by the  Master  Servicer  of either  the Group I Loans or the Group II
Loans and all property acquired (including REO Property) in respect of such Home
Equity  Loans shall be at a price  equal to 100% of the unpaid  Loan  Balance of
each Home  Equity  Loan in the  related  Loan  Group,  plus  accrued  and unpaid
interest on each such Home Equity Loan, at the  applicable  Net Loan Rate,  plus
the related  Policy premium rate, up to the first day of the month in which such
amounts  are  to be  distributed  to  Securityholders,  or in  the  case  of REO
Property,  the fair market value of the REO  Property,  plus any amounts due and
owing to the Credit  Enhancer  under the Insurance  Agreement (any unpaid Master
Servicing Fee shall be deemed paid at such time). The purchase price paid by the
Master  Servicer for the Group I Loans and the Group II Loans shall also include

                                       40
<PAGE>

any amounts owed to the Trust by Residential Funding pursuant to the penultimate
sentence of the second  paragraph of Section  3.1(d) of the Purchase  Agreement,
that remain unpaid on the date of such  purchase.  If such right is exercised by
the Master  Servicer,  the Master  Servicer shall deposit the amount  calculated
pursuant to this Section  8.08(b) with the Indenture  Trustee for deposit in the
Payment Account and, upon the receipt of such deposit,  the Indenture Trustee or
Custodian shall release to the Master Servicer, the files pertaining to the Home
Equity Loans being purchased.

               (c) In addition to the  foregoing,  on any Payment  Date on which
the Pool Balance of a Loan Group (after  application of payment  received during
the related  Collection Period) is less than ten percent of the aggregate of the
Cut-off  Date Loan  Balances  of the Home Equity  Loans in such Loan Group,  the
Master  Servicer  shall have the right,  at its option,  to purchase the related
Notes in whole,  but not in part, at a price equal to the  outstanding  Security
Balance of the related Notes (other than the Class A-I-IO Notes) plus the sum of
Interest  Distribution  Amount thereon for the related  Interest  Period and any
previously  unpaid  Interest  Distribution  Amount,  plus any amounts due to the
Credit  Enhancer under the Insurance  Agreement.  Any such purchase of the Class
A-I-IO Notes as discussed  above will be made at a price equal to the sum of the
interest accrued thereon during the related Interest Period; provided,  however,
that no such  purchase  will be permitted if it would result in a draw under the
related Policy,  unless the Credit Enhancer consents in writing to the purchase.
If the Master Servicer  exercises this right to purchase the outstanding Class I
Notes or Class II Notes, the Master Servicer will promptly  purchase the related
Home Equity Loans pursuant to this Section 8.08.

               (d) The  Master  Servicer,  at its  expense,  shall  prepare  and
deliver to the  Indenture  Trustee  for  execution,  at the time the Home Equity
Loans are to be released to the Master Servicer, appropriate documents assigning
each such Home  Equity  Loan from the  Indenture  Trustee  or the  Issuer to the
Master Servicer or the appropriate party.

Section 8.09 CERTAIN MATTERS AFFECTING THE INDENTURE  TRUSTEE.  For all purposes
of this Servicing  Agreement,  in the performance of any of its duties or in the
exercise of any of its powers hereunder,  the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.

Section  8.10 OWNER  TRUSTEE  NOT LIABLE FOR  RELATED  DOCUMENTS.  The  recitals
contained  herein shall be taken as the  statements  of the  Depositor,  and the
Owner Trustee assumes no responsibility for the correctness  thereof.  The Owner
Trustee  makes no  representations  as to the  validity or  sufficiency  of this
Servicing  Agreement,  of any Basic Document or of the Certificates  (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability  with  respect to the  sufficiency  of the Owner  Trust  Estate or its
ability to generate the payments to be distributed to  Certificateholders  under
the Trust  Agreement or the  Noteholders  under the  Indenture,  including,  the
compliance  by the  Depositor or the Seller with any warranty or  representation
made under any Basic Document or in any related  document or the accuracy of any
such warranty or representation,  or any action of the Certificate Paying Agent,
the  Certificate  Registrar or the  Indenture  Trustee  taken in the name of the
Owner Trustee.

                                       41
<PAGE>

        IN WITNESS WHEREOF,  the Master Servicer,  the Indenture Trustee and the
Issuer  have  caused  this  Servicing  Agreement  to be duly  executed  by their
respective  officers or  representatives  all as of the day and year first above
written.

                                 RESIDENTIAL FUNDING CORPORATION,
                                 as Master Servicer

                                 By:
                                      --------------------------------------
                                 Name:  Lisa R. Lundsten
                                 Title:    Managing Director

                                 HOME EQUITY LOAN TRUST 2003-HS3

                                 By:  Wilmington Trust Company, not in its
                                      individual capacity but solely as Owner
                                      Trustee

                                 By:
                                      --------------------------------------
                           Name:
                          Title:

                                 JPMORGAN CHASE BANK,
                                 as Indenture Trustee

                                 By:
                                      --------------------------------------
                           Name:
                          Title:

                                       42
<PAGE>

                                       A-1
                                    EXHIBIT A

                            HOME EQUITY LOAN SCHEDULE

                           TO BE PROVIDED UPON REQUEST

                                       43
<PAGE>

                                    EXHIBIT B

                            LIMITED POWER OF ATTORNEY

                         KNOW ALL MEN BY THESE PREMISES:

        That  JPMorgan  Chase  Bank,  as  Indenture   Trustee  (the   "Indenture
Trustee"),  under the Indenture (the "Indenture") between Home Equity Loan Trust
2003-HS3 and the Indenture Trustee, a national banking association organized and
existing  under the laws of the  State of New York,  and  having  its  principal
office located at 4 New York Plaza,  in the City of New York in the State of New
York,  hath made,  constituted  and appointed,  and does by these presents make,
constitute and appoint Residential Funding Corporation,  a corporation organized
and  existing  under  the laws of the  State of  Delaware,  its true and  lawful
Attorney-in-Fact,  with full power and authority to sign, execute,  acknowledge,
deliver, file for record, and record any instrument on its behalf and to perform
such  other  act or acts as may be  customarily  and  reasonably  necessary  and
appropriate to effectuate the following  enumerated  transactions  in respect of
any of the  mortgages  or deeds of trust  (the  "Mortgages"  and the  "Deeds  of
Trust", respectively) creating a trust or second lien or an estate in fee simple
interest  in real  property  securing a Home Equity  Loan and  promissory  notes
secured  thereby (the "Mortgage  Notes") for which the  undersigned is acting as
Indenture Trustee for various Securityholders  (whether the undersigned is named
therein  as  mortgagee  or  beneficiary  or has  become  mortgagee  by virtue of
Endorsement  of the Mortgage Note secured by any such Mortgage or Deed of Trust)
and for which  Residential  Funding  Corporation  is  acting as master  servicer
pursuant  to a  Servicing  Agreement,  dated  as  of  September  29,  2003  (the
"Servicing Agreement").

        This  appointment  shall apply only to transactions  which the Indenture
Trustee is authorized to enter into under the  Indenture,  but in no event shall
apply to any transactions other than the following enumerated transactions only:

1. The  modification or re-recording of a Mortgage or Deed of Trust,  where said
modification  or  re-recording  is for the purpose of correcting the Mortgage or
Deed of Trust to conform same to the original  intent of the parties  thereto or
to correct  title errors  discovered  after such title  insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.

2. The  subordination  of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company or a government  agency or unit with powers
of eminent domain; this section shall include, without limitation, the execution
of partial  satisfactions/releases,  partial  reconveyances  or the execution of
requests to trustees to accomplish same.

3. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of  foreclosure,  or the  completion  of judicial  or  non-judicial
foreclosure or termination,  cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:

        a. The  substitution  of trustee(s)  serving  under a Deed of Trust,  in
        accordance with state law and the Deed of Trust;

                                       44
<PAGE>

        b. Statements of breach or non-performance;

        c. Notices of default;

        d.  Cancellations/rescissions  of notices of default  and/or  notices of
        sale;

        e. The taking of a deed in lieu of foreclosure; and

        f. Such other  documents and actions as may be necessary under the terms
        of the Mortgage,  Deed of Trust or state law to  expeditiously  complete
        said transactions.

4. The conveyance of the properties to the mortgage  insurer,  or the closing of
the title to the property to be acquired as real estate owned,  or conveyance of
title to real estate owned.

5. The completion of loan assumption agreements.

6.  The  full  satisfaction/release  of a  Mortgage  or  Deed of  Trust  or full
reconveyance upon payment and discharge of all sums secured thereby,  including,
without limitation, cancellation of the related Mortgage Note.

7. The  assignment  of any  Mortgage or Deed of Trust and the  related  Mortgage
Note,  in  connection  with the  repurchase  of the Home Equity Loan secured and
evidenced  thereby  pursuant  to  the  requirements  of  a  Residential  Funding
Corporation Seller Contract, including, with limitation, by reason of conversion
of an adjustable rate mortgage loan from a variable rate to a fixed rate.

8. The full assignment of a Mortgage or Deed of Trust upon payment and discharge
of all  sums  secured  thereby  in  conjunction  with the  refinancing  thereof,
including, without limitation, the endorsement of the related Mortgage Note.

9. The  modification or re-recording of a Mortgage or Deed of Trust,  where said
modification or re-recording is for the purpose of any modification  pursuant to
Section 3.01 of the Servicing Agreement.

10. The  subordination  of the lien of a Mortgage  or Deed of Trust,  where said
subordination is in connection with any modification pursuant to Section 3.01 of
the Servicing Agreement, and the execution of partial  satisfactions/releases in
connection with such same Section 3.01.

The undersigned gives said  Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact  shall lawfully do or cause
to be done by authority hereof.

                                       45
<PAGE>

Third  parties  without  actual  notice may rely upon the  exercise of the power
granted  under this Limited  Power of Attorney;  and may be satisfied  that this
Limited Power of Attorney  shall  continue in full force and effect has not been
revoked  unless an  instrument  of  revocation  has been made in  writing by the
undersigned.

                                            JPMORGAN  CHASE  BANK,  not  in  its
                                            individual  capacity,  but solely as
                                            Indenture    Trustee    under    the
                                            Indenture

                                            By:
                                                 ------------------------------
                                      Name:
                                     Title:

STATE OF              )

                      SS.

COUNTY OF             )

        On this th day of , 2003,  before me the  undersigned,  Notary Public of
said State,  personally  appeared  personally  known to me to be duly authorized
officers  of  JPMorgan  Chase  Bank that  executed  the  within  instrument  and
personally  known to me to be the persons who executed the within  instrument on
behalf of  JPMorgan  Chase  Bank  therein  named,  and  acknowledged  to me such
JPMorgan Chase Bank executed the within instrument pursuant to its by-laws.

                                            WITNESS my hand and official seal.

                                            Notary Public in and for the
                                    State of
After recording, please mail to:

Attn:

                                       46
<PAGE>

                                    EXHIBIT C

                           FORM OF REQUEST FOR RELEASE

DATE:

TO:

Re:     REQUEST FOR RELEASE OF DOCUMENTS

In connection with your  administration of the Home Equity Loans, we request the
release of the Mortgage File described below.

Servicing Agreement Dated:

Series #:

Account #:

Pool #:

Loan #:

Borrower Name(s):

Reason for Document Request: (circle one)   Home Equity Loan     Prepaid in Full

                          Home Equity Loan Repurchased

"We hereby  certify  that all amounts  received or to be received in  connection
with such  payments  which are required to be deposited  have been or will be so
deposited as provided in the Servicing Agreement."

                         Residential Funding Corporation

                              Authorized Signature
................................................................................

TO CUSTODIAN/INDENTURE  TRUSTEE:  Please acknowledge this request, and check off
documents  being  enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
               Enclosed Documents:          [  ]   Promissory Note
                                            [  ] Mortgage or Deed of Trust
                                            [  ] Assignment(s) of Mortgage or
                                                 Deed of Trust
                                            [  ] Title Insurance Policy
                                            [  ] Other:

Name
Title
Date

                                       47
<PAGE>

                                       D-1
                                    EXHIBIT D

                 FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF
                                HOME EQUITY LOAN
                                                              , 20
                                                   -----------    ----

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, Minnesota 55437

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York  10004

Attention:  Residential Funding Corporation Series 2003-HS3

                      Re:    Home Equity Loan Pass-Through Certificates,
                             Series 2003-HS3, Assignment of Home Equity Loan

Ladies and Gentlemen:

               This letter is delivered to you in connection with the assignment
by __________ (the  "Indenture  Trustee") to (the "Lender") of (the "Home Equity
Loan")  pursuant to Section  3.05 of the  Servicing  Agreement  (the  "Servicing
Agreement"),  dated as of  September  1,  2003  among  Home  Equity  Loan  Trust
2003-HS3, as issuer,  Residential Funding Corporation,  as master servicer,  and
the Indenture  Trustee.  All terms used herein and not  otherwise  defined shall
have the  meanings  set forth in the  Servicing  Agreement.  The  Lender  hereby
certifies,  represents and warrants to, and covenants  with, the Master Servicer
and the Indenture Trustee that:

               (i) the Home Equity Loan is secured by Mortgaged Property located
in a jurisdiction  in which an assignment in lieu of satisfaction is required to
preserve lien priority,  minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;

               (ii) the substance of the assignment is, and is intended to be, a
refinancing  of such Home Equity Loan and the form of the  transaction is solely
to comply with, or facilitate the transaction under, such local laws;

               (iii) the Home Equity Loan following the proposed assignment will
be modified to have a rate of interest at least 0.25 percent  below or above the
rate of interest on such Home Equity Loan prior to such proposed assignment; and

               (iv) such  assignment is at the request of the borrower under the
related Home Equity Loan.

                                            Very truly yours,

                                    (Lender)

                                            By:
                                               --------------------------------
                                      Name:
                                               Title:

                                       48
<PAGE>

                                    EXHIBIT E

                         FORM OF FORM 10-K CERTIFICATION

        I, [identify the certifying individual], certify that:

        1. I have  reviewed  the annual  report on Form 10-K for the fiscal year
[____], and all reports on Form 8-K containing distribution or servicing reports
filed in respect of periods  included in the year covered by that annual report,
of the trust (the "Trust") created pursuant to the Trust Agreement,  dated as of
June [19],  2003 between the Depositor and Wilmington  Trust  Company,  as owner
trustee  (the  "Owner  Trustee"),  as amended  and  restated  by the Amended and
Restated Trust  Agreement,  dated as of September 29, 2003 between the Depositor
and the Owner  Trustee  (the "Trust  Agreement").  [The Home  Equity  Loans were
serviced  by  the  Master  Servicer  pursuant  to  a  Servicing  Agreement  (the
"Servicing  Agreement"),  dated as of  September  29,  2003,  among  the  Master
Servicer, the Issuer and the Indenture Trustee. ]

        2. Based on my knowledge,  the information in these reports,  taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a  material  fact  necessary  to make  the  statements  made,  in  light  of the
circumstances  under which such  statements  were made, not misleading as of the
last day of the period covered by this annual report;

        3. Based on my  knowledge,  the  servicing  information  required  to be
provided to the  Indenture  Trustee by the Master  Servicer  under the Servicing
Agreement for inclusion in these reports is included in these reports;

        4. I am responsible for reviewing the activities performed by the Master
Servicer  under the  Servicing  Agreement  and based upon my  knowledge  and the
annual compliance review required under the Servicing Agreement,  and, except as
disclosed in the reports,  the Master  Servicer has  fulfilled  its  obligations
under the Servicing Agreement; and

        5. The reports  disclose all  significant  deficiencies  relating to the
Master Servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public  accountant,  after conducting a review
in compliance with the Uniform Single  Attestation  Program for Mortgage Bankers
as set forth in the Servicing Agreement, that is included in these reports.

        In giving the  certifications  above,  I have  reasonably  relied on the
information provided to me by the following unaffiliated parties: [the Indenture
Trustee].

Date:_______________________

____________________________*
Name:
Title:

     *    to be  signed  by the  senior  officer  in  charge  of  the  servicing
          functions of the Master Servicer

                                       49
<PAGE>

                                    EXHIBIT F

                   [FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE]

        The  undersigned,  a  Responsible  Officer of  JPMorgan  Chase Bank (the
"Indenture Trustee") certifies that:

        (a) The Indenture  Trustee has performed all of the duties  specifically
required  to be  performed  by it pursuant to the  provisions  of the  Servicing
Agreement  dated as of September 29, 2003 (the  "Agreement")  among  Residential
Funding  Corporation,  as master servicer,  Home Equity Loan Trust 2003-HS3,  as
issuer,  and the Indenture  Trustee in  accordance  with the standards set forth
therein.

        (b) Based on my  knowledge,  the  information  that is  provided  by the
Indenture Trustee pursuant to Section 4.01(b)(I) of the Agreement is accurate as
of the last day of the 20[ ] calendar year.

        Capitalized  terms used and not defined  herein  shall have the meanings
given such terms in the Agreement.

     IN WITNESS WHEREOF,  I have duly executed this certificate as of _________,
20__.

                                      Name:___________________
                                      Title:

                                       50
<PAGE>EXECUTION CPOPY

                RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.

                                  as Depositor

                                       and

                            WILMINGTON TRUST COMPANY

                                as Owner Trustee

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

                      AMENDED AND RESTATED TRUST AGREEMENT

                         Dated as of September 29, 2003

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

                      Home Equity Loan-Backed Certificates,
                                 Series 2003-HS3

<PAGE>

<TABLE>
<CAPTION>

                                Table of Contents

Section
Page
                                       ARTICLE 1

                                      Definitions

<S>     <C>                                                                                <C>
Section 1.01.     Definitions...............................................................1
Section 1.02.     Other Definitional Provisions.............................................1

                                      ARTICLE II
                                     Organization

Section 2.01.     Name......................................................................2
Section 2.02.     Office....................................................................2
Section 2.03.     Purposes and Powers.......................................................2
Section 2.04.     Appointment of Owner Trustee..............................................3
Section 2.05.     Initial Capital Contribution of Owner Trust Estate........................3
Section 2.06.     Declaration of Trust......................................................3
Section 2.07.     Liability of the Holders of the Certificates..............................4
Section 2.08.     Title to Trust Property...................................................4
Section 2.09.     Situs of Trust............................................................4
Section 2.10.     Representations and Warranties of the Depositor...........................5
Section 2.11.     Payment of Trust Fees.....................................................5

                                      ARTICLE III
                   Conveyance Of The Home Equity Loans; Certificates

Section 3.01.     Conveyance of The Home Equity Loans.......................................6
Section 3.02.     Initial Ownership.........................................................6
Section 3.03.     The Certificates..........................................................6
Section 3.04.     Authentication of Certificates............................................6
Section 3.05.     Registration of and Limitations on Transfer And Exchange of
                  Certificates..............................................................7
Section 3.06.     Mutilated, Destroyed, Lost or Stolen Certificates........................12
Section 3.07.     Persons Deemed Certificateholders........................................13
Section 3.08.     Access to List of Certificateholders' Names And Addresses................13
Section 3.09.     Maintenance of Office or Agency..........................................13
Section 3.10.     Certificate Paying Agent.................................................13
Section 3.11.     Cooperation..............................................................15
Section 3.12.     Additional Certificate Security Balances Upon Issuance of Capped
                  Funding Notes............................................................15
Section 3.13.     Subordination............................................................16
Section 3.14.     No Priority Among Certificates...........................................16

                                      ARTICLE IV
                         Authority And Duties Of Owner Trustee

Section 4.01.     General Authority........................................................16
Section 4.02.     General Duties...........................................................17

                                        i

<PAGE>

Section 4.03.     Action Upon Instruction..................................................17
Section 4.04.     No Duties Except as Specified Under Specified Documents or In
                  Instructions.............................................................17
Section 4.05.     Restrictions.............................................................18
Section 4.06.     Prior Notice To Certificateholders and The Credit Enhancer With
                  Respect To Certain Matters...............................................18
Section 4.07.     Action by Certificateholders with Respect to Certain Matters.............19
Section 4.08.     Action By Certificateholders with Respect to Bankruptcy..................19
Section 4.09.     Restrictions on Certificateholders' Power................................19
Section 4.10.     Majority Control.........................................................19
Section 4.11.     Doing Business In Other Jurisdictions....................................19
Section 4.12.     Removal of Home Equity Loans.............................................20

                                       ARTICLE V
                              Application Of Trust Funds

Section 5.01.     Distributions............................................................20
Section 5.02.     Method Of Payment........................................................22
Section 5.03.     Signature On Returns.....................................................23
Section 5.04.     Statements To Certificateholders.........................................23
Section 5.05.     Tax Reporting............................................................23
Section 5.06.     Reports to the Master Servicer...........................................23
Section 5.07      Derivative Contracts.....................................................23

                                      ARTICLE VI
                             Concerning The Owner Trustee

Section 6.01.     Acceptance of Trusts And Duties..........................................24
Section 6.02.     Furnishing of Documents..................................................25
Section 6.03.     Representations and Warranties...........................................26
Section 6.04.     Reliance; Advice of Counsel..............................................26
Section 6.05.     Not Acting in Individual Capacity........................................27
Section 6.06.     Owner Trustee Not Liable for Certificates or Related Documents...........27
Section 6.07.     Owner Trustee May Own Certificates and Notes.............................27

                                      ARTICLE VII
                             Compensation Of Owner Trustee

Section 7.01.     Owner Trustee's Fees And Expenses........................................28
Section 7.02.     Indemnification..........................................................28

                                     ARTICLE VIII
                            Termination of Trust Agreement

Section 8.01.     Termination of Trust Agreement...........................................29
Section 8.02.     Additional Termination Requirements......................................30

                                        ii

<PAGE>

                                      ARTICLE IX
                Successor Owner Trustees and Additional Owner Trustees

Section 9.01.     Eligibility Requirements for Owner Trustee...............................31
Section 9.02.     Replacement of Owner Trustee.............................................31
Section 9.03.     Successor Owner Trustee..................................................32
Section 9.04.     Merger or Consolidation of Owner Trustee.................................32
Section 9.05.     Appointment of Co-Trustee or Separate Trustee............................32

                                       ARTICLE X
                                     Miscellaneous

Section 10.01.    Amendments...............................................................34
Section 10.02.    No Legal Title to Owner Trust Estate.....................................35
Section 10.03.    Limitations on Rights of Others..........................................35
Section 10.04.    Notices..................................................................35
Section 10.05.    Severability.............................................................36
Section 10.06.    Separate Counterparts....................................................36
Section 10.07.    Successors and Assigns...................................................36
Section 10.08.    No Petition..............................................................36
Section 10.09.    No Recourse..............................................................36
Section 10.10.    Headings.................................................................37
Section 10.11.    Governing Law............................................................37
Section 10.12.    Integration..............................................................37
Section 10.13.    Rights of Credit Enhancer to Exercise Rights of Certificateholders.......37

Signatures

EXHIBIT

Exhibit A - ...Form of Class SB Certificate                                            A-1
Exhibit B - ...Certificate of Trust of Home Equity Loan Trust 2003-HS3                 B-1
Exhibit C - ...Form of 144A Investment Representation                                  C-1
Exhibit D - ...Form of Investor Representation Letter                                  D-1
Exhibit E -  ..Form of Transferor Representation Letter                                E-1
Exhibit F - ...Form of Certificate of Non-Foreign Status                               F-1
Exhibit G - ...Form of ERISA Representation Letter                                     G-1
Exhibit H -    Form of Representation Letter                                           H-1
Exhibit I  -  .Form of Class R Certificates                                            I-1
Exhibit J-1  - Form of Transfer Affidavit and Agreement                                J-1-1
Exhibit J-2  - Form of Transferor Certificate                                          J-2-1
</TABLE>

                                        iii

                                       76
<PAGE>

        This Amended and Restated  Trust  Agreement,  dated as of September  29,
2003 (as amended from time to time, this "Trust Agreement"), between RESIDENTIAL
FUNDING MORTGAGE SECURITIES II, INC., a Delaware corporation,  as depositor (the
"Depositor") and WILMINGTON TRUST COMPANY,  a Delaware banking  corporation,  as
owner trustee (the "Owner Trustee"),

                                WITNESSETH THAT:

        WHEREAS,  the  Depositor  and the  Owner  Trustee  entered  into a trust
agreement  dated as of June 19,  2003,  in  connection  with the  formation of a
Delaware statutory trust (the "Original Trust Agreement"); and

        WHEREAS,  the  Depositor and the Owner Trustee wish to amend and restate
the Original Trust Agreement.

        NOW,  THEREFORE,  in  consideration  of  the  mutual  agreements  herein
contained, the Depositor and the Owner Trustee agree as follows:

                                    ARTICLE I

                                   Definitions

        Section  1.01.  Definitions.  For all purposes of this Trust  Agreement,
except as otherwise  expressly  provided herein or unless the context  otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A to the Indenture  dated  September 29, 2003
(the  "Indenture"),  between  Home Equity Loan Trust  2003-HS3,  as issuer,  and
JPMorgan  Chase Bank, as indenture  trustee.  All other  capitalized  terms used
herein shall have the meanings specified herein.

        Section 1.02. Other Definitional Provisions.
                      -----------------------------

        (a) All terms  defined in this Trust  Agreement  shall have the  defined
meanings  when  used in any  certificate  or other  document  made or  delivered
pursuant hereto unless otherwise defined therein.

        (b) As used in this  Trust  Agreement  and in any  certificate  or other
document  made or delivered  pursuant  hereto or thereto,  accounting  terms not
defined in this Trust  Agreement or in any such  certificate or other  document,
and  accounting  terms  partly  defined in this Trust  Agreement  or in any such
certificate  or  other  document  to the  extent  not  defined,  shall  have the
respective   meanings  given  to  them  under  generally   accepted   accounting
principles. To the extent that the definitions of accounting terms in this Trust
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms  under  generally  accepted  accounting  principles,  the
definitions  contained  in this Trust  Agreement or in any such  certificate  or
other document shall control.

        (c) The words  "hereof,"  "herein,"  "hereunder"  and  words of  similar
import when used in this Trust  Agreement shall refer to this Trust Agreement as
a whole and not to any particular  provision of this Trust  Agreement;  Article,

                                       1
<PAGE>

Section and Exhibit references  contained in this Trust Agreement are references
to  Articles,  Sections  and  Exhibits  in or to  this  Trust  Agreement  unless
otherwise  specified;   the  term  "including"  shall  mean  "including  without
limitation";  and the term "proceeds" shall have the meaning ascribed thereto in
the UCC.

        (d) The definitions  contained in this Trust Agreement are applicable to
the singular as well as the plural  forms of such terms and to the  masculine as
well as to the feminine and neuter genders of such terms.

        (e) Any agreement,  instrument or statute  defined or referred to herein
or in any instrument or certificate  delivered in connection herewith means such
agreement,  instrument  or statute  as from time to time  amended,  modified  or
supplemented and includes (in the case of agreements or instruments)  references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

                                   ARTICLE II

                                  Organization

        Section  2.01.  Name.  The trust created  hereby (the "Trust")  shall be
known as "Home Equity Loan Trust  2003-HS3," in which name the Owner Trustee may
conduct  the  business  of the  Trust,  make and  execute  contracts  and  other
instruments on behalf of the Trust and sue and be sued.

        Section  2.02.  Office.  The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the  Certificateholders,
the Credit Enhancer and the Depositor.

        Section 2.03. Purposes and Powers. The purpose of the Trust is to engage
in the following activities:

        (a) to issue the Notes  pursuant to the Indenture  and the  Certificates
pursuant to this Trust Agreement and to sell the Notes and the Certificates;

        (b) to  purchase  the Home Equity  Loans and to pay the  organizational,
start-up and transactional expenses of the Trust;

        (c) to assign, grant, transfer,  pledge and convey the Home Equity Loans
pursuant  to  the  Indenture  and  to  hold,   manage  and   distribute  to  the
Certificateholders pursuant to Section 5.01 any portion of the Home Equity Loans
released from the Lien of, and remitted to the Trust pursuant to the Indenture;

        (d) to enter into and perform its obligations  under the Basic Documents
to which it is to be a party;

        (e) to engage in those activities,  including  entering into agreements,
that are  necessary,  suitable or convenient to accomplish  the foregoing or are
incidental thereto or connected  therewith,  including,  without limitation,  to
accept  additional  contributions  of equity that are not subject to the Lien of
the Indenture; and

                                       2
<PAGE>

        (f) subject to compliance  with the Basic  Documents,  to engage in such
other activities as may be required in connection with conservation of the Owner
Trust Estate and the making of distributions to the  Certificateholders  and the
Noteholders.

The Trust is hereby authorized to engage in the foregoing activities.  The Trust
shall not engage in any activity other than in connection  with the foregoing or
other than as required or authorized by the terms of this Trust Agreement or the
Basic  Documents  while  any Note is  outstanding  without  the  consent  of the
Certificateholders  of  Certificates  evidencing  a  majority  of the  aggregate
Certificate  Percentage Interest of each Class of Certificates,  the Noteholders
of Notes representing a majority of the aggregate Security Balances of the Notes
and the Indenture Trustee.

        Section  2.04.  Appointment  of  Owner  Trustee.  The  Depositor  hereby
appoints  the Owner  Trustee as trustee  of the Trust  effective  as of the date
hereof, to have all the rights, powers and duties set forth herein.

        Section 2.05.  Initial Capital  Contribution of Owner Trust Estate.  The
Depositor hereby sells, assigns, transfers,  conveys and sets over to the Trust,
as of the date hereof,  the sum of $1. In  consideration  of the delivery by the
Owner Trustee, on behalf of the Trust, of the Securities to the Depositor or its
designee, upon the order of the Depositor, the Owner Trustee hereby acknowledges
receipt in trust from the Depositor,  as of the Closing Date,  and  concurrently
with the execution and delivery  hereof,  the  Depositor  does hereby  transfer,
assign,  set over and  otherwise  convey to the  Trust,  without  recourse,  but
subject to the other terms and  provisions of this Trust  Agreement,  all of the
right, title and interest of the Depositor in and to the Owner Trust Estate. The
foregoing  transfer,  assignment,  set over and conveyance  does not, and is not
intended  to,  result  in a  creation  or an  assumption  by  the  Trust  of any
obligation  of the  Depositor or any other Person in  connection  with the Trust
Estate  or under  any  agreement  or  instrument  relating  thereto,  except  as
specifically set forth herein.

        The Owner Trustee,  on behalf of the Trust,  acknowledges the conveyance
to the Trust by the  Depositor,  as of the  Closing  Date,  of the  Owner  Trust
Estate,  including all right,  title and interest of the Depositor in and to the
Owner Trust Estate.  Concurrently with such conveyance and in exchange therefor,
the Trust has pledged the Trust Estate to the Indenture Trustee and has executed
the  Certificates  and the Notes and caused  them to be duly  authenticated  and
delivered.

        Section 2.06.  Declaration of Trust.  The Owner Trustee hereby  declares
that it shall  hold the Owner  Trust  Estate in trust  upon and  subject  to the
conditions  set forth herein for the use and benefit of the  Certificateholders,
subject to the  obligations  of the Trust under the Basic  Documents.  It is the
intention  of the parties  hereto that the Trust  constitute  a statutory  trust
under the Statutory Trust Statute and that this Trust  Agreement  constitute the
governing  instrument of such statutory trust.  Effective as of the date hereof,
the Owner Trustee shall have all rights,  powers and duties set forth herein and
in the Statutory Trust Statute with respect to accomplishing the purposes of the
Trust. It is the intention of the parties hereto that, solely for federal, state

                                       3
<PAGE>

and local income and  franchise  tax  purposes,  the Trust shall be treated as a
disregarded  entity while it is wholly owned by a single person or entity,  with
the Group II Loans being treated as assets of the single  person or entity,  and
the Class II Notes  being debt of the entity  and the  provisions  of this Trust
Agreement shall be interpreted to further this intention. It is the intention of
the parties hereto that solely for federal, state and local income and franchise
tax purposes,  for so long as 100% of the Class SB-II Certificates are held by a
single  person  or  entity,  the  Trust  (other  than the  portion  of the Trust
constituting  the REMICs)  shall be treated as a  disregarded  entity,  with the
Trust Estate  being  treated as assets of the single  person or entity,  and the
Class II Notes being treated as debt of the entity,  and the  provisions of this
Trust  Agreement  shall be  interpreted  to further  this  intention.  It is the
intention  of the  parties  hereto  that,  an  election to be treated as a REMIC
("REMIC I") for  federal  income tax  purposes be made with  respect to the Home
Equity Loans in Loan Group I together with the proceeds of the Home Equity Loans
in Loan  Group I and the  proceeds  of the  Group I  Policy  on  deposit  in the
Certificate Distribution Account, the Custodial Account and the Payment Account,
for purposes of the REMIC  Provisions.  It is also the  intention of the parties
hereto that a second  election to be treated as a REMIC be made with  respect to
the REMIC I  Regular  Interests  ("REMIC  II") and that a third  election  to be
treated  as a REMIC be made  with  respect  to the  REMIC II  Regular  Interests
("REMIC III"). The Issuer will provide for the  administration of REMIC I, REMIC
II and REMIC III  pursuant  to  Article  XI of the  Indenture.  If more than one
person  owns the  Class  SB-II  Certificates,  then it is the  intention  of the
parties  hereto,  that solely for federal,  state and local income and franchise
tax  purposes  the Owner  Trust,  exclusive  of the  portion of the Owner  Trust
constituting the REMICs,  shall be treated as a partnership,  with the assets of
the partnership  being the Trust Estate,  exclusive of the assets of the REMICs,
the partners of the  partnership  being the Holders of the Group II Certificates
and the Class II Notes being debt of the  partnership and the provisions of this
Trust  Agreement  shall be  interpreted to further this  intention.  The parties
agree that, unless otherwise required by appropriate tax authorities,  the Owner
Trustee  will  file or cause  to be filed  annual  or other  necessary  returns,
reports and other forms as provided by the original Certificateholder consistent
with  the  characterization  of the  Trust  as an  entity  wholly  owned  by the
Depositor  or  an  affiliate  thereof,  or  if  two  or  more  persons  own  the
Certificates,  as a  partnership  for such tax  purposes and as provided by such
holders of Certificates.

        Section 2.07. Liability of the Holders of the Certificates.  The Holders
of the  Certificates  shall be liable for any entity level taxes  imposed on the
Trust.

        Section 2.08.  Title to Trust  Property.  Legal title to the Owner Trust
Estate  shall be vested at all times in the  Trust as a  separate  legal  entity
except where  applicable law in any  jurisdiction  requires title to any part of
the Owner  Trust  Estate to be vested in a trustee  or  trustees,  in which case
title shall be deemed to be vested in the Owner Trustee,  a co-trustee  and/or a
separate trustee, as the case may be.

        Section 2.09. Situs of Trust. The Trust will be located and administered
in the State of Delaware.  All bank accounts  maintained by the Owner Trustee on
behalf of the Trust  shall be located in the State of  Delaware  or the State of
New  York.  The Trust  shall not have any  employees  in any  state  other  than
Delaware;  provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having  employees  within or without the State of Delaware or
taking  actions  outside the State of  Delaware in order to comply with  Section
2.03.  Payments will be received by the Trust only in Delaware or New York,  and
payments  will be made by the Trust  only from  Delaware  or New York.  The only
office of the Trust will be at the Corporate Trust Office in Delaware.

                                       4
<PAGE>

        Section  2.10.  Representations  and  Warranties of the  Depositor.  The
Depositor hereby represents and warrants to the Owner Trustee that:

               (a) The  Depositor is duly  organized  and validly  existing as a
        corporation  in good  standing  under the laws of the State of Delaware,
        with  power and  authority  to own its  properties  and to  conduct  its
        business as such  properties  are  currently  owned and such business is
        presently conducted.

               (b) The  Depositor is duly  qualified to do business as a foreign
        corporation in good standing and has obtained all necessary licenses and
        approvals in all  jurisdictions  in which the  ownership or lease of its
        property   or  the  conduct  of  its   business   shall   require   such
        qualifications  and in which the  failure  to so  qualify  would  have a
        material adverse effect on the business, properties, assets or condition
        (financial  or other) of the  Depositor and the ability of the Depositor
        to perform under this Trust Agreement.

               (c) The  Depositor  has the power and  authority  to execute  and
        deliver this Trust  Agreement and to carry out its terms;  the Depositor
        has full power and  authority to sell and assign the property to be sold
        and  assigned to and  deposited  with the Trust as part of the Trust and
        the Depositor has duly  authorized  such sale and assignment and deposit
        to the  Trust by all  necessary  corporate  action;  and the  execution,
        delivery  and  performance  of  this  Trust  Agreement  have  been  duly
        authorized by the Depositor by all necessary corporate action.

               (d) The  consummation  of the  transactions  contemplated by this
        Trust  Agreement and the fulfillment of the terms hereof do not conflict
        with,  result in any material  breach of any of the terms and provisions
        of, or constitute  (with or without  notice or lapse of time) a material
        default under, the articles of incorporation or bylaws of the Depositor,
        or any material  indenture,  agreement or other  instrument to which the
        Depositor is a party or by which it is bound; nor result in the creation
        or  imposition  of any Lien upon any of its  properties  pursuant to the
        terms of any such indenture,  agreement or other instrument  (other than
        pursuant to the Basic Documents); nor violate any law or, to the best of
        the Depositor's  knowledge,  any order, rule or regulation applicable to
        the Depositor of any court or of any federal or state  regulatory  body,
        administrative  agency  or  other  governmental  instrumentality  having
        jurisdiction over the Depositor or its properties.

        Section  2.11.  Payment of Trust Fees.  The Owner  Trustee shall pay the
Trust's  fees and  expenses  incurred  with  respect to the  performance  of the
Trust's duties under the Indenture.

                                       5
<PAGE>

                                   ARTICLE III

                      Conveyance of the Home Equity Loans; Certificates

        Section  3.01.  Conveyance  of the Home  Equity  Loans.  The  Depositor,
concurrently  with the  execution  and delivery  hereof,  does hereby  transfer,
convey,  sell and assign to the Trust, on behalf of the Holders of the Notes and
the Certificates and the Credit Enhancer, without recourse, all its right, title
and interest in and to the Home Equity Loans.  The  Depositor  will also provide
the Trust with the Group I Policy and the Group II Policy.

        The parties hereto intend that, for non-tax  purposes,  the  transaction
set forth  herein be a sale by the  Depositor  to the Trust of all of its right,
title and  interest in and to the Home  Equity  Loans.  In the event  that,  for
non-tax  purposes,  the transaction set forth herein is not deemed to be a sale,
the  Depositor  hereby  grants to the Trust a  security  interest  in all of its
right,  title  and  interest  in,  to and under  the  Owner  Trust  Estate,  all
distributions  thereon and all proceeds thereof;  and this Trust Agreement shall
constitute a security agreement under applicable law.

        Section 3.02. Initial Ownership.  Upon the formation of the Trust by the
contribution by the Depositor  pursuant to Section 2.05 and until the conveyance
of the Home  Equity  Loans  pursuant  to Section  3.01 and the  issuance  of the
Certificates, the Depositor shall be the sole Certificateholder.

        Section 3.03.  The  Certificates.  The  Certificates  shall be issued in
minimum  denominations  of a  Certificate  Percentage  Interest of 10.0000%  and
integral  multiples  of  0.0001%  in excess  thereof;  provided,  however,  that
Certificates  may be issued in minimum  denominations  of less than  10.0000% in
accordance with the provisions of Section 3.12. The Class SB-I  Certificates and
Class SB-II  Certificates  shall be issued in  substantially  the form  attached
hereto as Exhibit A. The Class R-I Certificates, Class R-II Certificates and the
Class R-III  Certificates  shall be issued in  substantially  the form  attached
hereto as Exhibit I.

        The  Certificates  shall be executed on behalf of the Trust by manual or
facsimile   signature  of  an  authorized  officer  of  the  Owner  Trustee  and
authenticated in the manner provided in Section 3.04.  Certificates  bearing the
manual or facsimile  signatures of  individuals  who were, at the time when such
signatures  shall have been affixed,  authorized to sign on behalf of the Trust,
shall be validly  issued and  entitled to the  benefit of this Trust  Agreement,
notwithstanding  that such individuals or any of them shall 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  authentication  and  delivery  of such
Certificates. A Person shall become a Certificateholder and shall be entitled to
the rights and subject to the obligations of a Certificateholder  hereunder upon
such Person's acceptance of a Certificate duly registered in such Person's name,
pursuant to Section 3.05.

        A transferee of a Certificate shall become a Certificateholder and shall
be entitled to the rights and subject to the obligations of a  Certificateholder
hereunder upon such transferee's  acceptance of a Certificate duly registered in
such  transferee's  name pursuant to and upon satisfaction of the conditions set
forth in Section 3.05.

        Section 3.04.  Authentication  of  Certificates.  Concurrently  with the
acquisition  of the Home  Equity  Loans by the Trust,  the Owner  Trustee or the
Certificate  Paying  Agent  shall  cause  each Class of the  Certificates  in an

                                       6
<PAGE>

initial  Certificate  Percentage Interest of 100.00% to be executed on behalf of
the Trust,  authenticated  and  delivered  to or upon the  written  order of the
Depositor,  signed by its  chairman  of the  board,  its  president  or any vice
president,  without  further  corporate  action by the Depositor,  in authorized
denominations. No Certificate shall entitle its holder to any benefit under this
Trust  Agreement  or be valid for any purpose  unless there shall appear on such
Certificate a certificate of authentication  substantially in the form set forth
in  Exhibit  A or  Exhibit  I  hereto,  executed  by the  Owner  Trustee  or the
Certificate  Paying  Agent,  by  manual  signature;  such  authentication  shall
constitute  conclusive  evidence  that  such  Certificate  shall  have been duly
authenticated and delivered hereunder.  All Certificates shall be dated the date
of their authentication.

        Section 3.05.  Registration  of and Limitations on Transfer and Exchange
of Certificates.  (a) The Certificate  Registrar shall keep or cause to be kept,
at the office or agency  maintained  pursuant  to Section  3.09,  a  Certificate
Register in which,  subject to such reasonable  regulations as it may prescribe,
the Certificate Registrar shall provide for the registration of Certificates and
of transfers and exchanges of  Certificates  as herein  provided.  The Indenture
Trustee shall be the initial Certificate Registrar. If the Certificate Registrar
resigns or is removed,  the Owner Trustee shall appoint a successor  Certificate
Registrar.

        Subject  to  satisfaction  of  the  conditions  set  forth  below,  upon
surrender  for  registration  of  transfer of any  Certificate  at the office or
agency  maintained  pursuant to Section 3.09,  the Owner Trustee shall  execute,
authenticate  and  deliver  (or shall  cause the  Certificate  Registrar  as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or  transferees,  one or more new  Certificates  of the same Class in
authorized   denominations  of  a  like  aggregate  amount  dated  the  date  of
authentication by the Owner Trustee or any  authenticating  agent. At the option
of a Certificateholder,  Certificates may be exchanged for other Certificates of
the same Class of  authorized  denominations  of a like  aggregate  amount  upon
surrender of the Certificates to be exchanged at the office or agency maintained
pursuant to Section 3.09.

        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 Certificate Registrar duly executed by the Certificateholder
or  such   Certificateholder's   attorney  duly  authorized  in  writing.   Each
Certificate  surrendered  for  registration  of transfer  or  exchange  shall be
cancelled  and  subsequently   disposed  of  by  the  Certificate  Registrar  in
accordance with its customary practice.

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

        Except as described below, each holder of a Class SB-II Certificate or a
Class R Certificate shall establish its non-foreign  status by submitting to the
Certificate  Paying  Agent an IRS Form W-9 and the  Certificate  of  Non-Foreign
Status (in substantially the form attached hereto as Exhibit F).

                                       7
<PAGE>

        A Class SB-II Certificate or Class R Certificate may be transferred to a
Certificateholder unable to establish its non-foreign status as described in the
preceding  paragraph  only if such  Certificateholder  provides  an  Opinion  of
Counsel,  which  Opinion  of Counsel  shall not be an expense of the Trust,  the
Owner Trustee, the Certificate  Registrar or the Depositor,  satisfactory to the
Depositor  and the Credit  Enhancer,  that such transfer (1) will not affect the
tax status of the Trust and (2) will not  adversely  affect the interests of any
Certificateholder,   Noteholder  or  the  Credit  Enhancer,  including,  without
limitation,  as a  result  of  the  imposition  of  any  United  States  federal
withholding taxes on the Trust (except to the extent that such withholding taxes
would be payable solely from amounts otherwise  distributable to the Certificate
of the  prospective  transferee).  If such  transfer  occurs  and  such  foreign
Certificateholder  becomes  subject to such United  States  federal  withholding
taxes, any such taxes will be withheld by the Indenture Trustee.  Each holder of
a Class SB-II  Certificate  or a Class R  Certificate  unable to  establish  its
non-foreign  status shall submit to the  Certificate  Paying Agent a copy of its
Form W-8 and shall resubmit such Form W-8-BEN or such successor form as required
by then-applicable regulations and shall resubmit such form every three years or
with such frequency as required by then-applicable regulations.

        (b)(i) No transfer,  sale,  pledge or other disposition of a Certificate
shall be made unless such transfer,  sale, pledge or other disposition is exempt
from the  registration  requirements  of the  Securities  Act and any applicable
state  securities  laws or is made in accordance  with said Act and laws. In the
event of any such transfer,  the  Certificate  Registrar or the Depositor  shall
prior to such  transfer  require  the  transferee  (A) to either (i)  execute an
investment  letter in substantially the form attached hereto as Exhibit C (or in
such form and substance reasonably satisfactory to the Certificate Registrar and
the Depositor)  which  investment  letters shall not be an expense of the Trust,
the Owner  Trustee,  the  Certificate  Registrar,  the  Master  Servicer  or the
Depositor  and which  investment  letter states that,  among other things,  such
transferee (a) is a "qualified  institutional buyer" as defined under Rule 144A,
acting for its own  account or the  accounts of other  "qualified  institutional
buyers"  as  defined  under  Rule  144A,  and (b) is  aware  that  the  proposed
transferor intends to rely on the exemption from registration requirements under
the Securities Act, provided by Rule 144A or (ii) (a) deliver to the Certificate
Registrar  and the Depositor a written  Opinion of Counsel  acceptable to and in
form and substance  satisfactory to the Certificate  Registrar and the Depositor
that  such  transfer  may be  made  pursuant  to an  exemption,  describing  the
applicable exemption and the basis therefor,  from said Act and laws or is being
made  pursuant to said Act and laws,  which  Opinion of Counsel  shall not be an
expense of the Trust, the Owner Trustee, the Certificate  Registrar,  the Master
Servicer or the Depositor and (b) execute a representation letter, substantially
in the form of  Exhibit  D  hereto,  and to cause the  transferor  to  execute a
representation  letter,  substantially  in the form of  Exhibit E  hereto,  each
acceptable  to  and in  form  and  substance  satisfactory  to  the  Certificate
Registrar and the Depositor  certifying  the facts  surrounding  such  transfer,
which  representation  letters  shall not be an expense of the Trust,  the Owner
Trustee, the Certificate Registrar, the Master Servicer or the Depositor and (B)
in the case of a Class SB-II  Certificate  or Class R Certificate to execute the
Certificate of Non-Foreign  Status (in substantially the form attached hereto as
Exhibit F) acceptable to and in form and substance  reasonably  satisfactory  to
the Certificate  Registrar and the Depositor,  which certificate shall not be an
expense  of the Trust,  the Owner  Trustee,  the  Certificate  Registrar  or the
Depositor.  If the  Certificateholder  is unable to  provide  a  Certificate  of
Non-Foreign Status, the Certificateholder  must provide an Opinion of Counsel as

                                       8
<PAGE>

described in the preceding paragraph.  The Certificateholder  desiring to effect
such transfer shall,  and does hereby agree to,  indemnify the Trust,  the Owner
Trustee, the Certificate Registrar, the Master Servicer, the Credit Enhancer and
the Depositor  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.

        (ii) No transfer of Certificates  or any interest  therein shall be made
to any employee benefit plan or certain other retirement plans and arrangements,
including  individual  retirement  accounts and annuities,  Keogh plans and bank
collective  investment funds and insurance  company general or separate accounts
in which such plans, accounts or arrangements are invested,  that are subject to
ERISA, or Section 4975 of the Code  (collectively,  "Plan"),  any Person acting,
directly or indirectly,  on behalf of any such Plan or any Person acquiring such
Certificates  with "plan assets" of a Plan within the meaning of the  Department
of Labor  regulation  promulgated  at 29 C.F.R.  ss.2510.3-101  ("Plan  Assets")
unless the  Depositor,  the Owner  Trustee,  the  Certificate  Registrar and the
Master Servicer are provided with an Opinion of Counsel which establishes to the
satisfaction of the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master  Servicer  that the purchase of  Certificates  is  permissible  under
applicable  law,  will not  constitute or result in any  prohibited  transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor,  the
Owner  Trustee,  the  Certificate  Registrar  or  the  Master  Servicer  to  any
obligation or liability  (including  obligations or  liabilities  under ERISA or
Section  4975 of the  Code)  in  addition  to  those  undertaken  in this  Trust
Agreement,  which Opinion of Counsel  shall not be an expense of the  Depositor,
the Owner Trustee, the Certificate Registrar or the Master Servicer. Solely with
respect to the Class SB-I Certificates or Class SB-II  Certificates,  in lieu of
such Opinion of Counsel, a Plan, any Person acting,  directly or indirectly,  on
behalf of any such Plan or any  Person  acquiring  such  Certificates  with Plan
Assets of a Plan may  provide a  certification  in the form of Exhibit G to this
Trust  Agreement,  which the  Depositor,  the  Owner  Trustee,  the  Certificate
Registrar  and the Master  Servicer  may rely upon  without  further  inquiry or
investigation.  Neither  an  Opinion  of  Counsel  nor a  certification  will be
required in connection with the initial  transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case,  the Depositor or any
affiliate thereof shall be deemed to have represented that such affiliate is not
a Plan or a Person  investing  Plan  Assets of any  Plan) and the Owner  Trustee
shall be entitled to conclusively  rely upon a representation  (which,  upon the
request  of the  Owner  Trustee,  shall be a  written  representation)  from the
Depositor of the status of such transferee as an affiliate of the Depositor.

        (iii) In  addition,  no transfer of a Class SB-II  Certificate  shall be
permitted, and no such transfer shall be registered by the Certificate Registrar
or be effective  hereunder,  unless evidenced by an Opinion of Counsel addressed
to the Certificate  Registrar and the Credit  Enhancer,  which  establishes that
such transfer or the  registration of such transfer would not cause the Trust to
be  classified  as a  publicly  traded  partnership,  by  having  more  than 100
Certificateholders  at any  time  during  the  taxable  year  of the  Trust,  an
association  taxable as a corporation,  a corporation or a taxable mortgage pool
for federal and relevant  state income tax  purposes,  which  Opinion of Counsel
shall not be an expense of the Certificate  Registrar and shall be an expense of
the proposed transferee. No Opinion of Counsel will be required if such transfer
is made to a nominee of an existing beneficial holder of a Certificate.

        (iv) In  addition,  no  transfer,  sale,  assignment,  pledge  or  other
disposition  of a  Certificate  shall be made  unless  the  proposed  transferee
executes  a  representation  letter  substantially  in the form of Exhibit D, or

                                       9
<PAGE>

substantially  in the form of  Exhibit  H  hereto,  that (1) the  transferee  is
acquiring  the  Certificate  for its own  behalf  and is not  acting as agent or
custodian for any other Person or entity in connection with such acquisition and
(2) if the  transferee is a  partnership,  grantor  trust or S  corporation  for
federal income tax purposes,  the Certificates acquired are not more than 50% of
the assets of the partnership, grantor trust or S corporation.

        (v) In  addition,  with  respect to each Class R  Certificate,  (i) 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 to have  irrevocably
authorized the  Certificate  Paying Agent or its designee under clause  (vii)(A)
below to deliver  payments to a Person  other than such Person and to  negotiate
the terms of any mandatory  sale under clause  (vii)(B) below and to execute all
instruments of transfer and to do all other things  necessary in connection with
any such sale. The rights of each Person  acquiring any Ownership  Interest in a
Class R Certificate are expressly subject to the following provisions:

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

     (B)  In connection with any proposed Transfer of any Ownership  Interest in
          a  Class  R  Certificate,  the  Certificate  Registrar  shall  require
          delivery  to it, and shall not  register  the  Transfer of any Class R
          Certificate  until its receipt of, (I) an affidavit  and  agreement (a
          "Transfer  Affidavit and  Agreement,"  in the form attached  hereto as
          Exhibit  J-1)  from the  proposed  Transferee,  in form and  substance
          satisfactory  to the Master  Servicer,  representing  and  warranting,
          among other things, that it is a Permitted Transferee,  that it is not
          acquiring  its Ownership  Interest in the Class R Certificate  that is
          the subject of the  proposed  Transfer as a nominee,  trustee or agent
          for any Person who is not a Permitted Transferee,  that for so long as
          it retains its Ownership  Interest in a Class R  Certificate,  it will
          endeavor to remain a Permitted  Transferee,  and that it has  reviewed
          the  provisions  of this  Section 3.05 and agrees to be bound by them,
          and (II) a  certificate,  in the form attached  hereto as Exhibit J-2,
          from  the  Certificateholder  of a  Class  R  Certificate  wishing  to
          transfer the Class R Certificate,  in form and substance  satisfactory
          to the Master  Servicer,  representing  and  warranting,  among  other
          things,  that no purpose  of the  proposed  Transfer  is to impede the
          assessment or collection of tax.

(C)            Notwithstanding   the  delivery  of  a  Transfer   Affidavit  and
               Agreement by a proposed  Transferee  under clause (B) above, if a
               Responsible Officer of the Certificate  Registrar who is assigned
               to  this  Agreement  has  actual   knowledge  that  the  proposed
               Transferee  is not a  Permitted  Transferee,  no  Transfer  of an
               Ownership  Interest  in a Class R  Certificate  to such  proposed
               Transferee shall be effected.

                                       10
<PAGE>

(D)            Each Person  holding or  acquiring  any  Ownership  Interest in a
               Class  R  Certificate  shall  agree  (x) to  require  a  Transfer
               Affidavit and Agreement from any other Person to whom such Person
               attempts  to  transfer  its  Ownership  Interest  in  a  Class  R
               Certificate and (y) not to transfer its Ownership Interest unless
               it provides a  certificate  to the  Certificate  Registrar in the
               form attached hereto as Exhibit J-2.

(E)            Each Person holding or acquiring an Ownership Interest in a Class
               R  Certificate,  by  purchasing  an  Ownership  Interest  in such
               Certificate,  agrees to give the  Certificate  Registrar  written
               notice that it is a  "pass-through  interest  holder"  within the
               meaning    of    Temporary    Treasury     Regulations    Section
               1.67-3T(a)(2)(i)(A)   immediately  upon  acquiring  an  Ownership
               Interest  in a Class R  Certificate,  if it is, or is  holding an
               Ownership  Interest  in a Class R  Certificate  on  behalf  of, a
               "pass-through interest holder."

        (vi) The Certificate Registrar will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and Agreement,
a certificate of the Certificateholder of a Class R Certificate  requesting such
transfer  in the  form  attached  hereto  as  Exhibit  G and all of  such  other
documents as shall have been reasonably required by the Certificate Registrar as
a condition  to such  registration.  Transfers  of the Class R  Certificates  to
Non-United States Persons and Disqualified  Organizations (as defined in Section
860E(e)(5) of the Code) are prohibited.

        (vii) (A) If any  Disqualified  Organization  shall become a holder of a
Class R  Certificate,  then the last  preceding  Permitted  Transferee  shall be
restored,  to the extent  permitted  by law,  to all rights and  obligations  as
Certificateholder  of a Class R Certificate  thereof  retroactive to the date of
registration  of such  Transfer  of such Class R  Certificate.  If a  Non-United
States  Person  shall  become a holder of a Class R  Certificate,  then the last
preceding  United  States Person shall be restored,  to the extent  permitted by
law, to all rights and obligations as Certificateholder of a Class R Certificate
thereof retroactive to the date of registration of such Transfer of such Class R
Certificate.  If a transfer of a Class R Certificate is disregarded  pursuant to
the provisions of Treasury  Regulations  Section  1.860E-1 or Section  1.860G-3,
then the last preceding  Permitted  Transferee shall be restored,  to the extent
permitted by law, to all rights and obligations as  Certificateholder of a Class
R Certificate  thereof  retroactive to the date of registration of such Transfer
of such  Class R  Certificate.  The  Certificate  Registrar  shall  be  under no
liability  to  any  Person  for  any  registration  of  Transfer  of a  Class  R
Certificate that is in fact not permitted by this Section 3.05 or for making any
payments due on such  Certificate  to the holder thereof or for taking any other
action with respect to such holder under the provisions of this Agreement.

               (B) If any purported  Transferee shall become a Certificateholder
        of a  Class R  Certificate  in  violation  of the  restrictions  in this
        Section 3.05 and to the extent that the  retroactive  restoration of the
        rights of the Certificateholder of such Class R Certificate as described
        in clause  (vii)(A)  above shall be invalid,  illegal or  unenforceable,
        then the Master  Servicer  shall have the right,  without  notice to the
        holder or any prior  holder of such  Class R  Certificate,  to sell such
        Class R Certificate  to a purchaser  selected by the Master  Servicer on
        such terms as the Master Servicer may choose. Such purported  Transferee
        shall  promptly   endorse  and  deliver  each  Class  R  Certificate  in

                                       11
<PAGE>

        accordance with the instructions of the Master Servicer.  Such purchaser
        may  be the  Master  Servicer  itself  or any  Affiliate  of the  Master
        Servicer.  The proceeds of such sale, net of the commissions  (which may
        include  commissions  payable to the Master Servicer or its Affiliates),
        expenses and taxes due, if any, will be remitted by the Master  Servicer
        to such purported Transferee. The terms and conditions of any sale under
        this clause  (vii)(B) shall be determined in the sole  discretion of the
        Master  Servicer,  and the  Master  Servicer  shall not be liable to any
        Person having an Ownership Interest in a Class R Certificate as a result
        of its exercise of such discretion.

               (viii)  The  REMIC   Administrator   shall  make   available  all
        information  necessary to compute any tax imposed (A) as a result of the
        Transfer of an Ownership Interest in a Class R Certificate to any Person
        who is a Disqualified Organization,  including the information regarding
        "excess inclusions" of such Class R Certificates required to be provided
        to the  Internal  Revenue  Service and certain  Persons as  described in
        Treasury Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B)
        as a result of any regulated investment company,  real estate investment
        trust,  common trust fund,  partnership,  trust,  estate or organization
        described in Section  1381 of the Code that holds an Ownership  Interest
        in a Class R Certificate  having as among its record holders at any time
        any Person who is a Disqualified  Organization.  Reasonable compensation
        for   providing   such   information   may  be  required  by  the  REMIC
        Administrator  before  it will  provide  such  information  to any  such
        potentially affected Person.

               (ix) The  provisions of this Section 3.05 set forth prior to this
        clause (ix) may be modified, added to or eliminated, provided that there
        shall have been delivered to the Owner Trustee the following:

                      (A) written  notification  from each Rating  Agency to the
               effect that the modification,  addition to or elimination of such
               provisions  will not cause such Rating  Agency to  downgrade  its
               then-current ratings, if any, if determined without regard to the
               Group I Policy  and  Group II  Policy,  of any Class of the Notes
               below the lower of the then-current rating or the rating assigned
               to such Notes as of the Closing  Date by such Rating  Agency,  if
               determined  without  regard  to the  Group I Policy  and Group II
               Policy; and

                      (B)  subject  to Section  11.01(f)  of the  Indenture,  an
               Officers'  Certificate  of the Master  Servicer  stating that the
               Master  Servicer has received an Opinion of Counsel,  in form and
               substance  satisfactory  to the  Master  Servicer  and the Credit
               Enhancer,  to the effect that such  modification,  addition to or
               absence of such  provisions  will not cause any portion of any of
               the  REMICs to cease to qualify as a REMIC and will not cause (x)
               any portion of any of the REMICs to be subject to an entity-level
               tax caused by the Transfer of any Class R Certificate to a Person
               that is a Disqualified Organization or (y) a Certificateholder or
               another Person to be subject to a REMIC-related tax caused by the
               Transfer  of a  Class R  Certificate  to a  Person  that is not a
               Permitted Transferee.

                                       12
<PAGE>

        Section 3.06. Mutilated,  Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate shall be surrendered to the Certificate Registrar,  or
if the Certificate  Registrar shall receive  evidence to its satisfaction of the
destruction,  loss or theft of any Certificate and (ii) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required  by them to save each of them and the Issuer from harm,  then in
the absence of notice to the  Certificate  Registrar  or the Owner  Trustee that
such  Certificate has been acquired by a bona fide purchaser,  the Owner Trustee
shall  execute on behalf of the Trust and the Owner  Trustee or the  Certificate
Paying  Agent,  as the Trust's  authenticating  agent,  shall  authenticate  and
deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen  Certificate,  a new  Certificate  of like  tenor  and  denomination.  In
connection with the issuance of any new Certificate under this Section 3.06, the
Owner  Trustee or the  Certificate  Registrar  may  require the payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection therewith.  Any duplicate Certificate issued pursuant to this Section
3.06 shall  constitute  conclusive  evidence of  ownership  in the Trust,  as if
originally  issued,  whether or not the lost,  stolen or  destroyed  Certificate
shall be found at any time.

        Section  3.07.   Persons   Deemed   Certificateholders.   Prior  to  due
presentation of a Certificate for  registration of transfer,  the Owner Trustee,
the Certificate  Registrar or any Certificate  Paying Agent may treat the Person
in whose name any Certificate is registered in the  Certificate  Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes  whatsoever,  and none of the Trust, the
Owner Trustee,  the Certificate  Registrar or any Paying Agent shall be bound by
any notice to the contrary.

        Section 3.08. Access to List of Certificateholders' Names and Addresses.
The  Certificate  Registrar  shall  furnish  or  cause  to be  furnished  to the
Depositor or the Owner Trustee,  within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Depositor or the Owner Trustee,
a list, in such form as the Depositor or the Owner Trustee,  as the case may be,
may reasonably require, of the names and addresses of the  Certificateholders as
of the most  recent  Record  Date.  Each  Holder,  by  receiving  and  holding a
Certificate,  shall be deemed to have  agreed not to hold any of the Trust,  the
Depositor,  the Certificate Registrar or the Owner Trustee accountable by reason
of the  disclosure of its name and address,  regardless of the source from which
such information was derived.

        Section 3.09.  Maintenance of Office or Agency.  The Owner  Trustee,  on
behalf of the Trust, shall maintain in the City of New York an office or offices
or agency or agencies where  Certificates may be surrendered for registration of
transfer or exchange and where  notices and demands to or upon the Owner Trustee
in respect of the Certificates and the Basic Documents may be served.  The Owner
Trustee initially designates the Corporate Trust Office of the Indenture Trustee
as its office for such  purposes.  The Owner Trustee  shall give prompt  written
notice to the Depositor,  the Credit Enhancer and the  Certificateholders of any
change in the location of the Certificate Register or any such office or agency.

        Section 3.10. Certificate Paying Agent. (a) The Certificate Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account  on  behalf  of the  Trust  in  accordance  with the  provisions  of the
Certificates  and Section 5.01 hereof from payments  remitted to the Certificate

                                       13
<PAGE>

Paying Agent by the Indenture Trustee pursuant to Section 3.05 of the Indenture.
The Trust hereby appoints the Indenture Trustee as Certificate  Paying Agent and
the Indenture Trustee hereby accepts such appointment and further agrees that it
will  be  bound  by the  provisions  of this  Trust  Agreement  relating  to the
Certificate Paying Agent and shall:

               (i) hold all sums held by it for the  payment of amounts due with
respect to the  Certificates  in trust for the benefit of the  Persons  entitled
thereto  until such sums shall be paid to such Persons or otherwise  disposed of
as herein provided;

               (ii) give the Owner Trustee notice of any default by the Trust of
which it has actual  knowledge in the making of any payment  required to be made
with respect to the Certificates;

               (iii) at any time  during the  continuance  of any such  default,
upon the  written  request  of the  Owner  Trustee,  forthwith  pay to the Owner
Trustee  on behalf  of the  Trust all sums so held in Trust by such  Certificate
Paying Agent;

               (iv) immediately resign as Certificate Paying Agent and forthwith
pay to the Owner Trustee on behalf of the Trust all sums held by it in trust for
the  payment  of  Certificates  if at any time it ceases  to meet the  standards
required  to be  met  by  the  Certificate  Paying  Agent  at  the  time  of its
appointment;

               (v) comply with all  requirements of the Code with respect to the
withholding  from any payments made by it on any  Certificates of any applicable
withholding  taxes imposed thereon and with respect to any applicable  reporting
requirements in connection therewith; and

               (vi)  deliver  to the  Owner  Trustee  a copy  of the  report  to
Certificateholders  prepared  with  respect to each  Payment  Date by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement.

        (b) The Trust may revoke  such power and remove the  Certificate  Paying
Agent  if  the  Owner  Trustee  determines  in  its  sole  discretion  that  the
Certificate Paying Agent shall have failed to perform its obligations under this
Trust  Agreement  in any  material  respect.  The  Indenture  Trustee  shall  be
permitted to resign as Certificate  Paying Agent upon 30 days' written notice to
the Owner  Trustee;  provided the Indenture  Trustee is also resigning as Paying
Agent under the Indenture at such time. In the event that the Indenture  Trustee
shall no longer be the  Certificate  Paying Agent under this Trust Agreement and
Paying Agent under the Indenture, the Owner Trustee shall appoint a successor to
act as  Certificate  Paying Agent  (which shall be a bank or trust  company) and
which shall also be the successor  Paying Agent under the  Indenture.  The Owner
Trustee shall cause such  successor  Certificate  Paying Agent or any additional
Certificate  Paying Agent  appointed by the Owner Trustee to execute and deliver
to the Owner  Trustee an instrument to the effect set forth in this Section 3.10
as it relates to the  Certificate  Paying Agent.  The  Certificate  Paying Agent
shall return all unclaimed  funds to the Trust and upon removal of a Certificate
Paying  Agent such  Certificate  Paying Agent shall also return all funds in its
possession to the Trust. The provisions of Sections 6.01, 6.04, 6.05, 6.06, 7.01
and 7.02 shall apply to the Certificate  Paying Agent to the extent  applicable.
Any  reference  in this Trust  Agreement to the  Certificate  Paying Agent shall
include any co-paying agent unless the context requires otherwise.

                                       14
<PAGE>

        (c) The  Certificate  Paying Agent shall  establish  and  maintain  with
itself the  Certificate  Distribution  Account in which the  Certificate  Paying
Agent  shall  deposit,  on the same  day as it is  received  from the  Indenture
Trustee,  each remittance  received by the Certificate Paying Agent with respect
to payments made pursuant to the Indenture.  The Certificate  Paying Agent shall
make all distributions of Certificate  Distribution Amounts on the Certificates,
from moneys on deposit in the Certificate Distribution Account.

        Section 3.11.  Cooperation.  The Owner  Trustee  shall  cooperate in all
respects  with any  reasonable  request  by the  Credit  Enhancer  for action to
preserve or enforce the Credit  Enhancer's  rights or interest  under this Trust
Agreement or the Insurance  Agreement,  consistent with this Trust Agreement and
without limiting the rights of the Certificateholders as otherwise expressly set
forth in this Trust Agreement.

        Section 3.12. Additional  Certificate Security Balances Upon Issuance of
Capped  Funding  Notes.  (a) On any date on which  Variable  Funding  Notes  are
exchanged for Capped Funding Notes pursuant to Section 4.01(d) of the Indenture,
the Security Balance of one or more Class SB-II  Certificates shall be increased
in an amount equal to the Additional  Certificate  Security  Balance as required
pursuant to the Opinion of Counsel required to be delivered  pursuant to Section
4.01(d) of the  Indenture  in  connection  with the  issuance of Capped  Funding
Notes.  In  addition,  on any  Payment  Date on which the Group II-A  Additional
Balance  Differential  for such Payment Date if added to the aggregate  Security
Balance of the Class A-II-A  Variable  Funding Notes (after  application  of any
principal  payments  to be made  thereon on such  Payment  Date) would cause the
aggregate  Security  Balance thereof to exceed the Maximum Class A-II-A Variable
Funding Balance,  then the Security Balance of one or more Certificates shall be
increased by the amount of such excess.  Similarly, on any Payment Date on which
the Group II-B Additional Balance Differential for such Payment Date if added to
the aggregate Security Balance of the Class A-II-B Variable Funding Notes (after
application  of any principal  payments to be made thereon on such Payment Date)
would cause the aggregate  Security  Balance thereof to exceed the Maximum Class
A-II-B  Variable  Funding  Balance,  then the  Security  Balance  of one or more
Certificates shall be increased by the amount of such excess.

        (b) 100.00% of the value of the Additional  Certificate Security Balance
shall be added to any Class SB-II Certificate held by the Seller or an Affiliate
thereof without the consent of the other Certificateholders; or if no such Class
SB-II  Certificate  exists,  a  new  Class  SB-II  Certificate  or  Class  SB-II
Certificates  shall be issued at the  direction  of the  Seller or an  Affiliate
thereof having in the aggregate a Security Balance equal to such 100.00% of such
value. Alternatively,  the Depositor may allocate any portion of such value to a
Class SB-II  Certificateholder other than the Depositor or an Affiliate thereof,
provided  that  such  Certificateholder  provides  its  written  consent  to the
Depositor and the Owner Trustee.

        (c) Following such increase, the Certificate Percentage Interest of each
Class SB-II Certificate  shall be recalculated,  the numerator of which shall be
the  value  thereof  including  the  respective  value  of  the  portion  of the
Additional  Certificate  Security Balance added thereto pursuant to this Section
3.12,  and the  denominator  of which  shall be the value of all the Class SB-II
Certificates  following such  increase.  The Owner Trustee shall issue new Class
SB-II Certificates with new Certificate  Percentage  Interests to each Holder of
the  Class  SB-II  Certificates,  with  such  Certificate  Percentage  Interests

                                       15
<PAGE>

calculated to four decimal places. In addition, the new Class SB-II Certificates
may be issued in minimum  denominations  of 0.0001% and  integral  multiples  of
0.0001% in excess thereof.  This subsection,  and subsections (d) and (e) below,
shall not apply in the event that any Additional Certificate Security Balance is
allocated in accordance with subsection (b) either (i) at any time when there is
only one Class SB-II  Certificateholder,  or (ii) at any time when there is more
than one Class SB-II  Certificateholder if such Additional  Certificate Security
Balance is allocated on a pro rata basis among all Class SB-II Certificates.

        (d) For  purposes  of the  foregoing,  the  "value"  of any Class  SB-II
Certificate or any Additional  Certificate  Security Balance added thereto shall
be determined by the Seller in its sole discretion based on reasonable cash flow
assumptions and valuation methods,  and any such determination  shall be binding
on the Certificateholders. If the Seller is unable to determine the "value," the
Owner  Trustee  shall  determine  the  "value"  using the same  assumptions  and
methods.

        (e) The Owner  Trustee,  the  Indenture  Trustee and the Issuer agree to
cooperate  with each  other and the  Depositor  and the  Seller  and to cause no
unreasonable  delay in adjusting  the  Certificate  Percentage  Interests of the
Class SB-II Certificates pursuant to this Section 3.12 and the issuing of Capped
Funding Notes in connection with Section 4.01(d) of the Indenture.

        Section 3.13.  Subordination.  Except as otherwise provided in the Basic
Documents,   for  so  long  as  any  Notes  are   outstanding  or  unpaid,   the
Certificateholders will generally be subordinated in right of payment, under the
Certificates or otherwise,  to payments to the  Noteholders  under, or otherwise
related to, the Indenture. If an Event of Default has occurred and is continuing
under the Indenture,  the Certificates will be fully subordinated to obligations
owing  by the  Trust  to the  Noteholders  and the  Credit  Enhancer  under,  or
otherwise  related to, the Indenture,  and no distributions  will be made on the
Certificates  until the  Noteholders  and the  Indenture  Trustee and the Credit
Enhancer have been irrevocably paid in full.

        Section 3.14. No Priority  Among  Certificates.  All  Certificateholders
shall rank equally as to amounts distributable upon the liquidation, dissolution
or winding up of the Trust, with no preference or priority being afforded to any
Certificateholders  over  any  other  Certificateholders,  except  that  amounts
distributable to the Group I Certificates will be distributed first to the Class
SB-I Certificates,  in an amount equal to the Class SB-I Distribution Amount for
such  Payment  Date and the Class  SB-I  Distribution  Amount  for any  previous
Payment Date to the extent not previously paid,  before being distributed to the
Class  R-I   Certificates,   and  amounts   distributable  to  the  Class  SB-II
Certificates will be distributed to the Class SB-II Certificates.

                                   ARTICLE IV

                      Authority and Duties of Owner Trustee

        Section 4.01.  General  Authority.  The Owner Trustee is authorized  and
directed to execute and deliver the Basic  Documents to which the Trust is to be
a party and each  certificate  or other  document  attached  as an exhibit to or

                                       16
<PAGE>

contemplated  by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument  described  herein,  in each case, in
such form as the Owner Trustee shall approve,  as evidenced  conclusively by the
Owner  Trustee's  execution  thereof.  In addition to the  foregoing,  the Owner
Trustee is obligated to take all actions  required of the Trust  pursuant to the
Basic Documents.

        Section 4.02.  General Duties. The Owner Trustee shall be responsible to
administer the Trust pursuant to the terms of this Trust Agreement and the Basic
Documents   to  which  the  Trust  is  a  party  and  in  the  interest  of  the
Certificateholders,  subject to the Basic  Documents and in accordance  with the
provisions of this Trust Agreement.

        Section 4.03.  Action upon  Instruction.  (a) Subject to this Article IV
and in accordance with the terms of the Basic Documents,  the Certificateholders
may by written  instruction  direct the Owner  Trustee in the  management of the
Trust. Such direction may be exercised at any time by written instruction of the
Certificateholders pursuant to this Article IV.

        (b)  Notwithstanding  the  foregoing,  the  Owner  Trustee  shall not be
required to take any action  hereunder or under any Basic  Document if the Owner
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such  action is  likely  to  result in  liability  on the part of the Owner
Trustee  or is  contrary  to the terms  hereof or of any  Basic  Document  or is
otherwise contrary to law.

        (c) Whenever the Owner Trustee is unable to decide  between  alternative
courses of action  permitted or required by the terms of this Trust Agreement or
under any Basic Document, or in the event that the Owner Trustee is unsure as to
the  application of any provision of this Trust  Agreement or any Basic Document
or any such provision is ambiguous as to its  application,  or is, or appears to
be, in conflict with any other applicable  provision,  or in the event that this
Trust Agreement  permits any  determination by the Owner Trustee or is silent or
is  incomplete  as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate  under the  circumstances)  to
the  Certificateholders   (with  a  copy  to  the  Credit  Enhancer)  requesting
instruction  as to the  course of action to be  adopted,  and to the  extent the
Owner  Trustee acts in good faith in  accordance  with any written  instructions
received from Holders of  Certificates  representing  a majority of the Security
Balance of each Class of Certificates,  the Owner Trustee shall not be liable on
account  of such  action  to any  Person.  If the Owner  Trustee  shall not have
received  appropriate  instruction within 10 days of such notice (or within such
shorter  period of time as reasonably  may be specified in such notice or may be
necessary under the  circumstances)  it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement or
the  Basic  Documents,  as it  shall  deem to be in the  best  interests  of the
Certificateholders,  and the Owner Trustee shall have no liability to any Person
for such action or inaction.

        Section 4.04. No Duties Except as Specified under Specified Documents or
in  Instructions.  The Owner  Trustee  shall not have any duty or  obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner  Trustee  is a party,  except as  expressly  provided  (i) in
accordance with the powers granted to and the authority conferred upon the Owner

                                       17
<PAGE>

Trustee  pursuant to this Trust  Agreement,  (ii) in  accordance  with the Basic
Documents and (iii) in accordance with any document or instruction  delivered to
the Owner Trustee pursuant to Section 4.03; and no implied duties or obligations
shall be read into this Trust Agreement or any Basic Document  against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or  continuation  statement  in any  public  office at any time or to  otherwise
perfect or maintain the  perfection of any security  interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Trust Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense,  promptly
take all action as may be necessary  to  discharge  any liens on any part of the
Owner Trust  Estate that result from  actions by, or claims  against,  the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.

        Section  4.05.  Restrictions.  (a) The Owner  Trustee shall not take any
action  (x) that is  inconsistent  with the  purposes  of the Trust set forth in
Section 2.03 or (y) that, to the actual  knowledge of the Owner  Trustee,  would
result in the Trust becoming taxable as a corporation or a taxable mortgage pool
for federal income tax purposes or would cause REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any of the Notes or Certificates are
outstanding or any  obligations  are due and owing to the Credit  Enhancer under
the  Insurance  Agreement.  The  Certificateholders  shall not  direct the Owner
Trustee to take action that would violate the provisions of this Section 4.05.

        (b) The Owner  Trustee  shall not convey or transfer  any of the Trust's
properties  or assets,  including  those  included in the Trust  Estate,  to any
person  unless  (a) it shall have  received  an Opinion of Counsel to the effect
that such  transaction will not have any material adverse tax consequence to the
Trust or any  Certificateholder  and (b) such  conveyance or transfer  shall not
violate the provisions of Section 3.16(b) of the Indenture.

        Section 4.06. Prior Notice to Certificateholders and the Credit Enhancer
with Respect to Certain  Matters.  With respect to the  following  matters,  the
Owner Trustee shall not take action  unless,  at least 30 days before the taking
of such action, the Owner Trustee shall have notified the Certificateholders and
the  Credit   Enhancer  in  writing  of  the  proposed  action  and  Holders  of
Certificates  representing  a majority of the Security  Balance  thereof and the
Credit  Enhancer  shall not have  notified the Owner Trustee in writing prior to
the 30th day after  such  notice is given that such  Certificateholders  and the
Credit Enhancer have withheld consent or provided alternative direction:

        (a) the  initiation of any claim or lawsuit by the Trust (except  claims
or lawsuits brought in connection with the collection of cash  distributions due
and owing under the Home Equity Loans) and the  compromise of any action,  claim
or  lawsuit  brought  by or  against  the  Trust  (except  with  respect  to the
aforementioned  claims or lawsuits for collection of cash  distributions due and
owing under the Home Equity Loans);

        (b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such  amendment is required to be filed under the Statutory  Trust
Statute);

                                       18
<PAGE>

        (c) the  amendment  of the  Indenture  by a  supplemental  indenture  in
circumstances where the consent of any Noteholder is required;

        (d) the  amendment  of the  Indenture  by a  supplemental  indenture  in
circumstances  where the  consent of any  Noteholder  is not  required  and such
amendment materially  adversely affects the interest of the  Certificateholders;
and

        (e) the  appointment  pursuant  to the  Indenture  of a  successor  Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Trust Agreement
of a successor  Certificate Registrar or Certificate Paying Agent or the consent
to the  assignment  by the Note  Registrar,  Paying  Agent,  Indenture  Trustee,
Certificate  Registrar or Certificate  Paying Agent of its obligations under the
Indenture or this Trust Agreement, as applicable.

        Section  4.07.  Action by  Certificateholders  with  Respect  to Certain
Matters.  The Owner Trustee shall not have the power,  except upon the direction
of  Certificateholders  evidencing  not less than a majority of the  outstanding
Security  Balance  of the  Certificates,  and with  the  consent  of the  Credit
Enhancer,  to (a) remove  the  Master  Servicer  under the  Servicing  Agreement
pursuant  to Section  7.01  thereof or (b) except as  expressly  provided in the
Basic  Documents,  sell the Home  Equity  Loans  after  the  termination  of the
Indenture. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by Certificateholders  evidencing
not less than a majority of the outstanding Security Balance of the Certificates
and with the consent of the Credit Enhancer.

        Section 4.08. Action by  Certificateholders  with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy  relating to the Trust  without the unanimous  prior  approval of all
Certificateholders  and with the consent of the Credit Enhancer and the delivery
to the Owner Trustee by each such  Certificateholder of a certificate certifying
that such Certificateholder reasonably believes that the Trust is insolvent.

        Section   4.09.   Restrictions   on   Certificateholders'   Power.   The
Certificateholders shall not direct the Owner Trustee to take or to refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Trust Agreement or any of the Basic
Documents or would be contrary to Section  2.03,  nor shall the Owner Trustee be
obligated to follow any such direction, if given.

        Section 4.10. Majority Control. Except as expressly provided herein, any
action that may be taken by the  Certificateholders  under this Trust  Agreement
may be taken by the  Certificateholders  evidencing  not less than a majority of
the  outstanding  Security  Balance  of the  Certificates.  Except as  expressly
provided herein, any written notice of the Certificateholders delivered pursuant
to this  Trust  Agreement  shall be  effective  if signed by  Certificateholders
evidencing not less than a majority of the outstanding  Security  Balance of the
Certificates at the time of the delivery of such notice.

        Section 4.11.  Doing  Business in Other  Jurisdictions.  Notwithstanding
anything contained herein to the contrary,  neither Wilmington Trust Company nor
the Owner Trustee shall be required to take any action in any jurisdiction other
than in the State of Delaware if the taking of such action will,  even after the
appointment of a co-trustee or separate  trustee in accordance with Section 9.05
hereof,  (i) require the consent or approval or authorization or order of or the

                                       19
<PAGE>

giving of notice to, or the registration  with or the taking of any other action
in  respect  of,  any  state or other  governmental  authority  or agency of any
jurisdiction  other than the State of  Delaware;  (ii) result in any fee, tax or
other  governmental  charge  under  the laws of the State of  Delaware  becoming
payable by Wilmington Trust Company,  or (iii) subject  Wilmington Trust Company
to personal  jurisdiction in any  jurisdiction  other than the State of Delaware
for causes of action  arising  from acts  unrelated to the  consummation  of the
transactions by Wilmington  Trust Company or the Owner Trustee,  as the case may
be, contemplated hereby.

        Section 4.12. Removal of Home Equity Loans.  Certificateholders  holding
100% of the  Certificate  Percentage  Interests of the Class SB-II  Certificates
may, by delivering a written request to the Owner Trustee to such effect,  cause
the  removal  of Home  Equity  Loans in Loan  Group II from the Trust  Estate in
accordance  with  and  subject  to the  provisions  of  Section  3.15(b)  of the
Servicing  Agreement.  Promptly following receipt of any such request, the Owner
Trustee  shall  deliver to the Master  Servicer  the written  notice and request
required to be delivered to the Master  Servicer  pursuant to Section 3.15(b) of
the  Servicing  Agreement.  Any Group II Loans  removed  from the  Trust  Estate
pursuant to Section 3.15(b) of the Servicing  Agreement shall be property of the
Issuer  and,  upon the  written  request of the Class  SB-II  Certificateholders
holding  100%  of  the  Certificate  Percentage  Interests  of the  Class  SB-II
Certificates,  be released to the Class SB-II  Certificateholders  as a dividend
and in accordance with the written instructions of such Certificateholders.

                                    ARTICLE V

                           Application of Trust Funds

        Section 5.01.  Distributions.  (a) On each Payment Date, the Certificate
Paying Agent shall distribute to the  Certificateholders all funds on deposit in
the  Certificate  Distribution  Account and  available  therefor (as provided in
Section 3.05 of the Indenture),  as the Certificate Distribution Amount for such
Payment  Date.  Any  such  amounts  payable  to  the  holders  of  the  Group  I
Certificates shall be distributed, first, to the Certificateholders of the Class
SB-I Certificates,  in an amount equal to the Class SB-I Distribution Amount for
such  Payment  Date and the Class  SB-I  Distribution  Amount  for any  previous
Payment  Date  to  the  extent  not  previously   paid,   and  second,   to  the
Certificateholders  of the Class R-I Certificates,  any amounts  remaining.  All
distributions  made pursuant to this Section to any Class of Certificates  shall
be  distributed  to the  Certificateholders  of such Class pro rata based on the
respective Percentage Interests thereof.

        (b)  In  the  event  that  any   withholding   tax  is  imposed  on  the
distributions (or allocations of income) to a Certificateholder,  such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with this Section 5.01. The  Certificate  Paying Agent is hereby  authorized and
directed to retain or cause to be retained from amounts otherwise  distributable
to the  Certificateholders  sufficient  funds for the payment of any tax that is
legally  owed by the Trust (but such  authorization  shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment  of  such  tax,  if  permitted  by  law,  pending  the  outcome  of such
proceedings).  The  amount of any  withholding  tax  imposed  with  respect to a

                                       20
<PAGE>

Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the  Certificate  Paying Agent and remitted to the
appropriate taxing authority.  If there is a possibility that withholding tax is
payable with respect to a  distribution  (such as a  distribution  to a non-U.S.
Certificateholder),  the  Certificate  Paying  Agent may in its sole  discretion
withhold such amounts in accordance with this paragraph (b).

        (c)  Distributions  to  Certificateholders  shall be subordinated to the
creditors of the Trust, including the Noteholders.

        (d) Allocations of profits and losses,  as determined for federal income
tax  purposes,  shall be made  among  the  Classes  of Group I  Certificates  in
accordance  with the REMIC  provisions and within each Class of  Certificates to
the  Certificateholders on a pro rata basis based on the Certificate  Percentage
Interests thereof.

        (e) On each Payment Date, the following  amounts in the following  order
of priority,  from the amounts  allocable to the Class I Noteholders and Group I
Certificateholders pursuant to Section 3.05 of the Indenture, shall be deemed to
have been  distributed  by REMIC I to REMIC II on account of the REMIC I Regular
Interests or shall be withdrawn from the Distribution Account and distributed to
the holders of the Class R-I Certificates, as the case may be:

               (i) first,  (1) to the Holders of REMIC I Regular  Interests LTB,
        in an amount equal to (A) the  Uncertificated  Accrued Interest for such
        Payment Date, plus (B) any amounts in respect thereof  remaining  unpaid
        from  previous  Payment  Dates  and (2) to the  Holders  of the  REMIC I
        Regular  Interests LTB, any prepayment  charges  received on the Group I
        Loans during the related  Collection  Period; and second, (2) to Holders
        of  REMIC  I  Regular  Interest  LTA  in an  amount  equal  to  (A)  the
        Uncertificated  Accrued  Interest  for such Payment  Date,  plus (B) any
        amounts in respect thereof remaining unpaid from previous Payment Dates;
        and

               (ii) to the  Holders of REMIC I Regular  Interests,  in an amount
        equal to the  remainder of the  Available  Distribution  Amount for such
        Distribution  Date after the  distributions  made pursuant to clause (i)
        above, allocated in the following order of priority:

               (A) to the  Holders of REMIC I Regular  Interest  LTA,  until the
        Uncertificated  Principal  Balance  of REMIC I Regular  Interest  LTA is
        reduced to zero;

               (B) to the Holders of REMIC I Regular  Interests LTB sequentially
        in the order of their numerical  designation,  until the  Uncertificated
        Principal  Balance of each  successive  REMIC I Regular  Interest LTB is
        reduced to zero; and

               (C)  any  remaining  amount  to  the  Holders  of the  Class  R-I
        Certificates.

        (f) On each Distribution Date, the following  amounts,  in the following
order of priority,  shall be  distributed by REMIC II to REMIC III on account of
the REMIC II Regular Interests:

               (i)  first,  (1) to the  extent  of  the  Available  Distribution
        Amount,  to the  Holders of REMIC II  Regular  Interests  LTA-IO,  in an
        amount  equal to (A)  their  Uncertificated  Accrued  Interest  for such

                                       21
<PAGE>

        Payment Date, plus (B) any amounts in respect thereof  remaining  unpaid
        from previous Payment Dates and (2) pro rata to the Holders of the REMIC
        II Regular  Interests  LTA-IO,  any prepayment  charges  received on the
        Group I Loans during the related  Collection  Period; and second, (2) to
        the Holders of REMIC II Regular  Interest LT1, REMIC II Regular Interest
        LT2,  REMIC II Regular  Interest LT3 and REMIC II Regular  Interest LT4,
        pro  rata,  in an  amount  equal  to (A)  their  Uncertificated  Accrued
        Interest  for such  Distribution  Date,  plus (B) any amounts in respect
        thereof remaining unpaid from previous Payment Dates; and

               (ii) on each  Payment  Date,  to the  Holders of REMIC II Regular
        Interests,  in an amount equal to the remainder of the proceeds relating
        to the REMIC I Regular Interests after the  distributions  made pursuant
        to clause (i) above, allocated as follows (except as provided below):

                      (i) to the Holders of the REMIC II Regular  Interest  LT2,
               REMIC II Regular  Interest LT3 and REMIC II Regular Interest LT4,
               their respective Principal Distribution Amounts;

                      (ii) to the Holders of the REMIC II Regular  Interest  LT1
               any remainder until the Uncertificated  Principal Balance thereof
               is reduced to zero;

                      (iii) any remainder to the Holders of the REMIC II Regular
               Interest LT2, REMIC II Regular  Interest LT3 and REMIC II Regular
               Interest   LT4   pro   rata   according   to   their   respective
               Uncertificated Principal Balances as reduced by the distributions
               deemed  made  pursuant  to  (i)  above,  until  their  respective
               Uncertificated Principal Balances are reduced to zero; and

                      (iv) any  remaining  amounts  to the  Holders of the Class
               R-II Certificates; and

        (g) On each Payment Date,  following the distributions  made pursuant to
clauses (i) through (iv) of Section  3.05(a)(I) of the Indenture,  the remaining
amount  shall be deemed  distributed  by REMIC  III  first to REMIC III  Regular
Interest  SB-IO until its accrued  and unpaid  interest  for the current and all
prior  Payment  Dates shall have been  reduced to zero,  second to the REMIC III
Regular Interest SB-PO until the Uncertificated  Principal Balance thereof shall
have  been  reduced  to zero  and  third to the  Class  R-III  Certificates  any
remaining amount. From the amounts deemed distributed from REMIC III pursuant to
the preceding  sentence,  first the Class R-III  Certificateholder  and then the
Class SB-I (as the owner of REMIC III Regular  Interests  SB-IO and SB-PO) shall
be deemed to have paid the amounts  required to be paid pursuant to clause (vii)
of Section 3.05(a)(I).

        Section   5.02.   Method  of  Payment.   Subject  to  Section   8.01(c),
distributions  required to be made to  Certificateholders on any Payment Date as
provided in Section  5.01 shall be made 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  Certificateholder  shall have provided
to the  Certificate  Registrar  appropriate  written  instructions at least five
Business  Days prior to such  Payment  Date or, if not, by check  mailed to such
Certificateholder  at the address of such Holder  appearing  in the  Certificate
Register.

                                       22
<PAGE>

        Section  5.03.  Signature on Returns.  The Owner  Trustee  shall sign on
behalf of the Trust the tax returns of the Trust.  The REMIC  Administrator,  as
agent for the Owner  Trustee,  shall sign on behalf of the Trust the tax returns
of REMIC I,  REMIC II and REMIC  III.  The Owner  Trustee  shall  give the REMIC
Administrator  all such  powers of  attorney  as are  needed to enable the REMIC
Administrator  to prepare and sign such tax returns.  In the event that approval
from the applicable  District  Director of the Internal  Revenue Service for the
REMIC  Administrator  or the  Master  Servicer  to sign the tax  returns  is not
forthcoming following application, the REMIC Administrator shall prepare and the
Owner  Trustee shall sign the tax returns for REMIC I, REMIC II and REMIC III or
the Master  Servicer  shall  prepare  and the Owner  Trustee  shall sign the tax
returns for the Trust, as applicable.

        Section 5.04.  Statements to  Certificateholders.  On each Payment Date,
the Certificate Paying Agent shall send to each  Certificateholder the statement
or statements  provided to the Owner Trustee and the Certificate Paying Agent by
the Master  Servicer  pursuant to Section 4.01 of the Servicing  Agreement  with
respect to such Payment Date.

        Section 5.05. Tax  Reporting.  So long as the Depositor or any Affiliate
of   the   Depositor   owns   100%   of   the   Certificates    (the   "Original
Certificateholder"),  then no separate  federal and state income tax returns and
information returns or statements will be filed with respect to the Trust, other
than  the  portion  of the  Trust  constituting  the  REMICs.  If  the  Original
Certificateholder  is no  longer  the sole  Class  SB-I  Certificateholder,  the
subsequent  holders of the Class SB-I  Certificates by their acceptance  hereof,
agree to  appoint  the  Original  Certificateholder  as their  agent for the tax
matters partner and the Original  Certificateholder,  as agent for such holders,
agrees to perform all duties  necessary  to comply with federal and state income
tax laws.

        Any Class  SB-II  Certificateholder  that holds 100% of the Class  SB-II
Certificates  agrees by its purchase of 100% of the Class SB-II  Certificates to
treat the Trust, other than the portion of the Trust constituting the REMICs, as
a  disregarded  entity  wholly owned by such Class SB-II  Certificateholder  for
purposes  of  federal  and state  income  tax,  franchise  tax and any other tax
measured in whole or in part by income, with the assets of the Trust (other than
the  assets  constituting  the  REMICs)  being  treated  as being  owned by such
Certificateholder, and the Notes being debt of the Certificateholder.

        Section 5.06.  Reports to the Master  Servicer.  In connection  with the
preparation and filing by the Master Servicer, on behalf of the Depositor and in
respect  of the  Trust,  of  periodic  reports  required  to be filed  under the
provisions of the Exchange Act and the rules and  regulations  of the Commission
thereunder,  the  Depositor  shall  timely  provide to the Master  Servicer  all
material information  available to them which is required to be included in such
reports.

        Section 5.07  Derivative Contracts.

        (a) The Owner Trustee shall, at the direction of the Master Servicer, on
behalf the Trust Estate, enter into Derivative Contracts, solely for the benefit
of the Class SB  Certificates.  Any such Derivative  Contract shall constitute a
fully  prepaid  agreement.  The Master  Servicer  shall  determine,  in its sole

                                       23
<PAGE>

discretion,  whether any Derivative  Contract  conforms to the  requirements  of
Section 5.07(b) and (c). All collections,  proceeds and other amounts in respect
of the  Derivative  Contracts  payable by the Derivative  Counterparty  shall be
distributed  to the Class SB  Certificates  on the  Distribution  Date following
receipt  thereof by the Owner  Trustee.  In no event  shall  such an  instrument
constitute a part of any REMIC created hereunder.  In addition, in the event any
such  instrument  is  deposited,  the Trust Estate shall be deemed to be divided
into two  separate  and discrete  sub-Trusts.  The assets of one such  sub-Trust
shall  consist of all the assets of the Trust Estate other than such  instrument
and the assets of the other sub-Trust shall consist solely of such instrument.

        (b) Any Derivative  Contract that provides for any payment obligation on
the part of the Trust  Estate must (i) be without  recourse to the assets of the
Trust Estate, (ii) contain a non-petition covenant provision from the Derivative
Counterparty,  (iii) limit payment dates  thereunder to  Distribution  Dates and
(iv)  contain a  provision  limiting  any cash  payments  due to the  Derivative
Counterparty on any day under such Derivative Contract solely to funds available
therefor in the Certificate Account to make payments to the Holders of the Class
SB Certificates on such Distribution Date.

        (c) Each Derivative  Contract must (i) provide for the direct payment of
any amounts by the Derivative Counterparty thereunder to the Certificate Account
at least one Business Day prior to the related  Distribution  Date, (ii) contain
an assignment of all of the Trust Estate's rights (but none of its  obligations)
under such  Derivative  Contract to the Owner  Trustee on behalf of the Class SB
Certificateholders  and shall  include  an  express  consent  to the  Derivative
Counterparty  to  such  assignment,  (iii)  provide  that  in the  event  of the
occurrence of an Event of Default, such Derivative Contract shall terminate upon
the direction of a majority  Percentage  Interest of the Class SB  Certificates,
and (iv) prohibit the Derivative  Counterparty  from  "setting-off  or "netting"
other obligations of the Trust Estate and its Affiliates against such Derivative
Counterparty's payment obligations thereunder.

        (d)  Nothwithstanding  the provisions of paragraphs  (a), (b) and (c) of
this Section 5.07, no Derivative  Contract  shall (i) provide for the payment of
any amounts that would otherwise be payable to the Holders of any Class of Notes
or the Credit  Enhancer,  or (ii) materially  adversely affect the rights of the
Holders of any Class of Notes or the Credit Enhancer.

                                   ARTICLE VI

                          Concerning the Owner Trustee

        Section 6.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the  trusts  hereby  created  and agrees to perform  its duties  hereunder  with
respect  to such  trusts but only upon the terms of this  Trust  Agreement.  The
Owner Trustee and the Certificate Paying Agent also agree to disburse all moneys
actually  received by it  constituting  part of the Owner Trust  Estate upon the
terms of the Basic Documents and this Trust  Agreement.  The Owner Trustee shall
not be answerable or accountable hereunder or under any Basic Document under any

                                       24
<PAGE>

circumstances,  except (i) for its own  willful  misconduct,  negligence  or bad
faith or negligent  failure to act or (ii) in the case of the  inaccuracy of any
representation or warranty contained in Section 6.03 expressly made by the Owner
Trustee.  In  particular,  but  not by way of  limitation  (and  subject  to the
exceptions set forth in the preceding sentence):

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

        (b)  Under no  circumstances  shall  the Owner  Trustee  be  liable  for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;

        (c) The Owner Trustee shall not be responsible  for or in respect of the
validity or sufficiency of this Trust Agreement or for the due execution  hereof
by the Depositor or for the form, character, genuineness,  sufficiency, value or
validity of any of the Owner Trust Estate,  or for or in respect of the validity
or sufficiency of the Basic Documents,  the Notes, the Certificates,  other than
the certificate of authentication on the Certificates,  if executed by the Owner
Trustee and the Owner Trustee  shall in no event assume or incur any  liability,
duty, or obligation to any Noteholder or to any Certificateholder, other than as
expressly provided for herein or expressly agreed to in the Basic Documents;

        (d) The execution,  delivery,  authentication  and  performance by it of
this Trust Agreement will not require the authorization, consent or approval of,
the giving of notice to, the filing or  registration  with, or the taking of any
other action with respect to, any governmental authority or agency;

        (e) The Owner  Trustee shall not be liable for the default or misconduct
of the Depositor,  the Indenture Trustee or the Master Servicer under any of the
Basic  Documents or otherwise  and the Owner Trustee shall have no obligation or
liability to perform the  obligations of the Trust under this Trust Agreement or
the Basic  Documents that are required to be performed by the Indenture  Trustee
under the Indenture or the Seller under the Home Equity Loan Purchase Agreement;
and

        (f) The Owner  Trustee  shall be under no  obligation to exercise any of
the rights or powers vested in it or duties imposed by this Trust Agreement,  or
to institute,  conduct or defend any  litigation  under this Trust  Agreement or
otherwise or in relation to this Trust Agreement or any Basic  Document,  at the
request,  order  or  direction  of any of the  Certificateholders,  unless  such
Certificateholders  have  offered to the Owner  Trustee  security  or  indemnity
satisfactory  to it against  the costs,  expenses  and  liabilities  that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any  discretionary  act enumerated in this Trust  Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence,  bad faith or willful misconduct in
the performance of any such act.

        Section 6.02.  Furnishing of Documents.  The Owner Trustee shall furnish
to the  Securityholders  promptly upon receipt of a written  reasonable  request

                                       25
<PAGE>

therefor,  duplicates  or copies of all  reports,  notices,  requests,  demands,
certificates,  financial  statements and any other instruments  furnished to the
Trust under the Basic Documents.

        Section 6.03.  Representations and Warranties.  The Owner Trustee hereby
represents   and   warrants   to  the   Depositor,   for  the   benefit  of  the
Certificateholders, that:

        (a) It is a banking  corporation  duly organized and validly existing in
good  standing  under the laws of the State of  Delaware.  It has all  requisite
corporate  power and authority to execute,  deliver and perform its  obligations
under this Trust Agreement;

        (b) It has  taken  all  corporate  action  necessary  to  authorize  the
execution and delivery by it of this Trust  Agreement,  and this Trust Agreement
will be executed and delivered by one of its officers who is duly  authorized to
execute and deliver this Trust Agreement on its behalf;

        (c)  Neither  the  execution  nor  the  delivery  by  it of  this  Trust
Agreement,  nor the consummation by it of the transactions  contemplated  hereby
nor compliance by it with any of the terms or provisions  hereof will contravene
any federal or Delaware  law,  governmental  rule or  regulation  governing  the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or  constitute  any  default  under its charter  documents  or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound;

        (d) This Trust  Agreement,  assuming due  authorization,  execution  and
delivery by the Owner Trustee and the Depositor,  constitutes a valid, legal and
binding  obligation of the Owner Trustee,  enforceable  against it in accordance
with  the  terms   hereof   subject  to   applicable   bankruptcy,   insolvency,
reorganization,   moratorium  and  other  laws  affecting  the   enforcement  of
creditors' rights generally and to general  principles of equity,  regardless of
whether such enforcement is considered in a proceeding in equity or at law;

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

        (f) No  litigation  is  pending  or, to the best of the Owner  Trustee's
knowledge,  threatened  against  the Owner  Trustee  which  would  prohibit  its
entering into this Trust  Agreement or  performing  its  obligations  under this
Trust Agreement.

        Section 6.04.  Reliance;  Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature,  instrument,  notice,
resolution,  request,  consent,  order,  certificate,  report, opinion, bond, or
other  document or paper  believed by it to be genuine and  believed by it to be
signed by the proper party or parties.  The Owner Trustee may accept a certified
copy of a resolution  of the board of directors or other  governing  body of any
corporate  party as  conclusive  evidence  that  such  resolution  has been duly
adopted  by such body and that the same is in full force and  effect.  As to any
fact or  matter  the  method  of  determination  of  which  is not  specifically

                                       26
<PAGE>

prescribed  herein,  the Owner  Trustee  may for all  purposes  hereof rely on a
certificate,  signed by the president or any vice  president or by the treasurer
or other  authorized  officers of the relevant  party, as to such fact or matter
and such  certificate  shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.

        (b) In the exercise or  administration of the Trust hereunder and in the
performance  of its duties and  obligations  under this Trust  Agreement  or the
Basic  Documents,  the Owner Trustee (i) may act directly or through its agents,
attorneys,  custodians or nominees  (including  persons  acting under a power of
attorney)  pursuant to agreements  entered into with any of them,  and the Owner
Trustee  shall not be liable  for the  conduct  or  misconduct  of such  agents,
attorneys,  custodians or nominees  (including  persons  acting under a power of
attorney)  if  such  persons  have  been  selected  by the  Owner  Trustee  with
reasonable  care,  and (ii) may  consult  with  counsel,  accountants  and other
skilled  persons to be selected with  reasonable  care and employed by it at the
expense of the Trust.  The Owner Trustee shall not be liable for anything  done,
suffered or omitted in good faith by it in accordance with the opinion or advice
of any such counsel,  accountants or other such Persons and not contrary to this
Trust Agreement or any Basic Document.

        Section 6.05. Not Acting in Individual  Capacity.  Except as provided in
this Article VI, in accepting the trusts hereby created Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual  capacity,  and
all  Persons  having  any  claim  against  the  Owner  Trustee  by reason of the
transactions  contemplated  by this Trust  Agreement or any Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.

        Section  6.06.  Owner  Trustee  Not Liable for  Certificates  or Related
Documents. The recitals contained herein and in the Certificates (other than the
signatures  of the  Owner  Trustee  on the  Certificates)  shall be taken as the
statements of the Depositor, and the Owner Trustee assumes no responsibility for
the correctness  thereof.  The Owner Trustee makes no  representations as to the
validity or sufficiency of this Trust Agreement, of any Basic Document or of the
Certificates   (other  than  the   signatures   of  the  Owner  Trustee  on  the
Certificates) or the Notes, or of any Related Documents. The Owner Trustee shall
at no time have any  responsibility or liability with respect to the sufficiency
of the  Owner  Trust  Estate or its  ability  to  generate  the  payments  to be
distributed to Certificateholders  under this Trust Agreement or the Noteholders
under the  Indenture,  including,  the compliance by the Depositor or the Seller
with any  warranty  or  representation  made under any Basic  Document or in any
related document or the accuracy of any such warranty or representation,  or any
action  of the  Certificate  Paying  Agent,  the  Certificate  Registrar  or the
Indenture Trustee taken in the name of the Owner Trustee.

        Section 6.07.  Owner Trustee May Own  Certificates  and Notes. The Owner
Trustee in its  individual or any other capacity may become the owner or pledgee
of  Certificates  or Notes  and may deal with the  Depositor,  the  Seller,  the
Certificate Paying Agent, the Certificate Registrar and the Indenture Trustee in
transactions with the same rights as it would have if it were not Owner Trustee.

                                       27
<PAGE>

                                   ARTICLE VII

                          Compensation of Owner Trustee

        Section 7.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive  as  compensation  for its  services  hereunder  such  fees as have been
separately  agreed upon before the date hereof,  and the Owner  Trustee shall be
reimbursed for its reasonable  expenses hereunder and under the Basic Documents,
including  the  reasonable  compensation,  expenses  and  disbursements  of such
agents, representatives, experts and counsel as the Owner Trustee may reasonably
employ in  connection  with the exercise and  performance  of its rights and its
duties  hereunder  and under the Basic  Documents  which shall be payable by the
Master Servicer pursuant to Section 3.09 of the Servicing Agreement.

        Section  7.02.  Indemnification.  The  holder  of  the  majority  of the
Certificate  Percentage  Interest of the Class SB  Certificates in the aggregate
shall indemnify,  defend and hold harmless the Owner Trustee and its successors,
assigns, agents and servants (collectively,  the "Indemnified Parties") from and
against, any and all liabilities,  obligations,  losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs,  expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively,  "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified  Party in any way relating
to or arising out of this Trust Agreement,  the Basic Documents, the Owner Trust
Estate,  the  administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, provided, that:

               (a) the  holder of the  majority  of the  Certificate  Percentage
Interest of the Certificates shall not be liable for or required to indemnify an
Indemnified  Party from and against Expenses arising or resulting from the Owner
Trustee's  willful  misconduct,  negligence  or bad  faith or as a result of any
inaccuracy of a representation  or warranty  contained in Section 6.03 expressly
made by the Owner Trustee;

               (b) with respect to any such claim,  the Indemnified  Party shall
have given the holder of the majority of the Certificate  Percentage Interest of
the  Certificates  written notice thereof  promptly after the Indemnified  Party
shall have actual knowledge thereof;

               (c) while maintaining control over its own defense, the holder of
the majority of the Certificate  Percentage  Interest of the Certificates  shall
consult with the Indemnified Party in preparing such defense; and

               (d)  notwithstanding  anything  in this  Trust  Agreement  to the
contrary,  the holder of the majority of the Certificate  Percentage Interest of
the  Certificates  shall  not  be  liable  for  settlement  of any  claim  by an
Indemnified  Party  entered into without the prior  consent of the holder of the
majority  of the  Certificate  Percentage  Interest  of the  Certificates  which
consent shall not be unreasonably withheld.

        The indemnities  contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Trust  Agreement.
In the event of any claim,  action or  proceeding  for which  indemnity  will be
sought  pursuant  to this  Section  7.02,  the Owner  Trustee's  choice of legal
counsel,  if other  than the legal  counsel  retained  by the Owner  Trustee  in

                                       28
<PAGE>

connection  with the  execution and delivery of this Trust  Agreement,  shall be
subject  to the  approval  of the  holder  of the  majority  of the  Certificate
Percentage  Interest  of the  Class  SB  Certificates  in the  aggregate,  which
approval shall not be unreasonably withheld. In addition, upon written notice to
the Owner  Trustee and with the consent of the Owner Trustee which consent shall
not be  unreasonably  withheld,  the holder of the  majority of the  Certificate
Percentage  Interest of the Class SB Certificates in the aggregate has the right
to assume the  defense  of any claim,  action or  proceeding  against  the Owner
Trustee.

                                  ARTICLE VIII

                         Termination of Trust Agreement

        Section 8.01.  Termination of Trust Agreement.  (a) This Trust Agreement
(other  than  this  Article  VIII) and the Trust  shall  terminate  and be of no
further force or effect upon the earliest of (i) the final  distribution  of all
moneys or other  property or proceeds  of the Owner Trust  Estate in  accordance
with the terms of the Indenture and this Trust Agreement or (ii) the purchase by
the Master  Servicer of all Home Equity  Loans  pursuant to Section  8.08 of the
Servicing Agreement; provided, however, that in no event shall the trust created
hereby  continue  beyond the  expiration  of 21 years from the death of the last
survivor of the  descendants  of Joseph P. Kennedy,  the late  ambassador of the
United  States  to the  Court  of St.  James,  living  on the date  hereof.  The
bankruptcy,    liquidation,    dissolution,   death   or   incapacity   of   any
Certificateholder shall not (x) operate to terminate this Trust Agreement or the
Trust or (y) entitle such Certificateholder's  legal representatives or heirs to
claim an  accounting  or to take any  action  or  proceeding  in any court for a
partition  or  winding  up of all or any part of the  Trust or the  Owner  Trust
Estate or (z) otherwise  affect the rights,  obligations  and liabilities of the
parties hereto.

        (b) Except as provided in Section 8.01(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.

        (c) Notice of any termination of the Trust,  specifying the Payment Date
upon  which   Certificateholders  shall  surrender  their  Certificates  to  the
Certificate Paying Agent for payment of the final distribution and cancellation,
shall be given by the Certificate  Paying Agent by letter to  Certificateholders
and the Credit Enhancer mailed within five Business Days of receipt of notice of
such  termination  from the Owner Trustee,  stating (i) the Payment Date upon or
with  respect  to which  final  payment of the  Certificates  shall be made upon
presentation  and surrender of the Certificates at the office of the Certificate
Paying Agent therein  designated,  (ii) the amount of any such final payment and
(iii) that the Record Date  otherwise  applicable  to such  Payment  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Certificates  at the office of the Certificate  Paying Agent therein  specified.
The Certificate Paying Agent shall give such notice to the Owner Trustee and the
Certificate  Registrar  at the time such notice is given to  Certificateholders.
Upon  presentation  and surrender of the  Certificates,  the Certificate  Paying
Agent shall cause to be distributed to Certificateholders  amounts distributable
on such Payment Date pursuant to Section 5.01. No such  termination is permitted
if it would result in a draw on the Policy unless the Credit  Enhancer  consents
in writing.

                                       29
<PAGE>

        In the event  that all of the  Certificateholders  shall  not  surrender
their  Certificates for cancellation  within six months after the date specified
in the above mentioned written notice, the Certificate Paying Agent shall give a
second written  notice to the remaining  Certificateholders  to surrender  their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  Subject to applicable laws with respect to escheat of funds, if within
one year  following the Payment Date on which final payment of the  Certificates
was to have been made pursuant to Section 3.10, all the  Certificates  shall not
have been surrendered for  cancellation,  the Certificate  Paying Agent 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  shall
remain subject to this Trust  Agreement.  Any funds remaining in the Certificate
Distribution  Account after  exhaustion of such remedies shall be distributed by
the  Certificate  Paying Agent to the holder of the majority of the  Certificate
Percentage Interest of the Certificates.

        (d) Upon the  winding  up of the  Trust and its  termination,  the Owner
Trustee  shall  cause  the  Certificate  of Trust to be  cancelled  by  filing a
certificate of  cancellation  with the Secretary of State in accordance with the
provisions of Section 3810(c) of the Statutory Trust Statute.

        Section 8.02. Additional Termination Requirements.
                      ------------------------------------

(a) REMIC I shall be  terminated in  accordance  with the  following  additional
requirements  including upon the exercise by the Master  Servicer of an optional
redemption  of the Notes  pursuant to Section 8.08 of the  Servicing  Agreement,
unless the Owner  Trustee and the Master  Servicer  have  received an Opinion of
Counsel  (which Opinion of Counsel shall not be an expense of the Owner Trustee)
to the effect that the failure of any REMIC to comply with the  requirements  of
this Section 8.02 will not (i) result in the  imposition  on the Trust Estate of
taxes on "prohibited transactions," as described in Section 860F of the Code, or
(ii)  cause  either  REMIC to fail to  qualify  as a REMIC at any time  that any
Certificate is outstanding:

(i) The Master  Servicer shall  establish a 90-day  liquidation  period for such
REMIC  and  specify  the  first day of such  period  in a  statement,  which the
Indenture  Trustee  shall  attach  to REMIC I's final  Tax  Return  pursuant  to
Treasury  regulations  Section 1.860F-1.  The Master Servicer also shall satisfy
all of the  requirements  of a qualified  liquidation  for a REMIC under Section
860F of the Code and regulations thereunder;

(ii) The Master  Servicer  shall  notify  the Owner  Trustee  and the  Indenture
Trustee at the commencement of such 90-day  liquidation  period and, at or prior
to the time of  making  of the  final  payment  on the  Certificates,  the Owner
Trustee shall sell or otherwise  dispose of all of the  remaining  assets of the
Trust Estate that are included in REMIC I in  accordance  with the terms hereof;
and

(iii) If the Master  Servicer is exercising  its right to purchase the assets of
the Trust  Estate,  the Master  Servicer  shall,  during the 90-day  liquidation
period and at or prior to the Final Payment Date,  purchase all of the assets of
the Trust Estate for cash.

                                       30
<PAGE>

        Each  Holder of a  Security  and the Owner  Trustee  hereby  irrevocably
approves  and appoints the Master  Servicer as its  attorney-in-fact  to adopt a
plan of complete  liquidation  for such REMIC at the expense of the Trust Estate
in accordance with the terms and conditions of this Agreement.

                                   ARTICLE IX

                    Successor Owner Trustees and Additional Owner Trustees

        Section 9.01.  Eligibility  Requirements  for Owner  Trustee.  The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Statutory Trust Statute;  authorized to exercise  corporate trust
powers;  having a  combined  capital  and  surplus of at least  $50,000,000  and
subject to  supervision  or  examination  by federal or state  authorities;  and
having (or having a parent that has) long-term debt obligations with a rating of
at  least  A by  Standard  &  Poor's,  Moody's  and/or  Fitch  Ratings.  If such
corporation shall publish reports of condition at least annually pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the  purpose of this  Section,  the  combined  capital  and  surplus of such
corporation  shall be deemed to be its combined capital and surplus as set forth
in its most recent  report of  condition so  published.  In case at any time the
Owner Trustee shall cease to be eligible in  accordance  with the  provisions of
this Section 9.01, the Owner Trustee shall resign  immediately in the manner and
with the effect specified in Section 9.02.

        Section 9.02. Replacement of Owner Trustee. The Owner Trustee may at any
time resign and be discharged  from the trusts hereby created by giving 30 days'
prior written notice thereof to the Credit Enhancer,  the Indenture  Trustee and
the Depositor. Upon receiving such notice of resignation,  the Indenture Trustee
shall promptly  appoint a successor Owner Trustee with the consent of the Credit
Enhancer which will not be  unreasonably  withheld,  by written  instrument,  in
duplicate,  one copy of which  instrument  shall be delivered  to the  resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee  shall have been so appointed and have  accepted  appointment  within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
may  petition  any court of  competent  jurisdiction  for the  appointment  of a
successor Owner Trustee.

        If at  any  time  the  Owner  Trustee  shall  cease  to be  eligible  in
accordance  with the  provisions  of Section 9.01 and shall fail to resign after
written request therefor by the Indenture  Trustee,  or if at any time the Owner
Trustee  shall be  legally  unable  to act,  or shall be  adjudged  bankrupt  or
insolvent,  or a  receiver  of the Owner  Trustee  or of its  property  shall be
appointed,  or any  public  officer  shall  take  charge or control of the Owner
Trustee  or of its  property  or  affairs  for the  purpose  of  rehabilitation,
conservation  or  liquidation,  then the Indenture  Trustee may and shall at the
direction of the Credit  Enhancer  remove the Owner  Trustee.  If the  Indenture
Trustee shall remove the Owner  Trustee  under the authority of the  immediately
preceding  sentence,  the Indenture  Trustee shall promptly  appoint a successor
Owner  Trustee  acceptable  to the Credit  Enhancer  by written  instrument,  in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor  Owner  Trustee,  and shall pay
all fees owed to the outgoing Owner Trustee.

                                       31
<PAGE>

        Any  resignation  or removal of the Owner Trustee and  appointment  of a
successor Owner Trustee  pursuant to any of the provisions of this Section shall
not become  effective  until  acceptance of appointment  by the successor  Owner
Trustee  pursuant to Section 9.03 and payment of all fees and  expenses  owed to
the outgoing Owner Trustee.

        Section 9.03.  Successor  Owner  Trustee.  Any  successor  Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to the
Indenture Trustee and to its predecessor  Owner Trustee an instrument  accepting
such appointment  under this Trust  Agreement,  and thereupon the resignation or
removal of the  predecessor  Owner  Trustee  shall  become  effective,  and such
successor  Owner  Trustee,  without any further act, deed or  conveyance,  shall
become fully vested with all the rights,  powers,  duties and obligations of its
predecessor under this Trust Agreement,  with like effect as if originally named
as Owner Trustee.  The predecessor  Owner Trustee shall upon payment of its fees
and expenses deliver to the successor Owner Trustee all documents and statements
and monies  held by it under this Trust  Agreement;  and the  predecessor  Owner
Trustee shall execute and deliver such  instruments  and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.

        No successor Owner Trustee shall accept  appointment as provided in this
Section 9.03 unless at the time of such  acceptance such successor Owner Trustee
shall be eligible pursuant to Section 9.01.

        Upon acceptance of appointment by a successor Owner Trustee  pursuant to
this  Section  9.03,  the  Indenture  Trustee  shall mail notice  thereof to all
Certificateholders,   the  Credit  Enhancer,  the  Noteholders  and  the  Rating
Agencies. If the Indenture Trustee shall fail to mail such notice within 10 days
after  acceptance  of such  appointment  by the  successor  Owner  Trustee,  the
successor  Owner  Trustee shall cause such notice to be mailed at the expense of
the Indenture Trustee.

        Section 9.04. Merger or Consolidation of Owner Trustee.  Any Person into
which the Owner  Trustee  may be merged  or  converted  or with  which it may be
consolidated,   or  any  Person   resulting  from  any  merger,   conversion  or
consolidation  to which  the  Owner  Trustee  shall be a  party,  or any  Person
succeeding to all or  substantially  all of the corporate  trust business of the
Owner Trustee,  shall be the successor of the Owner Trustee  hereunder,  without
the execution or filing of any  instrument or any further act on the part of any
of  the  parties  hereto,  anything  herein  to  the  contrary  notwithstanding;
provided,  that such  Person  shall be eligible  pursuant  to Section  9.01 and,
provided,  further,  that the Owner  Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.

        Section  9.05.   Appointment   of   Co-Trustee   or  Separate   Trustee.
Notwithstanding  any other provisions of this Trust Agreement,  at any time, for
the purpose of meeting any legal  requirements of any  jurisdiction in which any
part of the Owner  Trust  Estate may at the time be located,  the Owner  Trustee
shall have the power and shall  execute and deliver all  instruments  to appoint
one or more Persons to act as co-trustee,  jointly with the Owner Trustee, or as
separate trustee or trustees,  of all or any part of the Owner Trust Estate, and
to vest in such Person,  in such  capacity,  such title to the Trust or any part
thereof  and,  subject to the other  provisions  of this  Section,  such powers,
duties,  obligations,  rights  and  trusts as the  Owner  Trustee  may  consider

                                       32
<PAGE>

necessary or  desirable.  No  co-trustee  or separate  trustee  under this Trust
Agreement shall be required to meet the terms of eligibility pursuant to Section
9.01 and no notice of the  appointment  of any  co-trustee  or separate  trustee
shall be required pursuant to Section 9.03.

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

        (a) All rights, powers, duties and obligations conferred or imposed upon
the Owner  Trustee  shall be  conferred  upon and  exercised or performed by the
Owner  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 Owner 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,  the Owner  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 Owner  Trust  Estate 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 Owner Trustee;

        (b) No trustee under this Trust Agreement shall be personally  liable by
reason of any act or omission of any other trustee  under this Trust  Agreement;
and

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

        Any  separate  trustee or  co-trustee  may at any time appoint the Owner
Trustee as 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
Trust  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 Owner  Trustee,  to the extent  permitted  by law,  without the
appointment of a new or successor co-trustee or separate trustee.

                                       33
<PAGE>

                                    ARTICLE X

                                  Miscellaneous

        Section  10.01.Amendments.  (a) This Trust Agreement may be amended from
time to time by the parties hereto as specified in this Section 10.01,  provided
that any amendment, except as provided in subparagraph (e) below, be accompanied
by an Opinion of Counsel,  to the Owner  Trustee and the Credit  Enhancer to the
effect that such  amendment (i) complies with the provisions of this Section and
(ii) will not cause the Trust to be subject to an entity  level tax or cause any
of REMIC I,  REMIC II or REMIC III to fail to  qualify  as a REMIC  for  federal
income tax purposes.

        (b) If the purpose of the amendment (as detailed  therein) is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not covered in this Trust  Agreement  (i.e., to give effect to the intent
of the parties), it shall not be necessary to obtain the consent of any Holders,
but the Owner  Trustee  shall be  furnished  with (A) a letter  from the  Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and (B) an Opinion of  Counsel to the effect  that such  action  will not
adversely affect in any material  respect the interests of any Holders,  and the
consent of the Credit Enhancer shall be obtained.

        (c) If the purpose of the amendment is to prevent the  imposition of any
federal  or state  taxes at any time that any  Security  is  outstanding  (i.e.,
technical  in nature),  it shall not be  necessary  to obtain the consent of any
Holder, but the Owner Trustee shall be furnished with an Opinion of Counsel that
such  amendment is necessary or helpful to prevent the  imposition of such taxes
and is not  materially  adverse  to any  Holder  and the  consent  of the Credit
Enhancer shall be obtained.

        (d) If the purpose of the amendment is to add or eliminate or change any
provision  of the Trust  Agreement  other  than as  contemplated  in (b) and (c)
above, the amendment shall require (A) the consent of the Credit Enhancer and an
Opinion of Counsel to the effect that such action will not  adversely  affect in
any  material  respect the  interests of any Holders and (B) either (a) a letter
from the Rating Agency that the amendment will not result in the  downgrading or
withdrawal  of the rating then  assigned to any Security if  determined  without
regard to the Policy or (b) the consent of Holders of Certificates  evidencing a
majority of the  Certificate  Percentage  Interest of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in
any manner the amount  of, or delay the timing of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

        (e) If the purpose of the amendment is to provide for the holding of any
of the  Certificates in book-entry form, it shall require the consent of Holders
of all such Certificates then outstanding; provided, that the Opinion of Counsel
specified in subparagraph (a) above shall not be required.

                                       34
<PAGE>

        (f) If the purpose of the  amendment  is to provide for the  issuance of
additional  certificates  representing an interest in the Trust, it shall not be
necessary to obtain the consent of any Holder,  but the Owner  Trustee  shall be
furnished with (A) an Opinion of Counsel to the effect that such action will not
adversely  affect in any material respect the interests of any Holders and (B) a
letter  from the  Rating  Agencies  that the  amendment  will not  result in the
downgrading  or  withdrawal  of the rating  then  assigned to any  Security,  if
determined  without regard to the Policy and the consent of the Credit  Enhancer
shall be obtained.

        (g) Promptly after the execution of any such  amendment or consent,  the
Owner  Trustee  shall  furnish  written  notification  of the  substance of such
amendment  or consent to each  Certificateholder,  the  Indenture  Trustee,  the
Credit Enhancer and each of the Rating  Agencies.  It shall not be necessary for
the consent of  Certificateholders  or the  Indenture  Trustee  pursuant to this
Section  10.01 to approve  the  particular  form of any  proposed  amendment  or
consent,  but it shall be sufficient if such consent shall approve the substance
thereof.  The manner of  obtaining  such  consents  (and any other  consents  of
Certificateholders  provided  for in this Trust  Agreement or in any other Basic
Document)  and of  evidencing  the  authorization  of the  execution  thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

        (h) In  connection  with the execution of any amendment to any agreement
to which  the  Trust is a party,  other  than this  Trust  Agreement,  the Owner
Trustee  shall be entitled to receive and  conclusively  rely upon an Opinion of
Counsel to the effect that such  amendment  is  authorized  or  permitted by the
documents  subject to such  amendment and that all  conditions  precedent in the
Basic Documents for the execution and delivery thereof by the Trust or the Owner
Trustee, as the case may be, have been satisfied.

        Promptly  after the  execution of any  amendment to the  Certificate  of
Trust,  the Owner  Trustee  shall  cause the filing of such  amendment  with the
Secretary of State of the State of Delaware.

        Section   10.02.No   Legal   Title   to   Owner   Trust   Estate.    The
Certificateholders  shall not have  legal  title to any part of the Owner  Trust
Estate. The  Certificateholders  shall be entitled to receive distributions with
respect to their undivided  beneficial  interest therein only in accordance with
Articles V and VIII.  No  transfer,  by operation  of law or  otherwise,  of any
right,  title or interest of the  Certificateholders  to and in their  ownership
interest  in the Owner  Trust  Estate  shall  operate  to  terminate  this Trust
Agreement or the trusts  hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Owner Trust Estate

        Section  10.03.Limitations on Rights of Others. Except for Section 2.07,
the  provisions of this Trust  Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders,  the Credit Enhancer and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Trust  Agreement  (other than Section 2.07),  whether express or
implied,  shall be  construed to give to any other Person any legal or equitable
right,  remedy or claim in the Owner Trust Estate or under or in respect of this
Trust Agreement or any covenants, conditions or provisions contained herein.

                                       35
<PAGE>

        Section  10.04.Notices.  (a) Unless  otherwise  expressly  specified  or
permitted  by the terms  hereof,  all  notices  shall be in writing and shall be
deemed given upon  receipt,  if to the Owner  Trustee,  addressed to  Wilmington
Trust Company,  Corporate Trust Administration,  Rodney Square North, 1100 North
Market  Street,   Wilmington,   Delaware  19890,   Attention:   Corporate  Trust
Administration;  if to the Depositor,  addressed to Residential Funding Mortgage
Securities II, Inc., 8400 Normandale  Lake  Boulevard,  Suite 250,  Minneapolis,
Minnesota  55437;  if to  the  Credit  Enhancer,  addressed  to  MBIA  Insurance
Corporation,  113 King  Street,  Armonk,  New  York  10504,  Attention:  Insured
Portfolio  Management-Structured  Finance  ("IPM-SF")  (Home  Equity  Loan Trust
2003-HS3);  if to the Rating  Agencies,  addressed to Standard & Poor's  Ratings
Services,  a division of The McGraw-Hill  Companies,  Inc., 55 Water Street, New
York, New York 10041 Attention:  Structured  Finance  Department - MBS or, as to
each  party,  at such other  address as shall be  designated  by such party in a
written notice to each other party.

        (b) Any notice required or permitted to be given to a  Certificateholder
shall be given by  first-class  mail,  postage  prepaid,  at the address of such
Holder as shown in the  Certificate  Register.  Any notice so mailed  within the
time prescribed in this Trust  Agreement shall be conclusively  presumed to have
been duly given, whether or not the Certificateholder receives such notice.

        (c) A copy of any  notice  delivered  to the Owner  Trustee or the Trust
shall also be delivered to the Depositor.

        Section  10.05.Severability.  Any provision of this Trust Agreement that
is  prohibited  or  unenforceable   in  any  jurisdiction   shall,  as  to  such
jurisdiction,   be   ineffective   to  the   extent  of  such   prohibition   or
unenforceability  without  invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

        Section  10.06.Separate  Counterparts.   This  Trust  Agreement  may  be
executed by the parties hereto in separate  counterparts,  each of which when so
executed and delivered  shall be an original,  but all such  counterparts  shall
together constitute but one and the same instrument.

        Section  10.07.Successors and Assigns. All representations,  warranties,
covenants and  agreements  contained  herein shall be binding upon, and inure to
the benefit of, each of the Depositor,  the Owner Trustee and its successors and
each  Certificateholder  and its successors and permitted assigns, all as herein
provided and the Credit  Enhancer.  Any  request,  notice,  direction,  consent,
waiver  or other  instrument  or action by a  Certificateholder  shall  bind the
successors and assigns of such Certificateholder.

        Section  10.08.No  Petition.  The Owner  Trustee,  by entering into this
Trust Agreement and each Certificateholder,  by accepting a Certificate,  hereby
covenant  and  agree  that  they  will not at any  time  institute  against  the
Depositor or the Trust, or join in any institution  against the Depositor or the
Trust of, any  bankruptcy  proceedings  under any United States federal or state
bankruptcy  or  similar  law  in  connection   with  any   obligations   to  the
Certificates, the Notes, this Trust Agreement or any of the Basic Documents.

                                       36
<PAGE>

        Section  10.09.No  Recourse.   Each  Certificateholder  by  accepting  a
Certificate  acknowledges that such  Certificateholder's  Certificates represent
beneficial  interests  in the Trust only and do not  represent  interests  in or
obligations  of the  Depositor,  the Seller,  the Owner  Trustee,  the Indenture
Trustee or any Affiliate thereof and no recourse may be had against such parties
or their assets,  except as may be expressly set forth or  contemplated  in this
Trust Agreement, the Certificates or the Basic Documents.

        Section  10.10.Headings.  The  headings  of  the  various  Articles  and
Sections  herein are for  convenience  of reference only and shall not define or
limit any of the terms or provisions hereof.

        Section  10.11.GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF  DELAWARE,  WITHOUT  REFERENCE  TO ITS
CONFLICT OF LAW  PROVISIONS,  AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

        Section  10.12.Integration.  This Trust Agreement constitutes the entire
agreement  among the parties hereto  pertaining to the subject matter hereof and
supersedes all prior agreements and understanding pertaining thereto.

        Section  10.13.Rights of Credit Enhancer.  (a) By accepting its Class SB
Certificate,  each  Class  SB  Certificateholder  agrees  that  unless  a Credit
Enhancer  Default  exists,  the Credit Enhancer shall have the right to exercise
all rights of the Class SB  Certificateholders  under this Agreement without any
further  consent of the Class SB  Certificateholders.  Nothing in this  Section,
however,  shall alter or modify in any way,  the  fiduciary  obligations  of the
Owner Trustee to the Class SB Certificateholders  pursuant to this Agreement, or
create any fiduciary obligation of the Owner Trustee to the Credit Enhancer. The
Credit Enhancer is an express third-party beneficiary to this Agreement.

        (b) From and after the date on which the Notes are no longer outstanding
under the Indenture and no amounts are owed to the Credit  Enhancer  pursuant to
the terms of the Insurance Agreement, including but not limited to, amounts owed
to the Credit  Enhancer in respect of draws made on the  Policies and for unpaid
premiums, the Credit Enhancer shall have no rights or benefits hereunder and all
references to the Credit Enhancer in this Trust Agreement shall be disregarded.

                                       37
<PAGE>

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

                                            RESIDENTIAL FUNDING MORTGAGE
                                            SECURITIES II, INC.

                                            By:
                                                 -------------------------------
                                                   Name:  Mark White
                                                   Title: Vice President

                                            WILMINGTON TRUST COMPANY, not in its
                                            individual  capacity  but  solely as
                                            Owner  Trustee,  except with respect
                                            to    the     representations    and
                                            warranties contained in Section 6.03
                                            hereof,

                                            By:
                                                 -------------------------------
                                                   Name:
                                                   Title:

Acknowledged and Agreed:

JPMORGAN CHASE BANK,
Indenture Trustee, as Certificate
Registrar and Certificate
Paying Agent

By:
     -------------------------------
       Name:
       Title:

                                       38
<PAGE>

                                    EXHIBIT A

                         FORM OF CLASS SB-I CERTIFICATE

               THIS CLASS SB-I  CERTIFICATE IS  SUBORDINATED IN RIGHT OF PAYMENT
TO THE TERM NOTES AND THE VARIABLE  FUNDING  NOTES AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).

               THIS  CLASS  SB-I   CERTIFICATE  IS  ISSUED  IN  THE  CERTIFICATE
PERCENTAGE  INTEREST  SET  FORTH  BELOW;  HOWEVER,  THE  CERTIFICATE  PERCENTAGE
INTEREST OF THIS  CERTIFICATE  MAY CHANGE IN ACCORDANCE WITH SECTION 3.12 OF THE
AGREEMENT.  THE HOLDER OF THIS CLASS SB-I  CERTIFICATE  HEREBY  CONSENTS  TO ANY
CHANGE IN ITS CERTIFICATE PERCENTAGE INTEREST IN ACCORDANCE WITH SUCH SECTION.

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

               THIS  CLASS  SB-I  CERTIFICATE  HAS  NOT  BEEN  AND  WILL  NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY  STATE  AND MAY NOT BE RESOLD  OR  TRANSFERRED  UNLESS  IT IS  REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR  TRANSFERRED IN  TRANSACTIONS  WHICH
ARE EXEMPT FROM  REGISTRATION  UNDER SUCH ACT AND UNDER  APPLICABLE  LAWS AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE AMENDED AND
RESTATED TRUST AGREEMENT ("THE AGREEMENT").

               NO TRANSFER OF THIS CLASS SB-I  CERTIFICATE  SHALL BE MADE UNLESS
THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER
FROM THE  TRANSFEREE  OF THIS CLASS  SB-I  CERTIFICATE  TO THE EFFECT  THAT SUCH
TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT OR OTHER PLAN SUBJECT TO THE  PROHIBITED
TRANSACTION  RESTRICTIONS AND THE FIDUCIARY  RESPONSIBILITY  REQUIREMENTS OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),  ANY
PERSON ACTING, DIRECTLY OR INDIRECTLY,  ON BEHALF OF ANY SUCH PLAN OR ANY PERSON
USING "PLAN ASSETS,"  WITHIN THE MEANING OF THE DEPARTMENT OF LABOR  REGULATIONS
SECTION  2510.3-101,  TO  ACQUIRE  THIS CLASS SB-I  CERTIFICATE  (EACH,  A "PLAN
INVESTOR"), OR (II) IF THIS CLASS SB-I CERTIFICATE IS PRESENTED FOR REGISTRATION
IN THE NAME OF A PLAN  INVESTOR,  EITHER (X) AN OPINION OF COUNSEL TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF THIS CLASS SB-I CERTIFICATE IS PERMISSIBLE UNDER
APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED  TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR  COMPARABLE  PROVISIONS  OF
ANY  SUBSEQUENT  ENACTMENTS)  AND WILL NOT  SUBJECT  THE  DEPOSITOR,  THE  OWNER
TRUSTEE,  THE MASTER SERVICER OR THE CERTIFICATE  REGISTRAR TO ANY OBLIGATION OR
LIABILITY  IN  ADDITION  TO  THOSE  UNDERTAKEN  IN  THE  AGREEMENT,   OR  (Y)  A
CERTIFICATION  IN THE FORM OF EXHIBIT G TO THE AGREEMENT IN LIEU OF SUCH OPINION
OF COUNSEL.

                                       1
<PAGE>

               THE TRANSFEREE OF THIS CLASS SB-I CERTIFICATE SHALL BE SUBJECT TO
UNITED STATES FEDERAL  WITHHOLDING  TAX UNLESS THE  CERTIFICATE  REGISTRAR SHALL
HAVE  RECEIVED  A  CERTIFICATE  OF  NON-FOREIGN  STATUS  CERTIFYING  AS  TO  THE
TRANSFEREE'S  STATUS AS A U.S.  PERSON OR CORPORATION OR PARTNERSHIP  UNDER U.S.
LAW.

               THIS CLASS SB-I  CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER,  THE  DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE
TRUSTEE,  THE OWNER  TRUSTEE OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE AGREEMENT OR THE OTHER BASIC DOCUMENTS.

                                       2
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2003

Date of Trust Agreement:
September 29, 2003

First Payment Date:                         Certificate Percentage Interest of
October 27, 2003                                   this Certificate:  100%

Assumed Final Payment Date:
September 25, 2033

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2003-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This Class SB-I  Certificate is payable solely from the assets of
the Owner Trust  Estate,  and does not represent an obligation of or interest in
the Depositor, the Seller, the Master Servicer, the Indenture Trustee, the Owner
Trustee or GMAC Mortgage Group, Inc. or any of their affiliates. This Class SB-I
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate Percentage Interest evidenced by this Class SB-I Certificate (as set
forth on the face  hereof) in certain  distributions  with  respect to the Owner
Trust  Estate,  consisting  primarily  of the  Home  Equity  Loans,  created  by
Residential  Funding Mortgage  Securities II, Inc. The Trust (as defined herein)
was created  pursuant to a Trust  Agreement dated as specified above (as amended
and supplemented  from time to time, the "Agreement")  between the Depositor and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This Class SB-I  Certificate  is issued  under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class SB-I Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

                                       3
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified  above, to the Person in whose name this Class SB-I
Certificate  is  registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the month  immediately  preceding  the month of such  distribution  (the
"Record  Date"),  in an amount equal to the pro rata  portion  evidenced by this
Class SB-I Certificate (based on the Certificate  Percentage  Interest stated on
the face hereon) of the Certificate  Distribution Amount, if any, required to be
distributed to Holders of  Certificates on such Payment Date.  Distributions  on
this Class SB-I  Certificate  will be made as provided in the  Agreement  by the
Certificate   Paying   Agent  by  wire   transfer   or  check   mailed   to  the
Certificateholder of record in the Certificate Register without the presentation
or  surrender  of this Class  SB-I  Certificate  or the  making of any  notation
hereon.  Pursuant  to the  Agreement,  the  Trust has  issued  five  Classes  of
Certificates,  designated  as the  Class  SB-I  Certificates,  the  Class  SB-II
Certificates,  the Class R-I  Certificates,  the Class R-II Certificates and the
Class R-III Certificates.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this Class SB-I  Certificate will be made
after  due  notice  by the  Certificate  Paying  Agent of the  pendency  of such
distribution  and only  upon  presentation  and  surrender  of this  Class  SB-I
Certificate at the office or agency maintained by the Certificate  Registrar for
that purpose in the City and State of New York. The initial  Security Balance of
this Class SB-I Certificate is set forth above. The Security Balance hereof will
be reduced to the extent of the distributions allocable to principal.

               No  transfer of this Class SB-I  Certificate  will be made unless
such transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended,  and any  applicable  state  securities  laws or is made in
accordance  with said Act and laws.  In the event that such a transfer  is to be
made, (i) the  Certificate  Registrar or the Depositor may require an opinion of
counsel acceptable to and in form and substance  satisfactory to the Certificate
Registrar  and the  Depositor  that  such  transfer  is exempt  (describing  the
applicable  exemption and the basis  therefor) from or is being made pursuant to
the registration  requirements of the Securities Act of 1933, as amended, and of
any  applicable  statute of any state and (ii) the  transferee  shall execute an
investment  letter  in  the  form  described  in the  Agreement  and  (iii)  the
Certificate  Registrar  shall  require the  transferee  to execute an investment
letter and a  Certificate  of  Non-Foreign  Status in the form  described by the
Agreement (or if a Certificate of Non-Foreign Status is not provided, an Opinion
of  Counsel  as  described  in  the  Agreement),  which  investment  letter  and
certificate or Opinion of Counsel shall not be at the expense of the Trust,  the
Owner Trustee,  the  Certificate  Registrar or the Depositor.  The Holder hereof
desiring to effect such transfer shall,  and does hereby agree to, indemnify the
Trust, the Owner Trustee, the Depositor, the Master Servicer and the Certificate
Registrar against any liability that may result if the transfer is not so exempt
or is not made in  accordance  with such federal and state laws.  In  connection
with any such transfer,  the Certificate Registrar (unless otherwise directed by
the Depositor) will also require either (i) a representation letter, in the form
as described by the  Agreement,  stating that the  transferee is not an employee
benefit or other plan subject to the prohibited transaction  restrictions or the
fiduciary  responsibility  requirements  of ERISA or Section 4975 of the Code (a
"Plan"), any person acting,  directly or indirectly,  on behalf of any such Plan
or any Person using the "plan  assets,"  within the meaning of the Department of

                                       4
<PAGE>

Labor  regulations  at 29  C.F.R.  ss.2510.3-101,  to  effect  such  acquisition
(collectively,  a "Plan  Investor")  or (ii) if this Class SB-I  Certificate  is
presented for registration in the name of a Plan Investor, either (x) an opinion
of  counsel  to the  effect  that the  purchase  or  holding  of this Class SB-I
Certificate is permissible  under  applicable law, will not constitute or result
in a prohibited  transaction  under  Section 406 of ERISA or Section 4975 of the
Code  (or  comparable  provisions  of any  subsequent  enactments)  and will not
subject the Depositor, the Owner Trustee, the Master Servicer or the Certificate
Registrar to any obligation or liability in addition to those  undertaken in the
Agreement,  or (y) a certification  in the form of Exhibit G to the Agreement in
lieu of such opinion of counsel.

               This Class SB-I  Certificate is one of a duly authorized issue of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this Class SB-I Certificate which are defined in the Agreement shall have the
meanings assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance  of this  Class  SB-I
Certificate,  agrees  that it will look  solely to the funds on  deposit  in the
Certificate  Distribution  Account that have been  released from the Lien of the
Indenture  for  payment  hereunder  and that  neither  the Owner  Trustee in its
individual   capacity   nor  the   Depositor   is   personally   liable  to  the
Certificateholders  for any amount payable under this Class SB-I  Certificate or
the Agreement or, except as expressly provided in the Agreement,  subject to any
liability under the Agreement.

               The Holder of this Class SB-I Certificate acknowledges and agrees
that  its  rights  to  receive  distributions  in  respect  of this  Class  SB-I
Certificate  are  subordinated  to the rights of the Noteholders as described in
the Indenture.,  dated as of September 29, 2003,  between Home Equity Loan Trust
2003-HS3  (the  "Trust") and  JPMorgan  Chase Bank,  as  Indenture  Trustee (the
"Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  of,  any  bankruptcy,  reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings  under any United
States  federal  or state  bankruptcy  or  similar  law in  connection  with any
obligations relating to the Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and the consent of the Credit Enhancer shall be obtained.  If the purpose
of the  amendment is to prevent the  imposition of any federal or state taxes at
any time that any Security is  outstanding,  it shall not be necessary to obtain
the consent of any Holder,  but the Owner  Trustee  shall be  furnished  with an
Opinion of Counsel  that such  amendment  is necessary or helpful to prevent the
imposition  of such  taxes and is not  materially  adverse to any Holder and the

                                       5
<PAGE>

consent  of the  Credit  Enhancer  shall  be  obtained.  If the  purpose  of the
amendment is to add or eliminate or change any provision of the Agreement, other
than as specified in the preceding two  sentences,  the amendment  shall require
either (a) a letter from the Rating  Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Security, if
determined  without  regard to the  Policy or (b) the  consent  of  Holders of a
majority of the Certificate  Percentage  Interests of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in
any  manner  the amount  of, or delay the time of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

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

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering  the same. This Class SB-I Certificate is issued in the Certificate
Percentage Interest above; however, the Certificate  Percentage Interest of this
Class  SB-I  Certificate  may  change in  accordance  with  Section  3.12 of the
Agreement.  The Holder of this Class SB-I  Certificate  hereby  consents  to any
change in its Certificate Percentage Interest in accordance with such Section.

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

               The Owner Trustee,  the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the  Certificate  Registrar  may treat the  Person in whose name this Class SB-I
Certificate is registered as the owner hereof for all purposes,  and none of the
Owner Trustee,  the Certificate  Paying Agent, the Certificate  Registrar or any
such agent shall be affected by any notice to the contrary.

               This Class SB-I Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2033, or (iii) the purchase by the
Master  Servicer  of all Home  Equity  Loans  pursuant  to  Section  8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature,  this Class SB-I Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.

                                       6
<PAGE>

               IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its  individual  capacity,  has caused this Class SB-I  Certificate to be
duly executed.

                            HOME EQUITY LOAN TRUST 2003-HS3

                            By: WILMINGTON TRUST COMPANY,
                                not in its individual capacity but solely as
                                Owner Trustee

Dated:  September 29, 2003  By:
                                ---------------------------------------
                                Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                WILMINGTON TRUST COMPANY,
                                 not in its individual capacity
                                 but solely as Owner Trustee

                            By: ______________________________
                                 Authorized Signatory

                            or JPMORGAN CHASE BANK,
                            not in its individual capacity but solely,
                            as Authenticating Agent of the Trust

Dated: September 29, 2003

                            By: ______________________________
                                Authorized Signatory

                                       7
<PAGE>

                                   ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE___________________________________

-----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

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

the  within   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  Certificate on the books of the  Certificate  Registrar,  with
full power of substitution in the premises.

Dated:_________________________________

                          _____________________________________*/
                             Signature Guaranteed:

                          ____________________________*/

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

*/ NOTICE:  The signature to this assignment must correspond with the name as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                       8
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

        The assignee  should  include the following for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  _____________________  for the  account of  ______________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                     ------------------------------
                                     Signature of assignee or agent
                                     (for authorization of wire transfer only)

                                       9
<PAGE>

                         FORM OF CLASS SB-II CERTIFICATE

               THIS CLASS SB-II  CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE TERM NOTES AND THE VARIABLE  FUNDING  NOTES AS DESCRIBED IN THE AGREEMENT
(AS DEFINED HEREIN).

               THIS CLASS SB-II CERTIFICATE IS ISSUED IN THE PERCENTAGE INTEREST
SET FORTH BELOW; HOWEVER, THE PERCENTAGE INTEREST OF THIS CERTIFICATE MAY CHANGE
IN ACCORDANCE WITH SECTION 3.12 OF THE AGREEMENT.  THE HOLDER OF THIS CLASS SB-I
CERTIFICATE HEREBY CONSENTS TO ANY CHANGE IN ITS CERTIFICATE PERCENTAGE INTEREST
IN ACCORDANCE WITH SUCH SECTION.

               THIS  CLASS  SB-II  CERTIFICATE  HAS NOT  BEEN  AND  WILL  NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY  STATE  AND MAY NOT BE RESOLD  OR  TRANSFERRED  UNLESS  IT IS  REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR  TRANSFERRED IN  TRANSACTIONS  WHICH
ARE EXEMPT FROM  REGISTRATION  UNDER SUCH ACT AND UNDER  APPLICABLE  LAWS AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE AMENDED AND
RESTATED TRUST AGREEMENT ("THE AGREEMENT").

               NO TRANSFER OF THIS CLASS SB-II  CERTIFICATE SHALL BE MADE UNLESS
THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER
FROM THE  TRANSFEREE  OF THIS CLASS  SB-II  CERTIFICATE  TO THE EFFECT THAT SUCH
TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT OR OTHER PLAN SUBJECT TO THE  PROHIBITED
TRANSACTION  RESTRICTIONS AND THE FIDUCIARY  RESPONSIBILITY  REQUIREMENTS OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),  ANY
PERSON ACTING, DIRECTLY OR INDIRECTLY,  ON BEHALF OF ANY SUCH PLAN OR ANY PERSON
USING "PLAN ASSETS,"  WITHIN THE MEANING OF THE DEPARTMENT OF LABOR  REGULATIONS
SECTION  2510.3-101,  TO ACQUIRE  THIS CLASS SB-II  CERTIFICATE  (EACH,  A "PLAN
INVESTOR"),   OR  (II)  IF  THIS  CLASS  SB-II   CERTIFICATE  IS  PRESENTED  FOR
REGISTRATION IN THE NAME OF A PLAN INVESTOR, EITHER (X) AN OPINION OF COUNSEL TO
THE EFFECT  THAT THE  PURCHASE  OR HOLDING OF THIS CLASS  SB-II  CERTIFICATE  IS
PERMISSIBLE  UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED
TRANSACTION  UNDER  SECTION  406 OF  ERISA  OR  SECTION  4975  OF THE  CODE  (OR
COMPARABLE  PROVISIONS OF ANY  SUBSEQUENT  ENACTMENTS)  AND WILL NOT SUBJECT THE
DEPOSITOR,  THE OWNER TRUSTEE, THE MASTER SERVICER OR THE CERTIFICATE  REGISTRAR
TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT,
OR (Y) A CERTIFICATION IN THE FORM OF EXHIBIT G TO THE AGREEMENT IN LIEU OF SUCH
OPINION OF COUNSEL.

                                       10
<PAGE>

               THE TRANSFEREE OF THIS CLASS SB-II  CERTIFICATE  SHALL BE SUBJECT
TO UNITED STATES FEDERAL WITHHOLDING TAX UNLESS THE CERTIFICATE  REGISTRAR SHALL
HAVE  RECEIVED  A  CERTIFICATE  OF  NON-FOREIGN  STATUS  CERTIFYING  AS  TO  THE
TRANSFEREE'S  STATUS AS A U.S.  PERSON OR CORPORATION OR PARTNERSHIP  UNDER U.S.
LAW.

               THIS CLASS SB-II CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER,  THE  DEPOSITOR,  THE MASTER  SERVICER,  THE INDENTURE
TRUSTEE,  THE OWNER  TRUSTEE OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE AGREEMENT OR THE OTHER BASIC DOCUMENTS.

                                       11
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2003

Date of Trust Agreement:
September 29, 2003

First Payment Date:                         Certificate Percentage Interest of
October 27, 2003                                   this Certificate:  100%

Assumed Final Payment Date:
September 25, 2033

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2003-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This Class SB-II Certificate is payable solely from the assets of
the Owner Trust  Estate,  and does not represent an obligation of or interest in
the Depositor, the Seller, the Master Servicer, the Indenture Trustee, the Owner
Trustee or GMAC  Mortgage  Group,  Inc. or any of their  affiliates.  This Class
SB-II  Certificate  is not guaranteed or insured by any  governmental  agency or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that Auer & Co. is the  registered  owner of the
Certificate  Percentage  Interest  evidenced by this Class SB-II Certificate (as
set forth on the face hereof) in certain distributions with respect to the Owner
Trust  Estate,  consisting  primarily  of the  Home  Equity  Loans,  created  by
Residential  Funding Mortgage  Securities II, Inc. The Trust (as defined herein)
was created  pursuant to a Trust  Agreement dated as specified above (as amended
and supplemented  from time to time, the "Agreement")  between the Depositor and
Wilmington  Trust  Company,  as owner trustee (the "Owner  Trustee,"  which term
includes any successor entity under the Agreement),  a summary of certain of the
pertinent provisions of which is set forth hereafter.  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This Class SB-II  Certificate  is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class SB-II  Certificate by virtue of the acceptance  hereof assents and
by which such Holder is bound.

                                       12
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Class SB-II
Certificate  is  registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such last
day) of the month  immediately  preceding  the month of such  distribution  (the
"Record  Date"),  in an amount equal to the pro rata  portion  evidenced by this
Class SB-II Certificate (based on the Certificate  Percentage Interest stated on
the face hereon) of the Certificate  Distribution Amount, if any, required to be
distributed to Holders of  Certificates on such Payment Date.  Distributions  on
this Class SB-II  Certificate  will be made as provided in the  Agreement by the
Certificate   Paying   Agent  by  wire   transfer   or  check   mailed   to  the
Certificateholder of record in the Certificate Register without the presentation
or  surrender  of this Class  SB-II  Certificate  or the making of any  notation
hereon.  Pursuant  to the  Agreement,  the  Trust has  issued  five  Classes  of
Certificates,  designated  as the  Class  SB-I  Certificates,  the  Class  SB-II
Certificates,  the Class R-I  Certificates,  the Class R-II Certificates and the
Class R-III Certificates.

               Except as otherwise provided in the Agreement and notwithstanding
the above, the final  distribution on this Class SB-II  Certificate will be made
after  due  notice  by the  Certificate  Paying  Agent of the  pendency  of such
distribution  and only upon  presentation  and  surrender  of this  Class  SB-II
Certificate at the office or agency maintained by the Certificate  Registrar for
that purpose in the City and State of New York. The initial  Security Balance of
this Class SB-II  Certificate  is set forth above.  The Security  Balance hereof
will be reduced to the extent of the distributions allocable to principal.

               No transfer of this Class SB-II  Certificate  will be made unless
such transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended,  and any  applicable  state  securities  laws or is made in
accordance  with said Act and laws.  In the event that such a transfer  is to be
made, (i) the  Certificate  Registrar or the Depositor may require an opinion of
counsel acceptable to and in form and substance  satisfactory to the Certificate
Registrar  and the  Depositor  that  such  transfer  is exempt  (describing  the
applicable  exemption and the basis  therefor) from or is being made pursuant to
the registration  requirements of the Securities Act of 1933, as amended, and of
any  applicable  statute of any state and (ii) the  transferee  shall execute an
investment  letter  in  the  form  described  in the  Agreement  and  (iii)  the
Certificate  Registrar  shall  require the  transferee  to execute an investment
letter and a  Certificate  of  Non-Foreign  Status in the form  described by the
Agreement (or if a Certificate of Non-Foreign Status is not provided, an Opinion
of  Counsel  as  described  in  the  Agreement),  which  investment  letter  and
certificate or Opinion of Counsel shall not be at the expense of the Trust,  the
Owner Trustee,  the  Certificate  Registrar or the Depositor.  The Holder hereof
desiring to effect such transfer shall,  and does hereby agree to, indemnify the
Trust, the Owner Trustee, the Depositor, the Master Servicer and the Certificate
Registrar against any liability that may result if the transfer is not so exempt
or is not made in  accordance  with such federal and state laws.  In  connection
with any such transfer,  the Certificate Registrar (unless otherwise directed by
the Depositor) will also require either (i) a representation letter, in the form
as described by the  Agreement,  stating that the  transferee is not an employee
benefit or other plan subject to the prohibited transaction  restrictions or the
fiduciary  responsibility  requirements  of ERISA or Section 4975 of the Code (a
"Plan"), any person acting,  directly or indirectly,  on behalf of any such Plan
or any Person using the "plan  assets,"  within the meaning of the Department of
Labor  regulations  at 29  C.F.R.  ss.2510.3-101,  to  effect  such  acquisition

                                       13
<PAGE>

(collectively,  a "Plan  Investor") or (ii) if this Class SB-II  Certificate  is
presented for registration in the name of a Plan Investor, either (x) an opinion
of counsel  to the  effect  that the  purchase  or  holding of this Class  SB-II
Certificate is permissible  under  applicable law, will not constitute or result
in a prohibited  transaction  under  Section 406 of ERISA or Section 4975 of the
Code  (or  comparable  provisions  of any  subsequent  enactments)  and will not
subject the Depositor, the Owner Trustee, the Master Servicer or the Certificate
Registrar to any obligation or liability in addition to those  undertaken in the
Agreement,  or (y) a certification  in the form of Exhibit G to the Agreement in
lieu of such opinion of counsel.

               This Class SB-II Certificate is one of a duly authorized issue of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this Class SB-II  Certificate  which are defined in the Agreement  shall have
the meanings assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance  of this Class  SB-II
Certificate,  agrees  that it will look  solely to the funds on  deposit  in the
Certificate  Distribution  Account that have been  released from the Lien of the
Indenture  for  payment  hereunder  and that  neither  the Owner  Trustee in its
individual   capacity   nor  the   Depositor   is   personally   liable  to  the
Certificateholders  for any amount payable under this Class SB-II Certificate or
the Agreement or, except as expressly provided in the Agreement,  subject to any
liability under the Agreement.

               The  Holder of this  Class  SB-II  Certificate  acknowledges  and
agrees that its rights to receive  distributions  in respect of this Class SB-II
Certificate  are  subordinated  to the rights of the Noteholders as described in
the  Indenture,  dated as of September 29, 2003,  between Home Equity Loan Trust
2003-HS3  (the  "Trust") and  JPMorgan  Chase Bank,  as  Indenture  Trustee (the
"Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  of,  any  bankruptcy,  reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings  under any United
States  federal  or state  bankruptcy  or  similar  law in  connection  with any
obligations relating to the Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and the consent of the Credit Enhancer shall be obtained.  If the purpose
of the  amendment is to prevent the  imposition of any federal or state taxes at
any time that any Security is  outstanding,  it shall not be necessary to obtain
the consent of any Holder,  but the Owner  Trustee  shall be  furnished  with an
Opinion of Counsel  that such  amendment  is necessary or helpful to prevent the

                                       14
<PAGE>

imposition  of such  taxes and is not  materially  adverse to any Holder and the
consent  of the  Credit  Enhancer  shall  be  obtained.  If the  purpose  of the
amendment is to add or eliminate or change any provision of the Agreement, other
than as specified in the preceding two  sentences,  the amendment  shall require
either (a) a letter from the Rating  Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Security, if
determined  without  regard to the  Policy or (b) the  consent  of  Holders of a
majority of the Certificate  Percentage  Interests of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in
any  manner  the amount  of, or delay the time of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

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

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Class SB-II Certificate is issued in the Certificate
Percentage Interest above; however, the Certificate  Percentage Interest of this
Class  SB-II  Certificate  may change in  accordance  with  Section  3.12 of the
Agreement.  The Holder of this Class SB-II  Certificate  hereby  consents to any
change in its Certificate Percentage Interest in accordance with such Section.

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

               The Owner Trustee,  the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the  Certificate  Registrar  may treat the Person in whose name this Class SB-II
Certificate is registered as the owner hereof for all purposes,  and none of the
Owner Trustee,  the Certificate  Paying Agent, the Certificate  Registrar or any
such agent shall be affected by any notice to the contrary.

               This Class SB-II  Certificate  shall be governed by and construed
in accordance with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement,  (ii) the Payment Date in August  2033,  or (iii) the purchase by the
Master  Servicer  of all Home  Equity  Loans  pursuant  to  Section  8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Class SB-II Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.

                                       15
<PAGE>

               IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual  capacity,  has caused this Class SB-II  Certificate to be
duly executed.

                                HOME EQUITY LOAN TRUST 2003-HS3

                                By: WILMINGTON TRUST COMPANY,
                                    not in its individual capacity but solely as
                                    Owner Trustee

Dated:  September 29, 2003      By:
                                    ---------------------------------------
                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                  WILMINGTON TRUST COMPANY,
                                   not in its individual capacity
                                   but solely as Owner Trustee

                              By: ______________________________
                                   Authorized Signatory

                              or JPMORGAN CHASE BANK,
                              not in its individual capacity but solely,
                              as Authenticating Agent of the Trust

Dated: September 29, 2003

                                            By: ______________________________
                                                Authorized Signatory

                                       16
<PAGE>

                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE___________________________________

-----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

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

the  within   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  Certificate on the books of the  Certificate  Registrar,  with
full power of substitution in the premises.

Dated:_________________________________

                          _____________________________________*/
                             Signature Guaranteed:

                          ____________________________*/

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

*/ NOTICE:  The signature to this assignment must correspond with the name as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                       17
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

        The assignee  should  include the following for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  _____________________  for the  account of  ______________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                     ------------------------------
                                     Signature of assignee or agent
                                     (for authorization of wire transfer only)

                                       18
<PAGE>

                                    EXHIBIT B
                             TO THE TRUST AGREEMENT

                              CERTIFICATE OF TRUST

                                       OF

                         HOME EQUITY LOAN TRUST 2003-HS3

        THIS  Certificate  of Trust of Home  Equity  Loan  Trust  2003-HS3  (the
"Trust")  is being  duly  executed  and filed by  Wilmington  Trust  company,  a
Delaware banking corporation,  as owner trustee, to form a statutory trust under
the Delaware Statutory Trust Act (12 Del. C ss.3801 et seq.).

        1. Name:  The name of the  statutory  trust formed hereby is Home Equity
Loan Trust 2003-HS3.

        2. Delaware Trustee:  The name and business address of the owner trustee
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street,  Wilmington,  Delaware  19890-0001,  Attention:
Corporate Trust Administration.

        3.  Effective  Date:  This  Certificate of Trust shall be effective upon
filing with the Secretary of State.

               IN WITNESS WHEREOF, the undersigned, being the sole owner trustee
of the Trust, has executed this Certificate of Trust.

                                            WILMINGTON TRUST COMPANY,
                                            as owner trustee

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:

                                       19
<PAGE>

                                    EXHIBIT C

                  [FORM OF RULE 144A INVESTMENT REPRESENTATION]

             Description of Rule 144A Securities, including numbers:
                 ===============================================
                 ===============================================
                          (the "Rule 144A Securities")

               The  undersigned  seller,  as registered  holder (the  "Seller"),
intends to transfer the Rule 144A Securities  described above to the undersigned
buyer (the "Buyer").

               1. In connection  with such  transfer and in accordance  with the
agreements  pursuant to which the Rule 144A Securities  were issued,  the Seller
hereby  certifies the following  facts:  Neither the Seller nor anyone acting on
its behalf has offered, transferred,  pledged, sold or otherwise disposed of the
Rule 144A  Securities,  any  interest in the Rule 144A  Securities  or any other
similar security to, or solicited any offer to buy or accept a transfer,  pledge
or other disposition of the Rule 144A Securities,  any interest in the Rule 144A
Securities  or any other  similar  security  from,  or otherwise  approached  or
negotiated  with respect to the Rule 144A  Securities,  any interest in the Rule
144A Securities 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
Rule 144A  Securities  under the  Securities  Act of 1933, as amended (the "1933
Act"),  or that  would  render the  disposition  of the Rule 144A  Securities  a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or  another  "qualified  institutional  buyer" as defined in Rule
144A under the 1933 Act.

               2. The Buyer warrants and represents to, and covenants  with, the
Owner Trustee and the  Depositor  (as defined in the Amended and Restated  Trust
Agreement (the "Agreement"),  dated as of September 29, 2003 between Residential
Funding Mortgage Securities II, Inc., as Depositor and Wilmington Trust Company,
as Owner Trustee  pursuant to Section 3.05 of the Agreement,  and JPMorgan Chase
Bank, as indenture trustee, as follows:

               a. The Buyer  understands  that the Rule 144A Securities have not
been registered under the 1933 Act or the securities laws of any state.

               b.  The  Buyer  considers  itself  a  substantial,  sophisticated
institutional  investor  having such  knowledge and  experience in financial and
business  matters  that it is  capable  of  evaluating  the  merits and risks of
investment in the Rule 144A Securities.

                                       20
<PAGE>

               c. The Buyer has been  furnished with all  information  regarding
the Rule 144A  Securities  that it has requested from the Seller,  the Indenture
Trustee, the Owner Trustee or the Master Servicer.

               d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred,  pledged,  sold or otherwise  disposed of the Rule 144A Securities,
any interest in the Rule 144A  Securities or any other  similar  security to, or
solicited any offer to buy or accept a transfer,  pledge or other disposition of
the Rule 144A Securities,  any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with respect to the
Rule 144A  Securities,  any  interest in the Rule 144A  Securities  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 Rule  144A
Securities  under the 1933 Act or that would render the  disposition of the Rule
144A Securities a violation of Section 5 of the 1933 Act or require registration
pursuant  thereto,  nor will it act, nor has it  authorized or will it authorize
any person to act, in such manner with respect to the Rule 144A Securities.

               e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. The Buyer is
aware that the sale to it is being made in reliance  on Rule 144A.  The Buyer is
acquiring the Rule 144A  Securities for its own account or the accounts of other
qualified  institutional buyers,  understands that such Rule 144A Securities may
be resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified  institutional  buyer that  purchases for its own account or for the
account  of a  qualified  institutional  buyer to whom  notice is given that the
resale,  pledge or  transfer  is being made in  reliance  on Rule 144A,  or (ii)
pursuant to another exemption from registration under the 1933 Act.

               3.  [only  applicable  to the Class SB  Certificates]  [The Buyer
represents that:

               (i) either (a) or (b) is satisfied, as marked below:

     a. The Buyer is not any  employee  benefit  plan  subject  to the  Employee
Retirement  Income Security Act of 1974, as amended  ("ERISA"),  or the Internal
Revenue Code of 1986,  as amended (the  "Code"),  a Person  acting,  directly or
indirectly, on behalf of any such plan or any Person acquiring such Certificates
with "plan  assets"  of a Plan  within the  meaning of the  Department  of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or

     b. The Buyer will provide the Depositor, the Owner Trustee, the Certificate
Registrar  and the Master  Servicer  with  either:  (x) an  opinion of  counsel,
satisfactory to the Depositor,  the Owner Trustee, the Certificate Registrar and
the  Master  Servicer,  to  the  effect  that  the  purchase  and  holding  of a
Certificate by or on behalf of the Buyer is permissible  under  applicable  law,
will not constitute or result in a prohibited  transaction  under Section 406 of
ERISA or Section 4975 of the Code (or  comparable  provisions of any  subsequent
enactments)  and  will  not  subject  the  Depositor,  the  Owner  Trustee,  the
Certificate  Registrar  or the Master  Servicer to any  obligation  or liability

                                       21
<PAGE>

(including  liabilities  under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Trust  Agreement,  which opinion of counsel shall not be
an expense of the Depositor, the Owner Trustee, the Certificate Registrar or the
Master Servicer;  or (y) in lieu of such opinion of counsel,  a certification in
the form of Exhibit G to the Trust Agreement; and

               (ii)  the  Buyer is  familiar  with  the  prohibited  transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made in this paragraph 3.]

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

               Capitalized  terms used  herein  that are not  otherwise  defined
shall have the meanings ascribed thereto in Appendix A to the indenture dated as
of September 29, 2003, between the Trust and the Indenture Trustee.

               IN  WITNESS  WHEREOF,  each  of the  parties  has  executed  this
document as of the date set forth below.

Print Name of Seller                              Print Name of Buyer

By:                                               By:
   -----------------------------------------
     Name:                                             Name:
     Title:                                           Title:

Taxpayer Identification:                          Taxpayer Identification:

No. No.

Date:                                             Date:
      --------------------------------------

                                       22
<PAGE>

                              ANNEX 1 TO EXHIBIT C

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

             [For Buyers Other Than Registered Investment Companies]

        The undersigned  hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:

               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  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 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis  $______________________1 in securities (except for the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.

______________________

1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities  unless Buyer is a dealer,  and, in that case,  Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities

                                       23
<PAGE>

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.

Bank. The Buyer (a) is a national bank or banking  institution  organized  under
the laws of any State,  territory or the  District of Columbia,  the business of
which is  substantially  confined to banking and is  supervised  by the State or
territorial  banking  commission  or similar  official  or is a foreign  bank or
equivalent institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual  financial  statements,  a copy of which is
attached hereto.

Savings and Loan. The Buyer (a) is a savings and loan association,  building and
loan   association,   cooperative   bank,   homestead   association  or  similar
institution,  which is supervised  and examined by a State or Federal  authority
having  supervision over any such  institutions or is a foreign savings and loan
association  or  equivalent  institution  and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial statements.

Broker-Dealer.  The Buyer is a dealer  registered  pursuant to Section 15 of the
Securities Exchange Act of 1934.

Insurance  Company.  The  Buyer  is  an  insurance  company  whose  primary  and
predominant  business  activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to supervision by
the  insurance  commissioner  or a  similar  official  or  agency  of a State or
territory or the District of Columbia.

State or Local Plan. The Buyer is a plan  established and maintained by a State,
its political subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its employees.

ERISA Plan. The Buyer is an employee  benefit plan within the meaning of Title I
of the Employee Retirement Income Security Act of 1974.

Investment  Adviser.  The Buyer is an investment  adviser  registered  under the
Investment Advisers Act of 1940.

SBIC.  The Buyer is a Small  Business  Investment  Company  licensed by the U.S.
Small Business  Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

Business  Development  Company.  The Buyer is a business  development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

Trust Fund.  The Buyer is a trust fund whose  trustee is a bank or trust company
and whose participants are exclusively (a) plans 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, or (b) employee
benefit  plans within the meaning of Title I of the Employee  Retirement  Income
Security  Act of 1974,  but is not a trust fund that  includes  as  participants
individual retirement accounts or H.R. 10 plans.

                                       24
<PAGE>

               3. The term  "securities"  as used  herein  does not  include (i)
securities of issuers that are affiliated  with the Buyer,  (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer,  (iii) 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.

               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.  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.

               5. The Buyer  acknowledges that it is familiar with Rule 144A and
understands  that the  seller to it and other  parties  related to the Rule 144A
Securities 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.

___ ___ Will the Buyer be purchasing  the Rule 144A Yes No  Securities  only for
the Buyer's own account?

               6. If the answer to the  foregoing  question  is "no",  the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party  (including  any  separate  account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified  institutional  buyer" within the meaning of Rule 144A.
In addition,  the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current  representation  letter from
such third party or taken other appropriate  steps  contemplated by Rule 144A to
conclude that such third party  independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.

               7. 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 Rule 144A  Securities will
constitute  a  reaffirmation  of  this  certification  as of the  date  of  such
purchase.

                                            Print Name of Buyer

                                            By: _______________________________
                                                 Name:
                                                 Title:

                                            Date:
                                                   ----------------------------

                                       25
<PAGE>

                              ANNEX 2 TO EXHIBIT C

                   QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

                    [For Buyers That Are Registered Investment Companies]

               The  undersigned  hereby  certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:

               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  ("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 SEC Rule 144A  because  (i) the
Buyer is an investment  company  registered under the Investment  Company Act of
1940,  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.

____ 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) bank deposit notes and certificates
of  deposit,  (iii)  loan  participations,   (iv)  repurchase  agreements,   (v)
securities  owned but  subject  to a  repurchase  agreement  and (vi)  currency,
interest rate and commodity swaps.

               5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made 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.

                                       26
<PAGE>

               6. The undersigned  will notify each of the parties to which this
certification is made of any changes in the information and conclusions  herein.
Until such notice,  the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this  certification by the undersigned as of the date of such
purchase.

                                            ------------------------------------
                                               Print Name of Buyer

                                            By:_________________________________
                                                Name:
                                                Title:

                                            IF AN ADVISER:

                                            ------------------------------------
                                            Print Name of Buyer

                                            Date:
                                                   -----------------------------

                                       27
<PAGE>

                                    EXHIBIT D

                     FORM OF INVESTOR REPRESENTATION LETTER

                                   ___________ , 20__

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota 55437

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York  10004
Attention:  Institutional Trust Services/Structured Finance Services

               Re:    Home Equity Loan-Backed Certificates
                      Series 2003-HS3, [Class R-__] [Class SB-__]

     Ladies and  Gentlemen:  (the  "Purchaser")  intends to  purchase  from (the
"Seller")  a ___%  Certificate  Percentage  Interest of  Certificates  of Series
2003-HS3 (the "Certificates"), issued pursuant to the Amended and Restated Trust
Agreement  (the "Trust  Agreement"),  dated as of September  29,  2003,  between
Residential  Funding Mortgage Securities II, Inc. as depositor (the "Depositor")
and  Wilmington  Trust  Company,  as owner  trustee  (the "Owner  Trustee"),  as
acknowledged  and agreed by JPMorgan Chase Bank, as Certificate  Registrar.  All
terms used herein and not otherwise defined shall have the meanings set forth in
the Trust Agreement. The Purchaser hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Certificate Registrar that:

               1. The Purchaser  understands that (a) the Certificates  have not
        been and will not be registered or qualified under the Securities Act of
        1933,  as  amended  (the  "Act") or any state  securities  law,  (b) the
        Depositor  is not  required to so register or qualify the  Certificates,
        (c) the  Certificates  may be resold only if  registered  and  qualified
        pursuant to the provisions of the Act or any state securities law, or if
        an exemption from such registration and qualification is available,  (d)
        the Trust Agreement contains restrictions  regarding the transfer of the
        Certificates  and  (e)  the  Certificates  will  bear  a  legend  to the
        foregoing effect.

               2.  The  Purchaser  is  acquiring  the  Certificates  for its own
        account  for  investment  only  and not  with a view  to or for  sale in
        connection  with any  distribution  thereof  in any  manner  that  would
        violate the Act or any applicable state securities laws.

               3.   The   Purchaser   is   (a)  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)
        able to bear  the  economic  risks  of  such  an  investment  and (c) an
        "accredited  investor"  within the  meaning of Rule  501(a)  promulgated
        pursuant to the Act.

                                       28
<PAGE>

               4.  The  Purchaser  has  been  furnished  with,  and  has  had an
        opportunity to review (a) [a copy of the Private  Placement  Memorandum,
        dated _______,  20__,  relating to the  Certificates  (b)] a copy of the
        Trust  Agreement  and [b] [c]  such  other  information  concerning  the
        Certificates,  the  Home  Equity  Loans  and the  Depositor  as has been
        requested  by the  Purchaser  from the  Depositor  or the  Seller and is
        relevant to the Purchaser's  decision to purchase the Certificates.  The
        Purchaser has had any questions arising from such review answered by the
        Depositor or the Seller to the  satisfaction  of the Purchaser.  [If the
        Purchaser  did  not  purchase  the  Certificates   from  the  Seller  in
        connection  with the initial  distribution of the  Certificates  and was
        provided  with  a  copy  of  the  Private   Placement   Memorandum  (the
        "Memorandum") relating to the original sale (the "Original Sale") of the
        Certificates  by the  Depositor,  the Purchaser  acknowledges  that such
        Memorandum  was provided to it by the Seller,  that the  Memorandum  was
        prepared by the Depositor solely for use in connection with the Original
        Sale and the Depositor did not  participate  in or facilitate in any way
        the purchase of the  Certificates by the Purchaser from the Seller,  and
        the  Purchaser  agrees that it will look solely to the Seller and not to
        the Depositor  with respect to any damage,  liability,  claim or expense
        arising  out of,  resulting  from or in  connection  with  (a)  error or
        omission, or alleged error or omission,  contained in the Memorandum, or
        (b) any information,  development or event arising after the date of the
        Memorandum.]

               5. The  Purchaser  has not and will not nor has it  authorized or
        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 of 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 (as to any of (a)
        through (e) above) would  constitute a distribution  of any  Certificate
        under the Act, that would render the  disposition  of any  Certificate a
        violation of Section 5 of the Act or any state  securities  law, or that
        would  require  registration  or  qualification  pursuant  thereto.  The
        Purchaser will not sell or otherwise  transfer any of the  Certificates,
        except in compliance with the provisions of the Trust Agreement.

               6. [only applicable to the Class SB Certificates]  [The Purchaser
        represents:

                  (i) that either (a) or (b) is satisfied, as marked below:

     ____ a. The  Purchaser  is not any  employee  benefit  plan  subject to the
Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),  or the
Internal  Revenue  Code of 1986,  as  amended  (the  "Code"),  a Person  acting,
directly or indirectly,  on behalf of any such plan or any Person acquiring such
Certificates  with "plan assets" of a Plan within the meaning of the  Department
of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101; or

                                       29
<PAGE>

     ____ b. The Purchaser  will provide the Depositor,  the Owner Trustee,  the
Certificate  Registrar and the Master  Servicer  with either:  (x) an opinion of
counsel,  satisfactory  to the  Depositor,  the Owner Trustee,  the  Certificate
Registrar and the Master  Servicer,  to the effect that the purchase and holding
of a  Certificate  by or  on  behalf  of  the  Purchaser  is  permissible  under
applicable law, will not constitute or result in a prohibited  transaction under
Section 406 of ERISA or Section 4975 of the Code (or  comparable  provisions  of
any  subsequent  enactments)  and will not  subject  the  Depositor,  the  Owner
Trustee,  the Certificate  Registrar or the Master Servicer to any obligation or
liability  (including  liabilities  under ERISA or Section  4975 of the Code) in
addition to those  undertaken in the Trust  Agreement,  which opinion of counsel
shall not be an expense of the  Depositor,  the Owner Trustee,  the  Certificate
Registrar or the Master Servicer;  or (y) in lieu of such opinion of counsel,  a
certification in the form of Exhibit G to the Trust Agreement; and

               (ii) the  Purchaser is familiar with the  prohibited  transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made in this paragraph 6.]

               7. The Purchaser is acquiring the  Certificate for its own behalf
and is not  acting  as agent or  custodian  for any  other  person  or entity in
connection with such acquisition;

               8.  The  Purchaser  is  not a  partnership,  grantor  trust  or S
corporation  for  federal  income  tax  purposes,  or,  if  the  Purchaser  is a
partnership, grantor trust or S corporation for federal income tax purposes, the
Certificates  are not more than 50% of the  assets of the  partnership,  grantor
trust or S corporation.

               9. The Purchaser is not a non-United States person.

                                            Very truly yours,

                                            By:  _______________________________
                                                 Name:
                                                 Title:

                                       30
<PAGE>

                                    EXHIBIT E

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                   _______________ , 20

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota 55437

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York  10004
Attention:  Institutional Trust Services/Structured Finance Services

               Re:    Home Equity  Loan-Backed Certificates
                      Series 2003-HS3

Ladies and Gentlemen:

     (the  "Purchaser")  intends to purchase  the  "Seller") a ___%  Certificate
Percentage  Interest of [Certificates] of Series 2003-HS3 (the  "Certificates"),
issued  pursuant  to the  Amended  and  Restated  Trust  Agreement  (the  "Trust
Agreement"),  dated  as of  September  29,  2003,  between  Residential  Funding
Mortgage Securities II, Inc. as depositor (the "Depositor") and Wilmington Trust
Company,  as owner trustee (the "Owner Trustee"),  as acknowledged and agreed by
JPMorgan  Chase Bank, as  Certificate  Registrar.  All terms used herein and not
otherwise defined shall have the meanings set forth in the Trust Agreement.  The
Seller hereby  certifies,  represents  and warrants to, and covenants  with, the
Depositor and the Certificate Registrar that:

        Neither  the  Seller nor  anyone  acting on its behalf has (a)  offered,
pledged,  sold,  disposed  of or  otherwise  transferred  any  Certificate,  any
interest in any  Certificate or any other similar  security to any person in any
manner, (b) has solicited 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) has otherwise  approached or
negotiated with respect to any  Certificate,  any interest in any Certificate or
any other  similar  security  with any  person in any  manner,  (d) has made any
general  solicitation by means of general advertising or in any other manner, or
(e) has taken any other action,  that (as to any of (a) through (e) above) would
constitute a distribution of the  Certificates  under the Securities Act of 1933

                                       31
<PAGE>

(the "Act"), that would render the disposition of any Certificate a violation of
Section  5 of the  Act or any  state  securities  law,  or  that  would  require
registration or qualification  pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate.  The
Seller has not and will not sell or otherwise  transfer any of the Certificates,
except in compliance with the provisions of the Trust Agreement.

                                            Very truly yours,

                                            By:________________________________
                                                Name:
                                                Title

                                       32
<PAGE>

                                    EXHIBIT F

                        CERTIFICATE OF NON-FOREIGN STATUS

        This  Certificate of  Non-Foreign  Status  ("certificate")  is delivered
pursuant to Section 3.05 of the Amended and Restated Trust  Agreement,  dated as
of  September  29, 2003 (the "Trust  Agreement"),  between  Residential  Funding
Mortgage  Securities  II, Inc., as depositor and Wilmington  Trust  Company,  as
Owner Trustee,  in connection with the acquisition of, transfer to or possession
by the undersigned,  whether as beneficial owner (the  "Beneficial  Owner"),  or
nominee  on  behalf  of the  Beneficial  Owner  of the Home  Equity  Loan-Backed
Certificates,  Series 2003-HS3 (the "Certificates").  Capitalized terms used but
not defined in this certificate  have the respective  meanings given them in the
Trust Agreement.

        Each holder must  complete Part I, Part II (if the holder is a nominee),
and in all cases sign and otherwise complete Part III.

        In addition,  each holder shall submit with the Certificates an IRS Form
W-9 relating to such holder.

        To confirm to the Trust that the provisions of Sections 871, 881 or 1446
of the Internal  Revenue Code (relating to withholding tax on foreign  partners)
do not  apply  in  respect  of the  Certificate  held  by the  undersigned,  the
undersigned hereby certifies:

Part I - Complete Either A or B

        A.     Individual as Beneficial Owner

               1. I am (The Beneficial  Owner is ) not a non-resident  alien for
purposes of U.S. income taxation;

               2. My (The Beneficial Owner's) name and home address are:

                ____________________________________; and

               3. My  (The  Beneficial  Owner's)  U.S.  taxpayer  identification
number (Social Security Number) is .

        B. Corporate, Partnership or Other Entity as Beneficial - Owner

               1. (Name of the Beneficial  Owner) is not a foreign  corporation,
foreign partnership, foreign trust or foreign estate (as those terms are defined
in the Code and Treasury Regulations;

               2.  The   Beneficial   Owner's   office   address  and  place  of
incorporation (if applicable) is ; and

                                       33
<PAGE>

               3. The Beneficial Owner's U.S. employer  identification number is
___________________.

Part II - Nominees

        If  the  undersigned  is the  nominee  for  the  Beneficial  Owner,  the
undersigned  certifies  that this  certificate  has been made in  reliance  upon
information contained in:

                       an IRS Form W-9
        --------------

                       a form such as this or substantially similar
        --------------

provided to the  undersigned  by an appropriate  person and (i) the  undersigned
agrees to notify the Trust at least  thirty (30) days prior to the date that the
form  relied  upon  becomes  obsolete,  and (ii) in  connection  with  change in
Beneficial  Owners,  the  undersigned  agrees  to  submit a new  Certificate  of
Non-Foreign Status to the Trust promptly after such change.

Part III -     Declaration

        The undersigned, as the Beneficial Owner or a nominee thereof, agrees to
notify the Trust  within sixty (60) days of the date that the  Beneficial  Owner
becomes a foreign person. The undersigned  understands that this certificate may
be  disclosed  to the  Internal  Revenue  Service  by the  Trust  and any  false
statement contained therein could be punishable by fines, imprisonment or both.

        Under  penalties  of  perjury,  I  declare  that  I have  examined  this
certificate  and to the best of my knowledge and belief it is true,  correct and
complete and will further  declare that I will inform the Trust of any change in
the  information  provided above,  and, if applicable,  I further declare that I
have the authority* to sign this document.

Name:______________________________

Title (if applicable):____________________

Signature and Date:_____________________

*NOTE:  If signed  pursuant to a power of attorney,  the power of attorney  must
accompany this certificate.

                                       34
<PAGE>

                                    EXHIBIT G

                       FORM OF ERISA REPRESENTATION LETTER

                                                   _____________, 200__

Residential Funding Mortgage
 Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890

Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

[CERTIFICATE REGISTRAR]

               Re:    Residential Funding Mortgage Securities II, Inc.
                      Home Equity Loan-Backed Certificates, Series 2003-HS3

Dear Sirs:

        __________________________________ (the "Transferee") intends to acquire
from  _____________________  (the  "Transferor") a ___%  Certificate  Percentage
Interest  of  Residential  Funding  Mortgage  Securities  II,  Inc.  Home Equity
Loan-Backed Certificates, Series 2003-HS3 (the "Certificates"),  issued pursuant
to an Amended  and  Restated  Trust  Agreement  (the  "Trust  Agreement")  dated
September 29, 2003 among  Residential  Funding Mortgage  Securities II, Inc., as
depositor (the "Depositor") and Wilmington Trust Company, as trustee (the "Owner
Trustee").  Capitalized  terms used herein and not otherwise  defined shall have
the meanings assigned thereto in the Trust Agreement.

        The  Transferee  hereby  certifies,  represents  and  warrants  to,  and
covenants with, the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master Servicer that either:

        (1) The  Certificates  (i) are not being  acquired  by,  and will not be
transferred to, any employee  benefit plan within the meaning of Section 3(3) of
the Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),  or
other  retirement  arrangement,  including  individual  retirement  accounts and
annuities,  Keogh  plans and bank  collective  investment  funds  and  insurance
company  general  or  separate  accounts  in  which  such  plans,   accounts  or
arrangements  are  invested,  that is subject to Section 406 of ERISA or Section

                                       35
<PAGE>

4975 of the Internal  Revenue Code of 1986,  as amended (the "Code") (any of the
foregoing,  a "Plan"),  (ii) are not being acquired with "plan assets" of a Plan
within the  meaning  of the  Department  of Labor  ("DOL")  Regulations  Section
2510.3-101, and (iii) will not be transferred to any entity that is deemed to be
investing  in plan  assets  within the  meaning of the DOL  Regulations  Section
2510.3-101; or

        (2) The purchase of the  Certificates  is permissible  under  applicable
law, will not constitute or result in any prohibited  transaction under ERISA or
Section 4975 of the Code, will not subject the Depositor or the Owner Trustee to
any obligation in addition to those  undertaken in the Trust Agreement and, with
respect to each  source of funds  being used by the  Transferee  to acquire  the
Certificates  (each  being  referred to as a  "Source"),  the  Transferee  is an
insurance  company and (i) the Source is assets of its "general  account,"  (ii)
the conditions set forth in PTCE 95-60 issued by the DOL have been satisfied and
the purchase and holding of  Certificates  by or on behalf of the Transferee are
exempt under  Section I of PTCE 95-60,  (iii) less than 25% of the  Transferee's
general account  constitute "plan assets" of "benefit plan investors" within the
meaning  of DOL  Regulations  Section  2510.3-101(f)(2),  and (iv) the amount of
reserves and liabilities for such general account contracts held by or on behalf
of any Plan do not  exceed 10% of the total  reserves  and  liabilities  of such
general account plus surplus as of the date hereof (for purposes of this clause,
all Plans  maintained by the same  employer (or  affiliate  thereof) or employee
organization are deemed to be a single Plan) in connection with its purchase and
holding of such Certificates.

        (3)  The  Transferee  is  familiar  with  the   prohibited   transaction
restrictions and fiduciary  responsibility  requirements of Sections 406 and 407
of ERISA and Section 4975 of the Code and  understands  that each of the parties
to which this  certification is made is relying and will continue to rely on the
statements made herein.

                                            Very truly yours,

                                            By:  ______________________________
                                                  Name:
                                                  Title

                                       36
<PAGE>

                                    EXHIBIT H

                          FORM OF REPRESENTATION LETTER

                                                   _____________, 200__

Residential Funding Mortgage
 Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890

Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, Minnesota  55437

[CERTIFICATE REGISTRAR]

     Re:  Residential   Funding   Mortgage   Securities  II,  Inc.  Home  Equity
          Loan-Backed Certificates, Series 2003-HS3

Dear Sirs:

        __________________________________ (the "Transferee") intends to acquire
from  _____________________  (the  "Transferor") a ___%  Certificate  Percentage
Interest of Residential  Mortgage  Securities  II, Inc. Home Equity  Loan-Backed
Certificates, Series 2003-HS3 (the "Certificates"), issued pursuant to a Amended
and Restated Trust  Agreement (the "Trust  Agreement")  dated September 29, 2003
among  Residential  Funding  Mortgage  Securities  II, Inc.,  as depositor  (the
"Depositor")  and Wilmington  Trust Company,  as trustee (the "Owner  Trustee").
Capitalized  terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Trust Agreement.

        The  Transferee  hereby  certifies,  represents  and  warrants  to,  and
covenants with, the Depositor,  the Owner Trustee, the Certificate Registrar and
the Master Servicer that:

        (1) the Transferee is acquiring the  Certificate  for its own behalf and
is not acting as agent or custodian for any other person or entity in connection
with such acquisition; and

                                       37
<PAGE>

        (2) the Transferee is not a partnership,  grantor trust or S corporation
for federal income tax purposes, or, if the Transferee is a partnership, grantor
trust or S corporation for federal income tax purposes, the Certificates are not
more than 50% of the assets of the partnership, grantor trust or S corporation.

                                            Very truly yours,

                                            By:_________________________________
                                                Name:
                                                Title:

                                       38
<PAGE>

                                    EXHIBIT I

                         FORM OF CLASS R-I CERTIFICATES

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

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

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES  EITHER A  CERTIFICATION  PURSUANT TO SECTION  3.05(b)(v)(B)(I)  OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE SERVICER, THE COMPANY AND
THE TRUSTEE THAT THE PURCHASE OF THIS  CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A  NON-EXEMPT  PROHIBITED  TRANSACTION  UNDER  SECTION  406 OF  THE  EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT  SUBJECT THE  SERVICER,  THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

ANY RESALE,  TRANSFER OR OTHER  DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE SERVICER AND THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) THE UNITED  STATES,  ANY STATE OR
POLITICAL  SUBDIVISION  THEREOF,  ANY  POSSESSION OF THE UNITED  STATES,  OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION  IF ALL OF ITS  ACTIVITIES  ARE SUBJECT TO TAX AND EXCEPT
FOR THE FHLMC,  A MAJORITY  OF ITS BOARD OF  DIRECTORS  IS NOT  SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES  DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS  EXEMPT  FROM THE TAX  IMPOSED  BY  CHAPTER 1 OF THE CODE  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES  DESCRIBED IN SECTION
1381(a)(2)(C)  OF THE CODE,  (E) AN ELECTING  LARGE  PARTNERSHIP  UNDER  SECTION
775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B),
(C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED  ORGANIZATION"),  OR
(F) AN AGENT OF A DISQUALIFIED ORGANIZATION,  (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE  SATISFIES
CERTAIN  ADDITIONAL  CONDITIONS  RELATING  TO  THE  FINANCIAL  CONDITION  OF THE
PROPOSED  TRANSFEREE.   NOTWITHSTANDING  THE  REGISTRATION  IN  THE  CERTIFICATE
REGISTER OR ANY TRANSFER,  SALE OR OTHER  DISPOSITION  OF THIS  CERTIFICATE TO A
DISQUALIFIED  ORGANIZATION  OR AN AGENT  OF A  DISQUALIFIED  ORGANIZATION,  SUCH
REGISTRATION  SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND
SUCH  PERSON  SHALL  NOT BE  DEEMED TO BE A  CERTIFICATEHOLDER  FOR ANY  PURPOSE
HEREUNDER,  INCLUDING,  BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.  EACH HOLDER OF THIS  CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

                                       39
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2003

Date of Trust Agreement:
September 29, 2003

First Payment Date:                         Certificate Percentage Interest of
October 27, 2003                                   this Certificate:  100%

Assumed Final Payment Date:
September 25, 2033

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2003-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This  Certificate  is payable solely from the assets of the Owner
Trust  Estate,  and does not  represent  an  obligation  of or  interest  in the
Depositor,  the Seller, the Master Servicer,  the Indenture  Trustee,  the Owner
Trustee  or  GMAC  Mortgage  Group,  Inc.  or  any  of  their  affiliates.  This
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that  Residential  Funding  Corporation  is  the
registered  owner  of the  Certificate  Percentage  Interest  evidenced  by this
Certificate  (as set forth on the face  hereof)  in certain  distributions  with
respect to the Owner  Trust  Estate,  consisting  primarily  of the Home  Equity
Loans, created by Residential Funding Mortgage Securities II, Inc. The Trust (as
defined  herein) was created  pursuant to a Trust  Agreement  dated as specified
above (as amended and supplemented  from time to time, the "Agreement")  between
the  Depositor  and  Wilmington  Trust  Company,  as owner  trustee  (the "Owner
Trustee,"  which term  includes any  successor  entity under the  Agreement),  a
summary of certain of the pertinent  provisions of which is set forth hereafter.
To the extent not defined  herein,  the  capitalized  terms used herein have the
meanings  assigned in the  Agreement.  This  Certificate  is issued under and is
subject to the terms,  provisions  and  conditions  of the  Agreement,  to which
Agreement  the Holder of this  Certificate  by virtue of the  acceptance  hereof
assents and by which such Holder is bound.

                                       40
<PAGE>

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Certificate
is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately  preceding the month of such distribution (the "Record Date"),
in an amount equal to the pro rata portion evidenced by this Certificate  (based
on the  Certificate  Percentage  Interest  stated  on the  face  hereon)  of the
Certificate  Distribution  Amount, if any, required to be distributed to Holders
of Certificates on such Payment Date.  Distributions on this Certificate will be
made as  provided  in the  Agreement  by the  Certificate  Paying  Agent by wire
transfer or check mailed to the  Certificateholder  of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this  Certificate  will be made after due
notice by the Certificate  Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the  Certificate  Registrar for that purpose in the City and State
of New York.

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

               No transfer of this Class R-I Certificate will be made unless the
Certificate  Registrar (unless otherwise directed by the Depositor) has received
(i) a representation letter, in the form as described by the Agreement,  stating
that the  transferee  is not an  employee  benefit or other plan  subject to the
prohibited transaction restrictions or fiduciary responsibility  requirements of
ERISA or Section  4975 of the Code  ("Plan"),  any person  acting,  directly  or
indirectly,  on behalf of any such plan or any person  using the "plan  assets,"
within  the  meaning  of  the  Department  of  Labor  regulations  at 29  C.F.R.
ss.2510.3-101,  to effect such acquisition (collectively,  a "Plan Investor") or
(ii) if such transferee is a Plan Investor,  an opinion of counsel acceptable to
and in form and substance satisfactory to the Depositor,  the Owner Trustee, the
Master Servicer and the Certificate  Registrar,  to the effect that the purchase
or holding of a Class R Certificate is permissible  under  applicable  law, will
not constitute or result in a non-exempt  prohibited  transaction  under Section

                                       41
<PAGE>

406 of  ERISA or  Section  4975 of the Code  (or  comparable  provisions  of any
subsequent  enactments)  and will not subject the Depositor,  the Owner Trustee,
the Master Servicer or the Certificate  Registrar to any obligation or liability
in addition to those undertaken in the Agreement.

               This   Certificate  is  one  of  a  duly   authorized   issue  of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this  Certificate  which are defined in the Agreement shall have the meanings
assigned to them in the Agreement.

               The  Certificateholder,  by its  acceptance of this  Certificate,
agrees  that it will  look  solely to the funds on  deposit  in the  Certificate
Distribution  Account that have been released from the Lien of the Indenture for
payment hereunder and that neither the Owner Trustee in its individual  capacity
nor the Depositor is personally liable to the  Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

               The Holder of this  Certificate  acknowledges and agrees that its
rights to receive  distributions in respect of this Certificate are subordinated
to the rights of the  Noteholders  as  described in the  Indenture,  dated as of
September  29, 2003,  between Home Equity Loan Trust  2003-HS3 (the "Trust") and
JPMorgan Chase Bank, as Indenture Trustee (the "Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  of,  any  bankruptcy,  reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings  under any United
States  federal  or state  bankruptcy  or  similar  law in  connection  with any
obligations relating to the Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and the consent of the Credit Enhancer shall be obtained.  If the purpose
of the  amendment is to prevent the  imposition of any federal or state taxes at
any time that any Security is  outstanding,  it shall not be necessary to obtain
the consent of any Holder,  but the Owner  Trustee  shall be  furnished  with an
Opinion of Counsel  that such  amendment  is necessary or helpful to prevent the
imposition  of such  taxes and is not  materially  adverse to any Holder and the
consent  of the  Credit  Enhancer  shall  be  obtained.  If the  purpose  of the
amendment is to add or eliminate or change any provision of the Agreement, other
than as specified in the preceding two  sentences,  the amendment  shall require
either (a) a letter from the Rating  Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Security, if
determined  without  regard to the  Policy or (b) the  consent  of  Holders of a
majority of the Certificate  Percentage  Interests of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in

                                       42
<PAGE>

any  manner  the amount  of, or delay the time of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

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

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Certificate is issued in the Certificate  Percentage
Interest above; however, the Certificate Percentage Interest of this Certificate
may change in accordance with Section 3.12 of the Agreement.  The Holder of this
Certificate hereby consents to any change in its Certificate Percentage Interest
in accordance with such Section.

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

               The Owner Trustee,  the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes,  and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate  Registrar or any such agent shall
be affected by any notice to the contrary.

               This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2033, or (iii) the purchase by the
Master  Servicer of all Revolving  Credit Loans  pursuant to Section 8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.

                                       43
<PAGE>

               IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.

                              HOME EQUITY LOAN TRUST 2003-HS3

                              By: WILMINGTON TRUST COMPANY,
                                  not in its individual capacity but solely as
                                  Owner Trustee

Dated:  September 29, 2003    By:
                                  ---------------------------------------
                                  Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                   WILMINGTON TRUST COMPANY,
                                    not in its individual capacity
                                    but solely as Owner Trustee

                               By: ______________________________
                                    Authorized Signatory

                               or JPMORGAN CHASE BANK,
                               not in its individual capacity but solely,
                               as Authenticating Agent of the Trust

Dated: September 29, 2003

                                            By: ______________________________
                                                Authorized Signatory

                                       44
<PAGE>

                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE___________________________________

-----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

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

the  within   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  Certificate on the books of the  Certificate  Registrar,  with
full power of substitution in the premises.

Dated:_________________________________

                          _____________________________________*/
                             Signature Guaranteed:

                          ____________________________*/

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

*/ NOTICE:  The signature to this assignment must correspond with the name as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                       45
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

        The assignee  should  include the following for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  _____________________  for the  account of  ______________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                     ------------------------------
                                     Signature of assignee or agent
                                     (for authorization of wire transfer only)

                                       46
<PAGE>

                         FORM OF CLASS R-II CERTIFICATES

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

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

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES  EITHER A  CERTIFICATION  PURSUANT TO SECTION  3.05(b)(v)(B)(I)  OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE SERVICER, THE COMPANY AND
THE TRUSTEE THAT THE PURCHASE OF THIS  CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A  NON-EXEMPT  PROHIBITED  TRANSACTION  UNDER  SECTION  406 OF  THE  EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT  SUBJECT THE  SERVICER,  THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

ANY RESALE,  TRANSFER OR OTHER  DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE SERVICER AND THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) THE UNITED  STATES,  ANY STATE OR
POLITICAL  SUBDIVISION  THEREOF,  ANY  POSSESSION OF THE UNITED  STATES,  OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION  IF ALL OF ITS  ACTIVITIES  ARE SUBJECT TO TAX AND EXCEPT
FOR THE FHLMC,  A MAJORITY  OF ITS BOARD OF  DIRECTORS  IS NOT  SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES  DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS  EXEMPT  FROM THE TAX  IMPOSED  BY  CHAPTER 1 OF THE CODE  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES  DESCRIBED IN SECTION
1381(a)(2)(C)  OF THE CODE,  (E) AN ELECTING  LARGE  PARTNERSHIP  UNDER  SECTION
775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B),
(C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED  ORGANIZATION"),  OR
(F) AN AGENT OF A DISQUALIFIED ORGANIZATION,  (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE  SATISFIES
CERTAIN  ADDITIONAL  CONDITIONS  RELATING  TO  THE  FINANCIAL  CONDITION  OF THE
PROPOSED  TRANSFEREE.   NOTWITHSTANDING  THE  REGISTRATION  IN  THE  CERTIFICATE
REGISTER OR ANY TRANSFER,  SALE OR OTHER  DISPOSITION  OF THIS  CERTIFICATE TO A
DISQUALIFIED  ORGANIZATION  OR AN AGENT  OF A  DISQUALIFIED  ORGANIZATION,  SUCH
REGISTRATION  SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND
SUCH  PERSON  SHALL  NOT BE  DEEMED TO BE A  CERTIFICATEHOLDER  FOR ANY  PURPOSE
HEREUNDER,  INCLUDING,  BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.  EACH HOLDER OF THIS  CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

                                       47
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2003

Date of Trust Agreement:
September 29, 2003

First Payment Date:                         Certificate Percentage Interest of
October 27, 2003                                   this Certificate:  100%

Assumed Final Payment Date:
September 25, 2033

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2003-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This  Certificate  is payable solely from the assets of the Owner
Trust  Estate,  and does not  represent  an  obligation  of or  interest  in the
Depositor,  the Seller, the Master Servicer,  the Indenture  Trustee,  the Owner
Trustee  or  GMAC  Mortgage  Group,  Inc.  or  any  of  their  affiliates.  This
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that  Residential  Funding  Corporation  is  the
registered  owner  of the  Certificate  Percentage  Interest  evidenced  by this
Certificate  (as set forth on the face  hereof)  in certain  distributions  with
respect to the Owner  Trust  Estate,  consisting  primarily  of the Home  Equity
Loans, created by Residential Funding Mortgage Securities II, Inc. The Trust (as
defined  herein) was created  pursuant to a Trust  Agreement  dated as specified
above (as amended and supplemented  from time to time, the "Agreement")  between
the  Depositor  and  Wilmington  Trust  Company,  as owner  trustee  (the "Owner
Trustee,"  which term  includes any  successor  entity under the  Agreement),  a
summary of certain of the pertinent  provisions of which is set forth hereafter.
To the extent not defined  herein,  the  capitalized  terms used herein have the
meanings  assigned in the  Agreement.  This  Certificate  is issued under and is
subject to the terms,  provisions  and  conditions  of the  Agreement,  to which
Agreement  the Holder of this  Certificate  by virtue of the  acceptance  hereof
assents and by which such Holder is bound.

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the
first Payment Date specified above, to the Person in whose name this Certificate

                                       48
<PAGE>

is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately  preceding the month of such distribution (the "Record Date"),
in an amount equal to the pro rata portion evidenced by this Certificate  (based
on the  Certificate  Percentage  Interest  stated  on the  face  hereon)  of the
Certificate  Distribution  Amount, if any, required to be distributed to Holders
of Certificates on such Payment Date.  Distributions on this Certificate will be
made as  provided  in the  Agreement  by the  Certificate  Paying  Agent by wire
transfer or check mailed to the  Certificateholder  of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this  Certificate  will be made after due
notice by the Certificate  Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the  Certificate  Registrar for that purpose in the City and State
of New York.

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

               No  transfer of this Class R-II  Certificate  will be made unless
the  Certificate  Registrar  (unless  otherwise  directed by the  Depositor) has
received (i) a representation letter, in the form as described by the Agreement,
stating that the transferee is not an employee  benefit or other plan subject to
the prohibited transaction restrictions or fiduciary responsibility requirements
of ERISA or Section 4975 of the Code ("Plan"),  any person  acting,  directly or
indirectly,  on behalf of any such plan or any person  using the "plan  assets,"
within  the  meaning  of  the  Department  of  Labor  regulations  at 29  C.F.R.
ss.2510.3-101,  to effect such acquisition (collectively,  a "Plan Investor") or
(ii) if such transferee is a Plan Investor,  an opinion of counsel acceptable to
and in form and substance satisfactory to the Depositor,  the Owner Trustee, the
Master Servicer and the Certificate  Registrar,  to the effect that the purchase
or holding of a Class R Certificate is permissible  under  applicable  law, will
not constitute or result in a non-exempt  prohibited  transaction  under Section
406 of  ERISA or  Section  4975 of the Code  (or  comparable  provisions  of any
subsequent  enactments)  and will not subject the Depositor,  the Owner Trustee,
the Master Servicer or the Certificate  Registrar to any obligation or liability
in addition to those undertaken in the Agreement.

               This   Certificate  is  one  of  a  duly   authorized   issue  of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this  Certificate  which are defined in the Agreement shall have the meanings
assigned to them in the Agreement.

                                       49
<PAGE>

               The  Certificateholder,  by its  acceptance of this  Certificate,
agrees  that it will  look  solely to the funds on  deposit  in the  Certificate
Distribution  Account that have been released from the Lien of the Indenture for
payment hereunder and that neither the Owner Trustee in its individual  capacity
nor the Depositor is personally liable to the  Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

               The Holder of this  Certificate  acknowledges and agrees that its
rights to receive  distributions in respect of this Certificate are subordinated
to the rights of the  Noteholders  as  described in the  Indenture,  dated as of
September  29, 2003,  between Home Equity Loan Trust  2003-HS3 (the "Trust") and
JPMorgan Chase Bank, as Indenture Trustee (the "Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  of,  any  bankruptcy,  reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings  under any United
States  federal  or state  bankruptcy  or  similar  law in  connection  with any
obligations relating to the Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and the consent of the Credit Enhancer shall be obtained.  If the purpose
of the  amendment is to prevent the  imposition of any federal or state taxes at
any time that any Security is  outstanding,  it shall not be necessary to obtain
the consent of any Holder,  but the Owner  Trustee  shall be  furnished  with an
Opinion of Counsel  that such  amendment  is necessary or helpful to prevent the
imposition  of such  taxes and is not  materially  adverse to any Holder and the
consent  of the  Credit  Enhancer  shall  be  obtained.  If the  purpose  of the
amendment is to add or eliminate or change any provision of the Agreement, other
than as specified in the preceding two  sentences,  the amendment  shall require
either (a) a letter from the Rating  Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Security, if
determined  without  regard to the  Policy or (b) the  consent  of  Holders of a
majority of the Certificate  Percentage  Interests of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in
any  manner  the amount  of, or delay the time of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

               As provided in the Agreement  and subject to certain  limitations
therein set forth,  the  transfer of this  Certificate  is  registerable  in the
Certificate  Register upon surrender of this  Certificate  for  registration  of
transfer at the offices or agencies of the Certificate  Registrar  maintained in
the City and State of New York,  accompanied by a written instrument of transfer

                                       50
<PAGE>

in form  satisfactory to the  Certificate  Registrar duly executed by the Holder
hereof or such Holder's  attorney duly authorized in writing,  and thereupon one
or more  new  Certificates  of  authorized  denominations  evidencing  the  same
aggregate  Certificate  Percentage  Interest  will be issued  to the  designated
transferee.  The initial Certificate  Registrar appointed under the Agreement is
the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Certificate is issued in the Certificate  Percentage
Interest above; however, the Certificate Percentage Interest of this Certificate
may change in accordance with Section 3.12 of the Agreement.  The Holder of this
Certificate hereby consents to any change in its Certificate Percentage Interest
in accordance with such Section.

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

               The Owner Trustee,  the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes,  and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate  Registrar or any such agent shall
be affected by any notice to the contrary.

               This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2033, or (iii) the purchase by the
Master  Servicer of all Revolving  Credit Loans  pursuant to Section 8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.

                                       51
<PAGE>

               IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.

                             HOME EQUITY LOAN TRUST 2003-HS3

                             By: WILMINGTON TRUST COMPANY,
                                 not in its individual capacity but solely as
                                 Owner Trustee

Dated:  September 29, 2003   By:
                                 ---------------------------------------
                                 Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                 WILMINGTON TRUST COMPANY,
                                  not in its individual capacity
                                  but solely as Owner Trustee

                             By: ______________________________
                                  Authorized Signatory

                             or JPMORGAN CHASE BANK,
                             not in its individual capacity but solely,
                             as Authenticating Agent of the Trust

Dated: September 29, 2003

                             By: ______________________________
                                 Authorized Signatory

                                       52
<PAGE>

                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE___________________________________

-----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

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

the  within   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  Certificate on the books of the  Certificate  Registrar,  with
full power of substitution in the premises.

Dated:_________________________________

                          _____________________________________*/
                             Signature Guaranteed:

                          ____________________________*/

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

*/ NOTICE:  The signature to this assignment must correspond with the name as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                       53
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

        The assignee  should  include the following for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  _____________________  for the  account of  ______________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                     ------------------------------
                                     Signature of assignee or agent
                                     (for authorization of wire transfer only)

                                       54
<PAGE>

                        FORM OF CLASS R-III CERTIFICATES

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

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

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES  EITHER A  CERTIFICATION  PURSUANT TO SECTION  3.05(b)(v)(B)(I)  OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE SERVICER, THE COMPANY AND
THE TRUSTEE THAT THE PURCHASE OF THIS  CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A  NON-EXEMPT  PROHIBITED  TRANSACTION  UNDER  SECTION  406 OF  THE  EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT  SUBJECT THE  SERVICER,  THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.

ANY RESALE,  TRANSFER OR OTHER  DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE SERVICER AND THE
TRUSTEE  THAT (1) SUCH  TRANSFEREE  IS NOT (A) THE UNITED  STATES,  ANY STATE OR
POLITICAL  SUBDIVISION  THEREOF,  ANY  POSSESSION OF THE UNITED  STATES,  OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION  IF ALL OF ITS  ACTIVITIES  ARE SUBJECT TO TAX AND EXCEPT
FOR THE FHLMC,  A MAJORITY  OF ITS BOARD OF  DIRECTORS  IS NOT  SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY  OF EITHER OF THE FOREGOING,  (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES  DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS  EXEMPT  FROM THE TAX  IMPOSED  BY  CHAPTER 1 OF THE CODE  UNLESS  SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX  IMPOSED  BY  SECTION  511 OF THE  CODE ON  UNRELATED  BUSINESS  TAXABLE
INCOME),  (D) RURAL  ELECTRIC AND  TELEPHONE  COOPERATIVES  DESCRIBED IN SECTION
1381(a)(2)(C)  OF THE CODE,  (E) AN ELECTING  LARGE  PARTNERSHIP  UNDER  SECTION
775(a) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B),
(C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED  ORGANIZATION"),  OR
(F) AN AGENT OF A DISQUALIFIED ORGANIZATION,  (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE  SATISFIES
CERTAIN  ADDITIONAL  CONDITIONS  RELATING  TO  THE  FINANCIAL  CONDITION  OF THE
PROPOSED  TRANSFEREE.   NOTWITHSTANDING  THE  REGISTRATION  IN  THE  CERTIFICATE
REGISTER OR ANY TRANSFER,  SALE OR OTHER  DISPOSITION  OF THIS  CERTIFICATE TO A
DISQUALIFIED  ORGANIZATION  OR AN AGENT  OF A  DISQUALIFIED  ORGANIZATION,  SUCH
REGISTRATION  SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND
SUCH  PERSON  SHALL  NOT BE  DEEMED TO BE A  CERTIFICATEHOLDER  FOR ANY  PURPOSE
HEREUNDER,  INCLUDING,  BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.  EACH HOLDER OF THIS  CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.

                                       55
<PAGE>

Certificate No. 1

Cut-off Date:
September 1, 2003

Date of Trust Agreement:
September 29, 2003

First Payment Date:                         Certificate Percentage Interest of
October 27, 2003                                   this Certificate:  100%

Assumed Final Payment Date:
September 25, 2033

                       HOME EQUITY LOAN-BACKED CERTIFICATE
                                 SERIES 2003-HS3

               evidencing  a  fractional  undivided  interest in the Owner Trust
Estate,  the  property of which  consists  primarily  of the Home Equity  Loans,
created by RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.  (hereinafter called
the  "Depositor,"  which term includes any successor  entity under the Agreement
referred to below).

               This  Certificate  is payable solely from the assets of the Owner
Trust  Estate,  and does not  represent  an  obligation  of or  interest  in the
Depositor,  the Seller, the Master Servicer,  the Indenture  Trustee,  the Owner
Trustee  or  GMAC  Mortgage  Group,  Inc.  or  any  of  their  affiliates.  This
Certificate  is  not  guaranteed  or  insured  by  any  governmental  agency  or
instrumentality  or by the  Depositor,  the  Seller,  the Master  Servicer,  the
Indenture  Trustee,  the Owner  Trustee or GMAC Mortgage  Group,  Inc. or any of
their affiliates.  None of the Depositor,  the Seller, the Master Servicer,  the
Indenture Trustee, the Owner Trustee,  GMAC Mortgage Group, Inc. or any of their
affiliates  will have any  obligation  with respect to any  certificate or other
obligation secured by or payable from payments on the Certificates.

               This  certifies  that  Residential  Funding  Corporation  is  the
registered  owner  of the  Certificate  Percentage  Interest  evidenced  by this
Certificate  (as set forth on the face  hereof)  in certain  distributions  with
respect to the Owner  Trust  Estate,  consisting  primarily  of the Home  Equity
Loans, created by Residential Funding Mortgage Securities II, Inc. The Trust (as
defined  herein) was created  pursuant to a Trust  Agreement  dated as specified
above (as amended and supplemented  from time to time, the "Agreement")  between
the  Depositor  and  Wilmington  Trust  Company,  as owner  trustee  (the "Owner
Trustee,"  which term  includes any  successor  entity under the  Agreement),  a
summary of certain of the pertinent  provisions of which is set forth hereafter.
To the extent not defined  herein,  the  capitalized  terms used herein have the
meanings  assigned in the  Agreement.  This  Certificate  is issued under and is
subject to the terms,  provisions  and  conditions  of the  Agreement,  to which
Agreement  the Holder of this  Certificate  by virtue of the  acceptance  hereof
assents and by which such Holder is bound.

               Pursuant to the terms of the Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately  following (the "Payment Date"),  commencing on the

                                       56
<PAGE>

first Payment Date specified above, to the Person in whose name this Certificate
is  registered  at the close of business on the last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
month immediately  preceding the month of such distribution (the "Record Date"),
in an amount equal to the pro rata portion evidenced by this Certificate  (based
on the  Certificate  Percentage  Interest  stated  on the  face  hereon)  of the
Certificate  Distribution  Amount, if any, required to be distributed to Holders
of Certificates on such Payment Date.  Distributions on this Certificate will be
made as  provided  in the  Agreement  by the  Certificate  Paying  Agent by wire
transfer or check mailed to the  Certificateholder  of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon.

               Except as otherwise provided in the Agreement and notwithstanding
the above,  the final  distribution on this  Certificate  will be made after due
notice by the Certificate  Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the  Certificate  Registrar for that purpose in the City and State
of New York.

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

               No transfer of this Class R-III  Certificate  will be made unless
the  Certificate  Registrar  (unless  otherwise  directed by the  Depositor) has
received (i) a representation letter, in the form as described by the Agreement,
stating that the transferee is not an employee  benefit or other plan subject to
the prohibited transaction restrictions or fiduciary responsibility requirements
of ERISA or Section 4975 of the Code ("Plan"),  any person  acting,  directly or
indirectly,  on behalf of any such plan or any person  using the "plan  assets,"
within  the  meaning  of  the  Department  of  Labor  regulations  at 29  C.F.R.
ss.2510.3-101,  to effect such acquisition (collectively,  a "Plan Investor") or
(ii) if such transferee is a Plan Investor,  an opinion of counsel acceptable to
and in form and substance satisfactory to the Depositor,  the Owner Trustee, the
Master Servicer and the Certificate  Registrar,  to the effect that the purchase
or holding of a Class R Certificate is permissible  under  applicable  law, will
not constitute or result in a non-exempt  prohibited  transaction  under Section
406 of  ERISA or  Section  4975 of the Code  (or  comparable  provisions  of any
subsequent  enactments)  and will not subject the Depositor,  the Owner Trustee,
the Master Servicer or the Certificate  Registrar to any obligation or liability
in addition to those undertaken in the Agreement.

               This   Certificate  is  one  of  a  duly   authorized   issue  of
Certificates  designated as Home Equity  Loan-Backed  Certificates of the Series
specified hereon (herein collectively called the "Certificates"). All terms used
in this  Certificate  which are defined in the Agreement shall have the meanings
assigned to them in the Agreement.

                                       57
<PAGE>

               The  Certificateholder,  by its  acceptance of this  Certificate,
agrees  that it will  look  solely to the funds on  deposit  in the  Certificate
Distribution  Account that have been released from the Lien of the Indenture for
payment hereunder and that neither the Owner Trustee in its individual  capacity
nor the Depositor is personally liable to the  Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.

               The Holder of this  Certificate  acknowledges and agrees that its
rights to receive  distributions in respect of this Certificate are subordinated
to the rights of the  Noteholders  as  described in the  Indenture,  dated as of
September  29, 2003,  between Home Equity Loan Trust  2003-HS3 (the "Trust") and
JPMorgan Chase Bank, as Indenture Trustee (the "Indenture").

               Each  Certificateholder,  by  its  acceptance  of a  Certificate,
covenants and agrees that such  Certificateholder will not at any time institute
against  the  Depositor  or the Trust,  or join in any  institution  against the
Depositor  or  the  Trust  of,  any  bankruptcy,  reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings  under any United
States  federal  or state  bankruptcy  or  similar  law in  connection  with any
obligations relating to the Certificates, the Notes, the Agreement or any of the
Basic Documents.

               The Agreement  permits the amendment  thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit Enhancer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Agreement and will not cause the Trust to be
subject to an entity  level tax. If the purpose of the  amendment  is to correct
any mistake,  eliminate any  inconsistency,  cure any ambiguity or deal with any
matter not  covered,  it shall not be  necessary  to obtain  the  consent of any
Holder,  but the Owner Trustee shall be furnished  with a letter from the Rating
Agencies that the amendment will not result in the  downgrading or withdrawal of
the rating then  assigned to any Security if  determined  without  regard to the
Policy and the consent of the Credit Enhancer shall be obtained.  If the purpose
of the  amendment is to prevent the  imposition of any federal or state taxes at
any time that any Security is  outstanding,  it shall not be necessary to obtain
the consent of any Holder,  but the Owner  Trustee  shall be  furnished  with an
Opinion of Counsel  that such  amendment  is necessary or helpful to prevent the
imposition  of such  taxes and is not  materially  adverse to any Holder and the
consent  of the  Credit  Enhancer  shall  be  obtained.  If the  purpose  of the
amendment is to add or eliminate or change any provision of the Agreement, other
than as specified in the preceding two  sentences,  the amendment  shall require
either (a) a letter from the Rating  Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Security, if
determined  without  regard to the  Policy or (b) the  consent  of  Holders of a
majority of the Certificate  Percentage  Interests of the  Certificates  and the
Indenture Trustee; provided, however, that no such amendment shall (i) reduce in
any  manner  the amount  of, or delay the time of,  payments  received  that are
required to be distributed on any Certificate without the consent of the related
Certificateholder  and  the  Credit  Enhancer,  or  (ii)  reduce  the  aforesaid
percentage 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.

               As provided in the Agreement  and subject to certain  limitations
therein set forth,  the  transfer of this  Certificate  is  registerable  in the
Certificate  Register upon surrender of this  Certificate  for  registration  of
transfer at the offices or agencies of the Certificate  Registrar  maintained in
the City and State of New York,  accompanied by a written instrument of transfer

                                       58
<PAGE>

in form  satisfactory to the  Certificate  Registrar duly executed by the Holder
hereof or such Holder's  attorney duly authorized in writing,  and thereupon one
or more  new  Certificates  of  authorized  denominations  evidencing  the  same
aggregate  Certificate  Percentage  Interest  will be issued  to the  designated
transferee.  The initial Certificate  Registrar appointed under the Agreement is
the Indenture Trustee.

               Except  as  provided  in  the  Agreement,  the  Certificates  are
issuable  only in minimum  denominations  of a 10.0000%  Certificate  Percentage
Interest and in integral multiples of a 0.0001% Certificate  Percentage Interest
in  excess  thereof.  As  provided  in the  Agreement  and  subject  to  certain
limitations  therein  set  forth,  the  Certificates  are  exchangeable  for new
Certificates   of   authorized   denominations,   as  requested  by  the  Holder
surrendering the same. This Certificate is issued in the Certificate  Percentage
Interest above; however, the Certificate Percentage Interest of this Certificate
may change in accordance with Section 3.12 of the Agreement.  The Holder of this
Certificate hereby consents to any change in its Certificate Percentage Interest
in accordance with such Section.

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

               The Owner Trustee,  the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee,  the Certificate  Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes,  and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate  Registrar or any such agent shall
be affected by any notice to the contrary.

               This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.

               The  obligations  created  by the  Agreement  in  respect  of the
Certificates  and the Trust created thereby shall terminate upon the earliest of
(i) the final  distribution  of all moneys or other  property or proceeds of the
Owner  Trust  Estate  in  accordance  with the  terms of the  Indenture  and the
Agreement, (ii) the Payment Date in September 2033, or (iii) the purchase by the
Master  Servicer of all Revolving  Credit Loans  pursuant to Section 8.08 of the
Servicing Agreement.

               Unless the certificate of  authentication  hereon shall have been
executed by an authorized  officer of the Owner  Trustee,  or an  authenticating
agent by manual signature, this Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.

                                       59
<PAGE>

               IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.

                               HOME EQUITY LOAN TRUST 2003-HS3

                               By: WILMINGTON TRUST COMPANY,
                                   not in its individual capacity but solely as
                                   Owner Trustee

Dated:  September 29, 2003     By:
                                   ---------------------------------------
                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

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

                                 WILMINGTON TRUST COMPANY,
                                  not in its individual capacity
                                  but solely as Owner Trustee

                             By: ______________________________
                                  Authorized Signatory

                             or JPMORGAN CHASE BANK,
                             not in its individual capacity but solely,
                             as Authenticating Agent of the Trust

Dated: September 29, 2003

                         By: ______________________________
                             Authorized Signatory

                                       60
<PAGE>
                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE___________________________________

-----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)

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

the  within   Certificate,   and  all  rights  thereunder,   hereby  irrevocably
constituting and appointing

______________________________________________________________________________

to transfer said  Certificate on the books of the  Certificate  Registrar,  with
full power of substitution in the premises.

Dated:_________________________________

                          _____________________________________*/
                             Signature Guaranteed:

                          ____________________________*/

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

*/ NOTICE:  The signature to this assignment must correspond with the name as it
appears upon the face of the within  Certificate  in every  particular,  without
alteration,   enlargement  or  any  change  whatever.  Such  signature  must  be
guaranteed by a member firm of the New York Stock Exchange or a commercial  bank
or trust company.

                                       61
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

        The assignee  should  include the following for the  information  of the
Certificate Paying Agent:

     Distribution shall be made by wire transfer in immediately  available funds
to  _____________________  for the  account of  ______________________,  account
number ______________, or, if mailed by check, to ______________.

     Applicable statements should be mailed to __________________.

                                     ------------------------------
                                     Signature of assignee or agent
                                     (for authorization of wire transfer only)

                                       62
<PAGE>

                                 EXHIBIT J-1

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF                         )

                                 ) ss.:

COUNTY OF                        )
               [NAME OF OFFICER], being first duly sworn, deposes and says:

1. That he is [Title of Officer] of [Name of Owner] (record or beneficial  owner
of the Home Equity Loan-Backed  Certificates,  Series 2003-HS3, Class R-[ ] (the
"Owner")),  a [savings  institution]  [corporation]  duly organized and existing
under the laws of [the  State of ] [the  United  States],  on behalf of which he
makes this affidavit and agreement.

2. That the Owner (i) is not and will not be a "disqualified organization" or an
electing  large  partnership  as of [date of  transfer]  within  the  meaning of
Sections 860E(e)(5) and 775, respectively, of the Internal Revenue Code of 1986,
as amended (the "Code") or an electing large partnership under Section 775(a) of
the Code,  (ii) will endeavor to remain other than a  disqualified  organization
for  so  long  as  it  retains  its  ownership  interest  in  the  Class  R-[  ]
Certificates,  and (iii) is acquiring the Class R-[ ]  Certificates  for its own
account  or for the  account of another  Owner  from  which it has  received  an
affidavit and  agreement in  substantially  the same form as this  affidavit and
agreement.  (For this purpose, a "disqualified  organization"  means an electing
large partnership under Section 775 of the Code, the United States, any state or
political  subdivision  thereof,  any  agency or  instrumentality  of any of the
foregoing  (other than an  instrumentality  all of the  activities  of which are
subject to tax and,  except for the Federal Home Loan  Mortgage  Corporation,  a
majority of whose board of directors  is not  selected by any such  governmental
entity) or any foreign government,  international  organization or any agency or
instrumentality of such foreign  government or organization,  any rural electric
or telephone  cooperative,  or any  organization  (other than  certain  farmers'
cooperatives)  that is  generally  exempt  from  federal  income tax unless such
organization is subject to the tax on unrelated business taxable income).

3. That the Owner is aware (i) of the tax that would be imposed on  transfers of
Class  R  Certificates   to   disqualified   organizations   or  electing  large
partnerships,  under  the  Code,  that  applies  to all  transfers  of  Class  R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
(or,  with  respect to transfers to electing  large  partnerships,  on each such
partnership),  or, if such transfer is through an agent (which person includes a
broker,  nominee or middleman)  for a disqualified  organization,  on the agent;
(iii) that the person  (other than with respect to  transfers to electing  large
partnerships)  otherwise  liable for the tax shall be relieved of liability  for

                                       63
<PAGE>

the tax if the  transferee  furnishes  to such  person  an  affidavit  that  the
transferee is not a disqualified organization and, at the time of transfer, such
person does not have actual knowledge that the affidavit is false; and (iv) that
the Class R-[ ] Certificates may be "noneconomic  residual interests" within the
meaning of Treasury  regulations  promulgated  pursuant to the Code and that the
transferor of a noneconomic  residual  interest will remain liable for any taxes
due with respect to the income on such residual interest,  unless no significant
purpose of the transfer was to impede the assessment or collection of tax.

4. That the Owner is aware of the tax imposed on a "pass-through entity" holding
Class R  Certificates  if either the  pass-through  entity is an electing  large
partnership  under  Section 775 of the if at any time during the taxable year of
the pass-through  entity a disqualified  organization is the record holder of an
interest in such entity.  (For this purpose,  a "pass through entity" includes a
regulated  investment  company,  a real estate  investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

5. The Owner is either (i) a citizen or  resident of the United  States,  (ii) a
corporation,  partnership  or  other  entity  treated  as  a  corporation  or  a
partnership for U.S.  federal income tax purposes and created or organized in or
under the laws of the  United  States,  any state  thereof  or the  District  of
Columbia (other than a partnership that is not treated as a United States person
under any applicable Treasury regulations), (iii) an estate that is described in
Section 7701(a)(30)(D) of the Code, or (iv) a trust that is described in Section
7701(a)(30)(E) of the Code.

6. The Owner  hereby  agrees that it will not cause income from the Class R- [ ]
Certificates to be attributable to a foreign  permanent  establishment  or fixed
base  (within  the meaning of an  applicable  income tax treaty) of the Owner or
another United States taxpayer.

7. That the Owner is aware that the Certificate  Registrar will not register the
transfer of any Class R Certificates unless the transferee,  or the transferee's
agent,  delivers  to it an  affidavit  and  agreement,  among other  things,  in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees  that it will not  consummate  any such  transfer if it knows or believes
that any of the  representations  contained in such  affidavit and agreement are
false.

8. That the Owner has  reviewed  the  restrictions  set forth on the face of the
Class R Certificates  and the provisions of Section 3.05 of the Trust  Agreement
under  which the Class R-[ ]  Certificates  were issued (in  particular,  clause
(i)(A) and (i)(B) of Section 3.05 which authorize the  Certificate  Registrar to
deliver payments to a person other than the Owner and negotiate a mandatory sale
by the  Servicer  Trustee  in the event the Owner  holds  such  Certificates  in
violation of Section  3.05).  The Owner  expressly  agrees to be bound by and to
comply with such restrictions and provisions.

9. That the Owner consents to any additional  restrictions or arrangements  that
shall be deemed  necessary  upon advice of counsel to  constitute  a  reasonable
arrangement  to ensure  that the Class  R-[ ]  Certificates  will only be owned,
directly or indirectly, by an Owner that is not a disqualified organization.

10. The Owner's Taxpayer Identification Number is .

11. This  affidavit and agreement  relates only to the Class R-[ ]  Certificates
held by the Owner and not to any  other  holder of the Class R-[  ]Certificates.
The Owner  understands that the liabilities  described herein relate only to the
Class R-[ ] Certificates.

                                       64
<PAGE>

12. That no purpose of the Owner  relating  to the  transfer of any of the Class
R-[ ]  Certificates  by the  Owner is or will be to  impede  the  assessment  or
collection of any tax; in making this  representation,  the Owner  warrants that
the Owner is familiar  with (i)  Treasury  Regulation  Section  1.860E-1(c)  and
recent amendments thereto,  effective as of July 19, 2002, and (ii) the preamble
describing the adoption of the amendments to such regulation,  which is attached
hereto as Exhibit 1.

13.  That the Owner has no  present  knowledge  or  expectation  that it will be
unable  to  pay  any  United  States  taxes  owed  by it so  long  as any of the
Certificates remain outstanding.  In this regard, the Owner hereby represents to
and for the  benefit  of the  person  from  whom it  acquired  the  Class  R-[ ]
Certificate  that the Owner  intends to pay taxes  associated  with holding such
Class R-[ ]  Certificate  as they become due,  fully  understanding  that it may
incur tax  liabilities in excess of any cash flows  generated by the Class R-[ ]
Certificate.

14. That the Owner has no present  knowledge or expectation  that it will become
insolvent or subject to a bankruptcy  proceeding for so long as any of the Class
R-[ ] Certificates remain outstanding.

15. The  Purchaser is not an employee  benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended  ("ERISA"),  or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"),  or an investment  manager,  named fiduciary or a
trustee of any such plan, or any other Person acting, directly or indirectly, on
behalf of or purchasing any Certificate with "plan assets" of any such plan.

                                       65
<PAGE>

     IN WITNESS WHEREOF,  the Owner has caused this instrument to be executed on
its behalf,  pursuant to the authority of its Board of Directors,  by its [Title
of Officer]  and its  corporate  seal to be hereunto  attached,  attested by its
[Assistant] Secretary, this ____ day of __________, ____________.

                                            [NAME OF OWNER]

                                            By:
                                               -------------------------------
                                                 [Name of Officer]
                                                 [Title of Officer]
[Corporate Seal]

ATTEST:

[Assistant] Secretary

     Personally  appeared before me the above-named [Name of Officer],  known or
proved to me to be the same person who executed the foregoing  instrument and to
be the [Title of Officer] of the Owner,  and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Owner.

     Subscribed and sworn before me this ____ day of __________, ____________.

                                     NOTARY PUBLIC

                                COUNTY OF
                                         ----------------------------------
                                STATE OF
                                        -----------------------------------
                                 My Commission  expires the day of ____,20 .

                                       66
<PAGE>

                                    EXHIBIT 1

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9004]
RIN 1545-AW98

Real Estate Mortgage Investment Conduits

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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

SUMMARY:  This  document  contains  final  regulations  relating  to safe harbor
transfers of noneconomic  residual interests in real estate mortgage  investment
conduits (REMICs).  The final regulations provide additional  limitations on the
circumstances under which transferors may claim safe harbor treatment.

DATES: Effective Date: These regulations are effective July 19, 2002.
    Applicability Date: For dates of applicability, see Sec. 1.860E-
(1)(c)(10).

FOR FURTHER INFORMATION CONTACT: Courtney Shepardson at (202) 622-3940
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The  collection  of  information  in this final rule has been  reviewed and,
pending  receipt and  evaluation of public  comments,  approved by the Office of
Management  and Budget (OMB) under 44 U.S.C.  3507 and assigned  control  number
1545-1675.
    The  collection  of  information  in  this  regulation  is in  Sec.  1.860E-
1(c)(5)(ii).  This  information  is  required to enable the IRS to verify that a
taxpayer is complying with the conditions of this regulation.  The collection of
information  is mandatory  and is  required.  Otherwise,  the taxpayer  will not
receive the benefit of safe harbor treatment as provided in the regulation.  The
likely respondents are businesses and other for-profit institutions.

                                       67
<PAGE>

    Comments on the  collection of  information  should be sent to the Office of
Management  and Budget,  Attn:  Desk Officer for the Department of the Treasury,
Office of Information and Regulatory Affairs, Washington, DC, 20503, with copies
to  the  Internal  Revenue  Service,   Attn:  IRS  Reports  Clearance   Officer,
W:CAR:MP:FP:S,  Washington,  DC 20224. Comments on the collection of information
should be received by September 17, 2002.  Comments are  specifically  requested
concerning:
    Whether  the   collection  of   information  is  necessary  for  the  proper
performance of the functions of the Internal Revenue Service,  including whether
the information will have practical utility;
    The accuracy of the  estimated  burden  associated  with the  collection  of
information (see below);
    How the quality, utility, and clarity of the information to be
collected may be enhanced;
    How the  burden of  complying  with the  collection  of  information  may be
minimized,  including through the application of automated collection techniques
or other forms of information technology; and
    Estimates of capital or start-up costs and costs of operation,  maintenance,
and purchase of service to provide information.
    An agency  may not  conduct  or  sponsor,  and a person is not  required  to
respond to, a  collection  of  information  unless it  displays a valid  control
number assigned by the Office of Management and Budget.
    The  estimated  total  annual  reporting  burden is 470  hours,  based on an
estimated  number of respondents  of 470 and an estimated  average annual burden
hours per respondent of one hour.
    Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax return information are confidential,
as required by 26 U.S.C. 6103.

Background

    This document contains final regulations  regarding the proposed  amendments
to 26 CFR part 1 under  section  860E of the Internal  Revenue Code (Code).  The
regulations  provide the circumstances under which a transferor of a noneconomic
REMIC  residual   interest   meeting  the   investigation   and   representation
requirements  may avail  itself  of the safe  harbor by  satisfying  either  the
formula test or the asset test.
    Final regulations  governing REMICs, issued in 1992, contain rules governing
the transfer of noneconomic REMIC residual interests.  In general, a transfer of
a  noneconomic  residual  interest  is  disregarded  for all tax  purposes  if a
significant purpose of the transfer is to

[[Page 47452]]

enable the  transferor to impede the  assessment or collection of tax. A purpose
to impede the assessment or collection of tax (a wrongful purpose) exists if the
transferor,  at the time of the transfer,  either knew or should have known that
the transferee would be unwilling or unable to pay taxes due on its share of the
REMIC's taxable income.

                                       68
<PAGE>

    Under a safe harbor, the transferor of a REMIC noneconomic residual interest
is presumed not to have a wrongful  purpose if two  requirements  are satisfied:
(1) the  transferor  conducts a  reasonable  investigation  of the  transferee's
financial  condition  (the  investigation  requirement);  and (2) the transferor
secures a  representation  from the transferee to the effect that the transferee
understands the tax obligations  associated with holding a residual interest and
intends to pay those taxes (the representation requirement).
    The  IRS  and  Treasury  have  been  concerned  that  some   transferors  of
noneconomic  residual  interests  claim they  satisfy  the safe  harbor  even in
situations  where the economics of the transfer  clearly indicate the transferee
is unwilling or unable to pay the tax associated with holding the interest.  For
this reason,  on February 7, 2000, the IRS published in the Federal Register (65
FR 5807) a notice of proposed rulemaking (REG-100276-97; REG-122450-98) designed
to clarify the safe harbor by adding the "formula  test," an economic  test. The
proposed  regulation  provides  that the safe harbor is  unavailable  unless the
present value of the  anticipated  tax  liabilities  associated with holding the
residual  interest  does not  exceed the sum of:  (1) The  present  value of any
consideration  given to the transferee to acquire the interest;  (2) the present
value of the expected future distributions on the interest;  and (3) the present
value of the anticipated tax savings associated with holding the interest as the
REMIC generates losses.
    The notice of proposed  rulemaking also contained rules for FASITs.  Section
1.860H-6(g) of the proposed regulations  provides  requirements for transfers of
FASIT  ownership  interests  and adopts a safe harbor by  reference  to the safe
harbor provisions of the REMIC regulations.
    In January 2001, the IRS published Rev. Proc. 2001-12 (2001-3 I.R.B. 335) to
set forth an alternative  safe harbor that taxpayers could use while the IRS and
the  Treasury  considered  comments  on  the  proposed  regulations.  Under  the
alternative safe harbor, if a transferor meets the investigation requirement and
the representation  requirement but the transfer fails to meet the formula test,
the transferor  may invoke the safe harbor if the transferee  meets a two- prong
test (the asset test). A transferee generally meets the first prong of this test
if, at the time of the transfer, and in each of the two years preceding the year
of  transfer,  the  transferee's  gross  assets  exceed $100 million and its net
assets exceed $10 million. A transferee generally meets the second prong of this
test if it is a  domestic,  taxable  corporation  and agrees in  writing  not to
transfer  the  interest  to any person  other  than  another  domestic,  taxable
corporation that also satisfies the requirements of the asset test. A transferor
cannot rely on the asset test if the  transferor  knows,  or has reason to know,
that the  transferee  will not comply  with its written  agreement  to limit the
restrictions on subsequent transfers of the residual interest.
    Rev. Proc. 2001-12 provides that the asset test fails to be satisfied in the
case of a transfer or assignment of a noneconomic residual interest to a foreign
branch of an otherwise  eligible  transferee.  If such a transfer or  assignment
were permitted,  a corporate taxpayer might seek to claim that the provisions of
an  applicable  income tax treaty  would  resource  excess  inclusion  income as
foreign  source  income,  and that,  as a  consequence,  any U.S. tax  liability
attributable  to the excess  inclusion  income  could be offset by  foreign  tax
credits.  Such a claim would impede the  assessment or collection of U.S. tax on
excess inclusion income,  contrary to the congressional purpose of assuring that
such income will be taxable in all events. See, e.g., sections 860E(a)(1),  (b),
(e) and 860G(b) of the Code.
    The Treasury and the IRS have  learned that certain  taxpayers  transferring
noneconomic residual interests to foreign branches have attempted to rely on the
formula  test to obtain  safe  harbor  treatment  in an  effort  to  impede  the
assessment or collection of U.S. tax on excess  inclusion  income.  Accordingly,
the  final  regulations  provide  that if a  noneconomic  residual  interest  is
transferred  to a  foreign  permanent  establishment  or  fixed  base  of a U.S.
taxpayer,  the transfer is not eligible for safe harbor  treatment  under either
the asset  test or the  formula  test.  The  final  regulations  also  require a
transferee  to  represent  that it will not cause  income  from the  noneconomic
residual  interest to be attributable to a foreign  permanent  establishment  or
fixed base.

                                       69
<PAGE>

    Section 1.860E-1(c)(8)  provides computational rules that a taxpayer may use
to  qualify  for  safe  harbor   status   under  the   formula   test.   Section
1.860E-1(c)(8)(i)  provides that the transferee is presumed to pay tax at a rate
equal to the highest rate of tax specified in section 11(b).  Some  commentators
were  concerned that this presumed rate of taxation was too high because it does
not take into  consideration  taxpayers  subject to the alternative  minimum tax
rate. In light of the comments received,  this provision has been amended in the
final regulations to allow certain transferees that compute their taxable income
using the alternative  minimum tax rate to use the alternative  minimum tax rate
applicable to corporations.
    Additionally,  Sec.  1.860E-1(c)(8)(iii) provides that the present values in
the  formula  test  are to be  computed  using  a  discount  rate  equal  to the
applicable  Federal  short-term  rate prescribed by section  1274(d).  This is a
change  from  the  proposed   regulation  and  Rev.  Proc.   2001-12.  In  those
publications  the  provision  stated that "present  values are computed  using a
discount rate equal to the applicable Federal rate prescribed in section 1274(d)
compounded  semiannually"  and that "[a] lower  discount rate may be used if the
transferee can demonstrate that it regularly borrows, in the course of its trade
or  business,  substantial  funds at such  lower  rate from an  unrelated  third
party." The IRS and the Treasury  Department  have learned  that,  based on this
provision,  certain taxpayers have been attempting to use unrealistically low or
zero interest rates to satisfy the formula test,  frustrating  the intent of the
test.  Furthermore,  the  Treasury  Department  and the IRS believe  that a rule
allowing  for a rate  other than a rate based on an  objective  index  would add
unnecessary complexity to the safe harbor. As a result, the rule in the proposed
regulations  that  permits a transferee  to use a lower  discount  rate,  if the
transferee can demonstrate that it regularly  borrows  substantial funds at such
lower rate, is not included in the final regulations; and the Federal short-term
rate  has  been  substituted  for  the  applicable  Federal  rate.  To  simplify
taxpayers' computations, the final regulations allow use of any of the published
short-term  rates,  provided  that  the  present  values  are  computed  with  a
corresponding  period  of  compounding.  With the  exception  of the  provisions
relating to transfers to foreign  branches,  these  changes  generally  have the
proposed  applicability  date of February 4, 2000,  but  taxpayers may choose to
apply the interest  rate formula set forth in the proposed  regulation  and Rev.
Proc. 2001-12 for transfers occurring before August 19, 2002.
    It is anticipated that when final regulations are adopted with respect to

[[Page 47453]]

FASITs,  Sec.  1.860H-6(g)  of the  proposed  regulations  will  be  adopted  in
substantially  its  present  form,  with the result  that the final  regulations
contained  in this  document  will  also  govern  transfers  of FASIT  ownership
interests with substantially the same applicability date as is contained in this
document.

                                       70
<PAGE>

Effect on Other Documents

    Rev.  Proc.  2001-12  (2001-3  I.R.B.  335) is  obsolete  for  transfers  of
noneconomic residual interests in REMICs occurring on or after August 19, 2002.

Special Analyses

    It is hereby  certified that these  regulations  will not have a significant
economic impact on a substantial number of small entities. This certification is
based  on the  fact  that it is  unlikely  that a  substantial  number  of small
entities will hold REMIC residual interests. Therefore, a Regulatory Flexibility
Analysis  under  the  Regulatory  Flexibility  Act (5 U.S.C.  chapter  6) is not
required.  It  has  been  determined  that  this  Treasury  decision  is  not  a
significant regulatory action as defined in Executive Order 12866.  Therefore, a
regulatory assessment is not required. It also has been determined that sections
553(b) and 553(d) of the  Administrative  Procedure Act (5 U.S.C.  chapter 5) do
not apply to these regulations.

Drafting Information

    The principal author of these regulations is Courtney  Shepardson.  However,
other  personnel  from the IRS and  Treasury  Department  participated  in their
development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and record keeping requirements.

26 CFR Part 602

    Reporting and record keeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority  citation for part 1 continues to read in part as
follows:

    Authority: 26 U.S.C. 7805 * * *

                                       71
<PAGE>

                                   EXHIBIT J-2

                         FORM OF TRANSFEROR CERTIFICATE

                                                     , 20
                                          ---------    ----

Residential Funding Mortgage
  Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 250
Minneapolis, MN 55437

JPMorgan Chase Bank
4 New York Plaza
6th Floor
New York, NY 10004
Attention:  Institutional Trust Services/Structured Finance Services

               Re:    Home Equity Loan-Backed Certificates,
                      Series 2003-HS3, Class R-[__]

Ladies and Gentlemen:

        This letter is delivered to you in connection  with the transfer by (the
"Seller") to (the "Purchaser") of a [__]% Percentage Interest in the Home Equity
Loan-Backed  Certificates,  Series 2003-HS3,  Class R-[ ] (the  "Certificates"),
pursuant to Section 3.05 of the Trust Agreement (the "Trust  Agreement"),  dated
as of September 29, 2003 among  Residential  Asset Mortgage  Products,  Inc., as
seller (the  "Company"),  and Wilmington  Trust  Company,  as owner trustee (the
"Trustee").  All terms used  herein  and not  otherwise  defined  shall have the
meanings  set forth in the  Amended and  Restated  Trust  Agreement.  The Seller
hereby  certifies,  represents and warrants to, and covenants  with, the Company
and the Trustee that:

        1. No purpose of the Seller  relating to the transfer of the Certificate
by the  Seller  to the  Purchaser  is or will be to  impede  the  assessment  or
collection of any tax.

        2. The  Seller  understands  that the  Purchaser  has  delivered  to the
Trustee and the Master  Servicer a transfer  affidavit and agreement in the form
attached  to the Trust  Agreement  as Exhibit  J-1.  The Seller does not know or
believe that any representation contained therein is false.

        3. The Seller has at the time of the  transfer  conducted  a  reasonable
investigation  of the financial  condition of the Purchaser as  contemplated  by
Treasury  Regulations  Section  1.860E-1(c)(4)(i)  and,  as  a  result  of  that
investigation,  the Seller has  determined  that the Purchaser has  historically
paid its debts as they  become  due and has  found no  significant  evidence  to
indicate  that the  Purchaser  will not continue to pay its debts as they become
due in the future.  The Seller  understands  that the  transfer of a Class R-[ ]
Certificate  may not be respected for United States income tax purposes (and the
Seller may  continue  to be liable for United  States  income  taxes  associated
therewith) unless the Seller has conducted such an investigation.

                                       72
<PAGE>

        4. The Seller has no actual  knowledge  that the proposed  Transferee is
not both a United States Person and a Permitted Transferee.

                                            Very truly yours,

                                    (Seller)

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
Title:

                                       73
<PAGE>

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