Document:

EXHIBIT 10.31

                           CHILDREN'S WONDERLAND, INC.
                                  P.O. BOX 6129
                              OXNARD, CA 93031-6129

April 20, 2000

Mr. Justin Gasarch
29 Beach road
Monmouth Beach, NJ 07750

Dear Mr. Gasarch:

       Children's Wonderland, Inc. (referred to as "we", "us" or the "Company")
hereby retains you (Justin Gasarch) and you hereby agree to be retained by us to
render advisory services (the "Services") in matters relating to real estate and
the development of pre-school clients for our Internet strategy. This Agreement
is effective for a period of twelve months from the date set forth above. During
such period, you will provide us with the Services as may reasonably be
requested of you from time to time by us, provided that you will not be required
to undertake duties not reasonably within the scope of the Services contemplated
hereunder. The time required of you to provide the Services is not expected to
be substantial and you will not be obligated to spend any specific amount of
time in providing the Services. All consultation may be provided by you via
telephone, facsimile and e-mail from your regular place of business. You agree
to keep confidential any information which you have been notified by the Company
as being confidential and which in fact is non-public and otherwise treated as
confidential.

       In consideration for your agreement to provide the Services to us, we
will become obligated to issue to you or your designee, simultaneously with your
execution of this Agreement and your (or your assignee's) subscription to our
Units ("Units") (consisting of our Series B Convertible Preferred Stock and
Warrants), the number of shares of our Common Stock, after giving effect to a
reverse split of our Common Stock, which is the higher of (i) 250,000 or (ii)
3.8% of the total outstanding Common Stock on the date hereof after taking into
account the conversion of all of our Series A Convertible Preferred Stock
outstanding but not taking into account the conversion of other convertible
securities which we have outstanding, including any of our Series B Convertible
Preferred Stock. You agree that we will not issue the shares of Common Stock to
you as contemplated in the preceding sentence until such time as we have amended
our Restated Articles of Incorporation to authorize a sufficient number of
shares of Common Stock to permit the conversion of our outstanding convertible
securities and to permit such issuance of shares to you. In the event we have
not closed on our offering of Units within the time frame (plus any optional
extensions) described in our Subscription Agreement, dated March 3, 2000, this
Agreement will be voided and be of no force and effect and any subscription of
Units by you or your assignee will also be null and void.

<PAGE>

Mr. Justin Gasarch
April 20, 2000
Page 2

       We will register the shares of Common Stock, which we are obligated to
issue to you or your designee pursuant to the preceding paragraph, under the
Securities Act of 1933, as amended, on or prior to the six-month anniversary of
the date hereof; provided, however, that such six-month anniversary will be
extended by such number of days, if any, by which our becoming current with our
reporting obligations under the Securities Exchange Act of 1934 (which status we
will use best efforts to attain as soon as practicable) is delayed beyond the
five-month anniversary of the date hereof.

       As a condition to this Agreement, you and Gray Gull Realty Co. (and any
of your other assignees) will each deliver General Releases to us in connection
with our offering of the Units. We agree to hold such General Releases in
escrow, and they will not be enforceable, until we have registered your shares
as contemplated in the foregoing paragraph and the Series B Preferred Stock to
be received by you and/or your assignee is converted into our Common Stock. In
addition, provided that you and your assignee also agree, John Clarke and Robert
Becker, as holders of all of our outstanding Series A Convertible Preferred
Stock, agree that, in the event of a liquidation, dissolution or winding up of
the Company, the Series A Convertible Preferred Stock will be entitled to 37.5%,
and you and your assignee will be entitled to 62.5%, of the total of the
payments made by the Company resulting from such liquidation, dissolution or
winding up with respect to the liquidation preferences of both the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock held by
you or your assignee and also agree in such event that you or your assignee will
be entitled to payment of the full principal amount of your and your assignee's
subscription to the Units before any payments are made on the Series A
Convertible Preferred. The provisions of the preceding sentence will apply only
if such shares held by you or your assignee have not been transferred to a third
party and if such shares and the Series A Convertible Preferred Stock have not
been converted into shares of our Common Stock.

       By signing below, John Clarke and Robert Becker agree to vote their
shares of the Company's capital stock in favor of carrying out the intent and
purpose of the foregoing paragraphs.

       We acknowledge that you may conduct business other than as a consultant
and may also provide consulting advice to others. Nothing herein contained shall
be construed to limit or restrict you from rendering the same or similar
services to others, or in rendering similar advice to others, as long as such
business or advice is not competitive with that of the Company. You shall be
responsible for the payment of all federal, state and local taxes, including
F.I.C.A. and income taxes, payable on any compensation paid by the Company to
you hereunder.

       It is expressly understood and agreed that your relationship to Company
is that of an independent contractor and that neither this Agreement nor the
Services to be rendered hereunder shall for any purpose whatsoever or in any way
or manner create any employer-employee relationship between Company and you. You
shall have no authority to act for, represent or bind Company in any manner,
except as may be agreed to expressly by Company in writing from time

<PAGE>

Mr. Justin Gasarch
April 20, 2000
Page 3

to time and you and the Company are and shall remain independent parties bound
by the provisions hereof.

       This Agreement embodies the entire agreement between the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof.

       Neither you nor we may assign this Agreement or any rights created
hereunder. You may not delegate the performance of any of your duties hereunder.
Any such purported delegation or assignment shall be void.

       This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without regard to principles of conflicts of
law.

       If you are in agreement with the terms set forth above, please sign a
copy of this letter and return the signed copy to us.

                                   Very truly yours,

                                   CHILDREN'S WONDERLAND, INC.

                                              By:              /s/
                                                  ------------------------------
                                              Name:  Debby Bitticks
                                              Title: President

                                              By:              /s/
                                                  ------------------------------
                                              Name:  Robert Becker
                                              Title: Principal Shareholder

                                              By:              /s/
                                                  ------------------------------
                                              Name:   John Clarke
                                               Title: Principal Shareholder

AGREED as of the date set forth above:

               /s/
-------------------------------------
JUSTIN GASARCHEXECUTION

                       SAXON ASSET SECURITIES TRUST 2001-2

                     MORTGAGE LOAN ASSET BACKED CERTIFICATES

                                  SERIES 2001-2

                                 TRUST AGREEMENT

                            dated as of July 1, 2001

                                      among

                         SAXON ASSET SECURITIES COMPANY,

                                  as Depositor

                              SAXON MORTGAGE, INC.,

                               as Master Servicer

                                       and

                             BANKERS TRUST COMPANY,

                       as Trustee, Certificate Registrar,
                       Paying Agent and Calculation Agent

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Article I Definitions..........................................................7

   Section 1.01.  Standard Terms; Section References...........................7

   Section 1.02.  Defined Terms................................................8

   Section 1.03   Calculation of Certain Amounts..............................30

Article II Formation of Trust; Conveyance of Mortgage Loans...................30

   Section 2.01.  Conveyance of Mortgage Loans................................30

   Section 2.02.  Purchase of Subsequent Mortgage Loans.......................31

   Section 2.03.  Pre-Funding Account and Capitalized Interest Account........34

Article III Remitting to Certificateholders...................................34

   Section 3.01.  Certificate Distributions...................................34

   Section 3.02.  Reports to the Depositor and the Trustee....................38

   Section 3.03.  Reports by or on Behalf of the Master Servicer..............39

   Section 3.04.  Advance Facility............................................40

Article IV The Certificates...................................................42

   Section 4.01.  The Certificates............................................42

   Section 4.02.  Denominations...............................................43

Article V Miscellaneous Provisions............................................43

   Section 5.01.  Request for Opinions........................................43

   Section 5.02.  Form of Certificates; Schedules and Exhibits;
                  Governing Law...............................................43

   Section 5.04.  Master Servicer; Certificate Registrar, Paying Agent
                  and Calculation Agent.......................................44

                                       i
<PAGE>

Schedule I:       The Mortgage Loans:        A.      Group I Mortgage Loans

                                             B.      Group II Mortgage Loans
                                                     (Separately identifying
                                                     the Subgroup IIA and IIB
                                                     Mortgage Loans)

Schedule II:      Sales Agreement

Schedule III:     Servicing Agreement

Schedule IV:      Form of Subsequent Sales Agreement

Exhibit AF:  1:   Form of Class AF-1 Certificate

             2:   Form of Class AF-2 Certificate

             3:   Form of Class AF-3 Certificate

             4:   Form of Class AF-4 Certificate

             5:   Form of Class AF-5 Certificate

             6:   Form of Class AF-6 Certificate

Exhibit M:   1:   Form of Class M-1 Certificate

             2:   Form of Class M-2 Certificate

Exhibit B:        Form of Class B-1 Certificate

Exhibit AV:  1:   Form of Class AV-1 Certificate

             2:   Form of Class AV-2 Certificate

Exhibit A-IO:     Form of Class A-IO Certificate

Exhibit X-IO:     Form of Class X-IO Certificate

Exhibit P:        Form of Class P Certificate

Exhibit C:        Form of Class C Certificate

Exhibit R:        Form of Class R Certificate

Exhibit I:        Reportable Exceptions

Exhibit J:        Form of Remittance Agency Agreement

Exhibit K:        Form of Security Release Certification

  s                                     ii
<PAGE>

                                 TRUST AGREEMENT

         THIS TRUST AGREEMENT dated as of July 1, 2001 (this "Agreement"), among
SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"), SAXON
MORTGAGE, INC., a Virginia corporation, as master servicer (the "Master
Servicer"), and BANKERS TRUST COMPANY, a New York corporation, as trustee (the
"Trustee"), under this Agreement and the Standard Terms to Trust Agreement
(February 2000 Edition) (the "Standard Terms"), all the provisions of which,
unless otherwise specified herein, are incorporated herein and shall be a part
of this Agreement as if set forth herein in full (this Agreement with the
Standard Terms so incorporated, the "Trust Agreement"), and also in the
capacities of Certificate Registrar, Paying Agent, and Calculation Agent
pursuant to this Agreement.

                              PRELIMINARY STATEMENT

         The Board of Directors of the Depositor has duly authorized the
formation of a trust (the "Trust") to issue a series of asset backed
certificates with an aggregate initial Certificate Principal Balance of
$650,410,000 to be known as the Saxon Asset Securities Trust 2001-2, Mortgage
Loan Asset Backed Certificates, Series 2001-2 (the "Certificates"). The
Certificates in the aggregate evidence the entire beneficial ownership in the
Trust. The Certificates consist of the following: the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-1, Class AV-2, Class
A-IO, Class M-1, Class M-2, Class B-1, Class X-IO, Class P, Class C, and Class R
Certificates.

         In accordance with Section 10.01 of the Standard Terms, the Trustee
will make elections to treat each of the segregated pools of assets described
below as a real estate mortgage investment conduit (each a "REMIC" or, in the
alternative, "REMIC 1", "REMIC 2", and "REMIC 3", REMIC 3 also being referred to
as the Upper-Tier REMIC). The Certificates, other than the Class R Certificate
and the Class P Certificate, represent ownership of the regular interests in the
Upper-Tier REMIC for purposes of the REMIC Provisions. The Class P Certificate
represents an interest in the Trust Estate but does not represent an interest in
any REMIC created hereunder. The Class P Certificate shall be entitled to
distributions of prepayment penalties received by the Trustee with respect to
the Mortgage Loans to the extent such prepayment penalties do not represent
Pledged Prepayment Penalties. The Class R Certificates represents ownership of
the sole class of residual interest in each of REMIC 1, REMIC 2, and the
Upper-Tier REMIC for purposes of the REMIC Provisions. The Upper-Tier REMIC
shall hold as its assets the several classes of uncertificated Lower Tier
Interests in REMIC 2, other than the Class LT2-R Interest, and each such Lower
Tier Interest is hereby designated as a regular interest in REMIC 2 for purposes
of the REMIC Provisions. REMIC 2 shall hold as its assets the several classes of
uncertificated Lower Tier Interests in REMIC 1, other than the Class LT1-R
Interest, and each such Lower Tier Interest is hereby designated as a regular
interest in REMIC 1. REMIC 1 shall hold as its assets the property of the Trust
Estate other than the Lower Tier Interests in REMIC 1 and REMIC 2, the
Prefunding Account, the Capitalized Interest Account, and the Basis Risk Reserve
Fund. The startup day for each REMIC created hereby for purposes of the REMIC
Provisions is the Closing Date. In addition, for purposes of the REMIC
Provisions, the latest possible maturity date for each regular interest in each
REMIC created hereby is the Distribution Date in July 2033.

<PAGE>

         REMIC 1

         The following table sets forth (or describes) the class designation,
interest rate, and principal amount for each class of the REMIC 1 Lower Tier
Interests.

                 REMIC 1                REMIC 1
                Lower Tier             Lower Tier           Initial Class
             Class Designation        Interest Rate        Principal Amount
             -----------------        -------------     --------------------
              Class LT1-A                   (1)          $   502,182,000.00

              Class LT1-B                   (1)          $     5,528,000.00

              Class LT1-C                   (1)          $     6,894,000.00

              Class LT1-D                   (1)          $    11,123,000.00

              Class LT1-E                   (1)          $    15,219,000.00

              Class LT1-F                   (1)          $    29,658,000.00

              Class LT1-G                   (1)          $    11,058,000.00

              Class LT1-H                   (1)          $    68,748,000.00

              Class LT1-R                   (2)                       (2)

(1)      The interest rate with respect to any Distribution Date (and the
         related Accrual Period) for these Interests is a per annum rate equal
         to the Weighted Average Net Rate as of the first day of the calendar
         month immediately preceding the Distribution Date.

(2)      The Class LT1-R Interest is the sole class of residual interest in
         REMIC 1. It does not have an interest rate or a principal balance.

         On each Distribution Date, the Group 1 Interest Funds and the Group II
Interest Funds, in each case determined without regard to Pledged Prepayment
Penalties, shall be distributed with respect to the REMIC 1 Lower Tier Interests
at the rates described above.

         On each Distribution Date, the Group 1 Principal Funds and the Group II
Principal Funds shall be distributed, and all Realized Losses attributable to
the Mortgage Loans shall be allocated, first to the Class LT1-A Interest until
its principal balance is reduced to zero, and then to each of the remaining
Lower Tier Interests in REMIC 1, sequentially in the alphabetical order of their
class designation, until the principal balance of each such Lower Tier Interest
is reduced to zero.

         For any Distribution Date, Pledged Prepayment Penalties received with
respect to the Mortgage Loans in Group I and Group II shall be allocated
proportionally among the Lower Tier

                                       2
<PAGE>

Interests in REMIC 1 in accordance with their relative principal balances
immediately before such Distribution Date.

REMIC 2

         The following table sets forth (or describes) the class designation,
interest rate, and principal amount for each class of REMIC 2 Lower Tier
Interests.

    REMIC 2             REMIC 2                                  Corresponding
   Lower Tier          Lower Tier        Initial Class             Class of
Class Designation     Interest Rate     Principal Amount         Certificates
-----------------  -----------------   ------------------      -----------------
Class LT2-D               (1)          $   325,205,000.00             N/A

Class LT2-AF-1            (1)          $    55,750,000.00         Class AF-1

Class LT2-AF-2            (1)          $    18,550,000.00         Class AF-2

Class LT2-AF-3            (1)          $    26,600,000.00         Class AF-3

Class LT2-AF-4            (1)          $    16,400,000.00         Class AF-4

Class LT2-AF-5            (1)          $    19,431,000.00         Class AF-5

Class LT2-AF-6            (1)          $    13,000,000.00         Class AF-6

Class LT2-AV-1            (1)          $    92,500,000.00         Class AV-1

Class LT2-AV-2            (1)          $    37,445,500.00         Class AV-2

Class LT2-M-1             (1)          $    22,764,500.00          Class M-1

Class LT2-M-2             (1)          $    13,008,000.00          Class M-2

Class LT2-B               (1)          $     9,756,000.00          Class B-1

Class LT2-IO-1            (2)                       (2)              A-IO

Class LT2-IO-2            (3)                       (3)              A-IO

Class LT2-IO-3            (4)                       (4)              A-IO

Class LT2-IO-4            (5)                       (5)              A-IO

Class LT2-IO-5            (6)                       (6)              A-IO

Class LT2-IO-6            (7)                       (7)              A-IO

Class LT2-IO-7            (8)                       (8)              A-IO

Class LT2-R               (9)                       (9)

                                       3
<PAGE>

(1)      The interest rate with respect to any Distribution Date (and the
         related Accrual Period) for these Interests is a per annum rate equal
         to the Net WAC Cap applicable to the Group I Certificates other than
         the Class AF-1 Certificates.

(2)      The Class LT2-IO-1 Interest has a notional principal balance of
         $5,528,000 and, for each Distribution Date up to and including the
         Distribution Date in January, 2002, shall bear interest at a rate of
         6.25% and shall not bear interest thereafter.

(3)      The Class LT2-IO-2 Interest has a notional principal balance of
         $6,894,000 and, for each Distribution Date up to and including the
         Distribution Date in July, 2002, shall bear interest at a rate of 6.25%
         and shall not bear interest thereafter.

(4)      The Class LT2-IO-3 Interest has a notional principal balance of
         $11,123,000 and, for each Distribution Date up to and including the
         Distribution Date in January, 2003, shall bear interest at a rate of
         6.25% and shall not bear interest thereafter.

(5)      The Class LT2-IO-4 Interest has a notional principal balance of
         $15,219,000 and, for each Distribution Date up to and including the
         Distribution Date in April, 2003, shall bear interest at a rate of
         6.25% and shall not bear interest thereafter.

(6)      The Class LT2-IO-5 Interest has a notional principal balance of
         $29,658,000 and, for each Distribution Date up to and including the
         Distribution Date in July, 2003, shall bear interest at a rate of 6.25%
         and shall not bear interest thereafter.

(7)      The Class LT2-IO-6 Interest has a notional principal balance of
         $11,058,000 and, for each Distribution Date up to and including the
         Distribution Date in October, 2003, shall bear interest at a rate of
         6.25% and shall not bear interest thereafter.

(8)      The Class LT2-IO-7 Interest has a notional principal balance of
         $68,748,000 and, for each Distribution Date up to and including the
         Distribution Date in February, 2004, shall bear interest at a rate of
         6.25% and shall not bear interest thereafter.

(9)      The Class LT2-R Interest is the sole class of residual interest in
         REMIC 1. It does not have an interest rate or a principal balance.

         On each Distribution Date, interest distributed with respect to the
REMIC 1 Lower Tier Interests shall be distributed on the REMIC 2 Lower Tier
Interests at the rates described above, provided however, that a portion of the
interest that accrues at the rate described above on the Class LT2-D Interest
shall be deferred and added to the principal balance of the Class LT2-D
Interest. For any Distribution Date, the portion so deferred shall equal 50% of
the increase occurring on such Distribution Date in the Overcollateralization
Amount. Interest so deferred shall be applied to make principal payments on the
other Lower Tier Interests in REMIC 2.

         On each Distribution Date principal distributed with respect to the
REMIC 1 Lower Tier Interests, and any interest deferred on the Class LT2-D
Interest, shall be distributed, and any Realized Losses shall be allocated,
among the REMIC 2 Lower Tier Interests in a manner such that immediately
following such Distribution Date:

                                       4
<PAGE>

(a)      the principal balance of the Class LT2-AF-1 Interest equals 50% of the
         Class AF-1 Certificate Principal Balance;

(b)      the principal balance of the Class LT2-AF-2 Interest equals 50% of the
         Class AF-2 Certificate Principal Balance;

(c)      the principal balance of the Class LT2-AF-3 Interest equals 50% of the
         Class AF-3 Certificate Principal Balance;

(d)      the principal balance of the Class LT2-AF-4 Interest equals 50% of the
         Class AF-4 Certificate Principal Balance;

(e)      the principal balance of the Class LT2-AF-5 Interest equals 50% of the
         Class AF-5 Certificate Principal Balance;

(f)      the principal balance of the Class LT2-AF-6 Interest equals 50% of the
         Class AF-6 Certificate Principal Balance;

(g)      the principal balance of the Class LT2-AV-1 Interest equals 50% of the
         Class AV-1 Certificate Principal Balance;

(h)      the principal balance of the Class LT2-AV-2 Interest equals 50% of the
         Class AV-2 Certificate Principal Balance;

(i)      the principal balance of the Class LT2-M-1 Interest equals 50% of the
         Class M-1 Certificate Principal Balance;

(j)      the principal balance of the Class LT2-M-2 Interest equals 50% of the
         Class M-2 Certificate Principal Balance;

(k)      the principal balance of the Class LT2-B Interest equals 50% of the sum
         of the Class B-1 Certificate Principal Balance; and

(l)      the principal balance of the Class LT2-D Interest equals the excess of
         the Assumed Principal Balance over the sum of the balances of the Class
         LT2-AF-1, Class LT2-AF-2, Class LT2-AF-3, Class LT2-AF-4, Class
         LT-2-AF-5, Class LT2-AF-6, Class LT2-AV-1, Class LT2-AV-2, Class
         LT2-M-1, Class LT2-M-2 and Class LT2-B Interests.

         For any Distribution Date, Pledged Prepayment Penalties distributed on
the REMIC 1 Lower Tier Interests shall be distributed proportionally among the
REMIC 2 Lower Tier Interests in accordance with their relative principal
balances immediately before such Distribution Date.

REMIC 3

         The following table sets forth (or describes) the class designation,
interest rate, and principal amount for each class of the REMIC 3 Interests.

                                       5
<PAGE>

    REMIC 3                    REMIC 3                        Initial Class
  Certificate                Certificate                       Principal
Class Designation           Interest Rate                       Amount
------------------      ----------------------           -------------------
Class AF-1                        (1)                    $   111,500,000.00

Class AF-2                        (2)                    $    37,100,000.00

Class AF-3                        (3)                    $    53,200,000.00

Class AF-4                        (4)                    $    32,800,000.00

Class AF-5                        (5)                    $    38,862,000.00

Class AF-6                        (6)                    $    26,000,000.00

Class AV-1                        (7)                    $   185,000,000.00

Class AV-2                        (8)                    $    74,891,000.00

Class M-1                         (9)                    $    45,529,000.00

Class M-2                        (10)                    $    26,016,000.00

Class B-1                        (11)                    $    19,512,000.00

Class A-IO                       (12)                                (12)

Class X-IO                       (13)                                (13)

Class C                          (14)                                (14)

Class R                          (15)                                (15)

(1)      The Class AF-1 Pass-Through Rate.

(2)      The Class AF-2 Pass-Through Rate.

(3)      The Class AF-3 Pass-Through Rate.

(4)      The Class AF-4 Pass-Through Rate.

(5)      The Class AF-5 Pass-Through Rate.

(6)      The Class AF-6 Pass-Through Rate.

(7)      The Class AV-1 Pass-Through Rate.

(8)      The Class AV-2 Pass-Through Rate.

(9)      The Class M-1 Pass-Through Rate.

(10)     The Class M-2 Pass-Through Rate.

                                       6
<PAGE>

(11)     The Class B-1 Pass-Through Rate.

(12)     The Class A-IO Certificates do not have a principal balance. For any
         Distribution Date, the Class A-IO Certificate shall be entitled to all
         interest payable for such date with respect to the Class LT2-IO-1,
         Class LT2-IO-2, Class LT2-IO-3, Class LT2-IO-4, Class LT2-IO-5, Class
         LT2-IO-6, and Class LT2-IO 7 Interests.

(13)     The Class X-IO Certificates do not have a principal balance. For each
         Distribution Date (and the related Accrual Period) the Class X-IO
         Certificates shall have a notional principal balance equal to the
         Assumed Principal Balance (i.e., the aggregate of the principal
         balances of the REMIC 2 Lower Tier Interests), and shall accrue
         interest on such notional principal balance at a per annum rate equal
         to the Class X-IO Pass-Through Rate.

(14)     The Class C Certificate does not have a principal balance. For each
         Distribution Date (and the related Accrual Period) the Class C
         Certificate shall have a notional principal balance equal to the
         Assumed Principal Balance (i.e., the aggregate of the principal
         balances of the REMIC 2 Lower Tier Interests), and shall accrue
         interest on such notional principal balance at a per annum rate equal
         to:
                  (a)      for each Distribution Date up to an including the
                           Distribution Date in July, 2003, the excess, if any,
                           of the Net WAC Cap over the sum of (i) the product of
                           (A) 2, and (B) the Adjusted Net Rate, plus (ii)
                           0.275%; and

                  (b)      for each Distribution Date after the Distribution
                           Date in July, 2003, the excess, if any, of the Net
                           WAC Cap over the sum of (i) the product of (A) 2, and
                           (B) the Adjusted Net Rate, plus (ii) 0.10%.

         For each Distribution Date, interest accrued on the Class C Certificate
         during the related Accrual Period shall be deferred to the extent of
         the increase in the Overcollateralization Amount for such Distribution
         Date. Any interest so deferred shall not itself bear interest.

(15)     The Class R Certificate evidences ownership of the Class LT1-R and
         Class LT2-R Interests and also represents the sole class of residual
         interest in REMIC 3. It does not have an interest rate or a principal
         balance.

         For any Distribution Date, distributions shall be made and realized
losses shall be allocated among the Certificates in the manner set out in
Section 3.03.

         NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the Depositor, the Master
Servicer and the Trustee agree as follows:

                                    Article I
                                   Definitions

         Section 1.01.  Standard Terms; Section References.

         (a)      (i) The Standard Terms prescribe the duties, responsibilities
and obligations of the Depositor, the Master Servicer and the Trustee with
respect to the Certificates. The Depositor, the Master Servicer and the Trustee
agree to observe and perform such duties, responsibilities and obligations to
the extent they are not inconsistent with the provisions of this Agreement and

                                       7
<PAGE>

acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Sections
1.01 and 1.02 hereof, are and shall be a part of this Agreement to the same
extent as if set forth herein in full.

                  (ii) With respect to any inconsistency between the provisions
of Section 2.02(b)(A) through 2.02(b)(G) of the Standard Terms and the
provisions of Section 2.3 of the Standard Terms to Custody Agreement relating to
this Agreement, the provisions of the latter shall control.

         (b)      Unless otherwise specified herein, all references in this
Agreement to sections shall mean sections contained in this Agreement.

         (c)      Section 2.02(b)(v)(D) of the Standard Terms is amended to add
the following immediately after the words "that such copies bear a reproduction
of such signature or signatures":

                  ", provided, however, that no original assignment shall be
                  required to be delivered hereunder with respect to any
                  Mortgage Loan that names the related Custodian as nominee for
                  Sellers or its affiliate as the originating lender named
                  therein, as mortgagee (or as beneficiary if the related
                  Security Instrument is a deed of trust or similar
                  instrument);"

         (d)      Section 2.02(e) of the Standard Terms is amended to add the
following immediately after the words "possession of such assignment":

                  ", provided, however, that no original assignment shall be
                  required to be delivered hereunder with respect to any
                  Mortgage Loan that names the related Servicer, Trustee or
                  Custodian as nominee for Seller or its affiliate as the
                  originating lender named therein, as mortgagee (or as
                  beneficiary if the related Security Instrument is a deed of
                  trust or similar instrument);"

         (e)      The definition of "Trustee Mortgage Loan File" in the Standard
Terms is amended to add immediately after the words "assignment submitted for
recordation" in subparagraph (c):

                  ", provided, however, that no original assignment shall be
                  required to be delivered hereunder with respect to any
                  Mortgage Loan that names the related Servicer, Trustee or
                  Custodian as nominee for Seller or its affiliate as the
                  originating lender named therein, as mortgagee (or as
                  beneficiary if the related Security Instrument is a deed of
                  trust or similar instrument);"

         (f)      The Form of Remittance Report provided by the Standard Terms
shall be deemed to be amended and restated in its entirety so as to provide for
the reporting of all of the information described in Section 3.03(a) hereof.

         (g)      Commencing in January 2002, the Master Servicer shall prepare
and deliver to the Holder of the Residual Certificate the statement described in
Section 4.01 of the Standard Terms.

         (h)      The restriction on transfers set forth in Section 5.05(b)
(i) of the Standard Terms shall not be applicable to the Public Subordinated
Certificates.

                                       8
<PAGE>

         Section 1.02.  Defined Terms.

         Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein, the definition herein shall control.

         "Accrual Period": With respect to the Group I Certificates (other than
the Class AF-1 Certificates) and the Class A-IO and Class X-IO Certificates and
each Lower Tier Interest and any Distribution Date, the calendar month
immediately preceding such Distribution Date; a "calendar month" shall be deemed
to be 30 days. With respect to the Variable Rate Certificates and any
Distribution Date, the period commencing on the immediately preceding
Distribution Date (or in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding the current Distribution Date.
All calculations of interest on the Group I Certificates (other than the Class
AF-1 Certificates), the Class A-IO and Class X-IO Certificates, and the Lower
Tier Interests will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months and all calculations of interest on the Variable Rate
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and a year of 360 days.

         "Adjusted Net Rate": For any Distribution Date (and the related Accrual
Period), the weighted average of the interest rates on the Class LT2-D, Class
LT2-AF-1, Class LT2-AF-2, Class LT2-AF-3, Class LT2-AF-4, Class LT2-AF-5, Class
LT2-AF-6, Class LT-AV-1, Class LT-AV-2, Class LT2-M-1, Class LT2-M-2 and Class
LT2-B Interests computed for this purpose by limiting the interest rate payable
on the Class LT2-D Interest at zero and the rate payable on each of the other
above-listed Lower Tier Interests in the REMIC 2 to a rate that corresponds to
the rate payable for such Distribution Date on the Corresponding Class of
Certificates.

         "Allocable Portion" for each Group and Distribution Date, an amount
equal to the (i) Certificate Principal Balance of the Class A Certificates of
such Group; divided by (ii) the sum of the Certificate Principal Balance of the
Class A Certificates of both groups.

         "Applied Realized Loss Amount": As to any Distribution Date and Class
of Subordinate Certificates, the sum of the Realized Losses which have been
applied in reduction of the Certificate Principal Balance of such Class of
Certificates on such date.

         "Assumed Investment Rate":  3.75% per annum.

         "Assumed Principal Balance": As of any Distribution Date, the sum of:

         (i)      the aggregate Scheduled Principal Balances of the Mortgage
                  Loans as of such Distribution Date, plus

         (i)      the aggregate amount on deposit in the Pre-Funding Account
                  (less all amounts representing investment earnings thereon).

         "Basis Risk Payment": For any Distribution Date, an amount to be
deposited into the Basis Risk Reserve Fund equal to the sum of (i) the
Certificate Carryover Amounts for such Distribution Date and (ii) any Required
Reserve Fund Deposit for such Distribution Date, provided however,

                                       9
<PAGE>

the amount of the Basis Risk Payment for any Distribution Date cannot exceed the
amount available for distribution on such date pursuant to Section 3.01(f)(ix)
hereof.

         "Basis Risk Reserve Fund": A fund created under Section 3.05 hereof and
held as part of the Trust Estate but not as part of any REMIC created hereunder,
to provide a source for payments of Certificate Carryover Amounts.

         "Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5, Class AF-6, Class AV-1, Class AV-2, Class M-1, Class
M-2, Class B-1, Class X-IO and Class A-IO Certificates except to the extent
provided in Section 5.03 of the Standard Terms.

         "Calculation Agent": Bankers Trust Company, a New York corporation, and
its successors and assigns in such capacity.

         "Capitalized Interest Account": The account created and maintained with
the Paying Agent by the Trust pursuant to Section 2.03.

         "Capitalized Interest Requirement": As to any Distribution Date to and
including the Distribution Date immediately following the end of the Funding
Period, the product of (x) the excess of (a) the sum of the Group I Pre-Funded
Amount and the Group II Pre-Funded Amount on the Closing Date over (b) the
aggregate of the Principal Balances of the Group I Subsequent Mortgage Loans and
the Group II Subsequent Mortgage Loans transferred to the Trust prior to such
Distribution Date that have a monthly payment that will be included in the
amounts distributed for such Distribution Date, and (y) the Weighted Average Net
Rate for the Distribution Date.

         "Certificate": Any of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class AV-1, Class AV-2, Class M-1, Class M-2,
Class B-1, Class A-IO, Class X-IO, Class P, Class C, and Class R Certificates.

         "Certificate Carryover Amount": On any Distribution Date and as to any
Class, the sum of:

                  (i)      if the Pass-Through Rate for such Distribution Date
                           and Class is based on the Net WAC Cap, the excess of
                           (A) the amount of interest that would have been
                           distributable on such Certificates for such
                           Distribution Date had the interest rate thereon been
                           calculated without regard to the Net WAC Cap, over
                           (B) the amount of interest distributable based on the
                           Net WAC Cap, and

                  (ii)     the excess of the amount described in clause (i)(A)
                           above over the amount described in clause (i)(B)
                           above for all prior Distribution Dates, together with
                           interest thereon calculated at the applicable Pass
                           Through Rate (determined without regard to the Net
                           WAC Cap).

The Certificate Carryover Amount for any Class and Distribution Date will be
reduced by all amounts distributed thereto pursuant to Section 3.01(f)(x)
through (xiii) hereof.

                                       10
<PAGE>

         "Certificate Registrar": Bankers Trust Company, a New York corporation,
and its successors and assigns in such capacity.

         "Class": All Certificates, and in the case of REMIC 1 and REMIC 2, all
Lower Tier Interests, bearing the same class designation.

         "Class A Certificates" Each Certificate including the letter "A" in its
Class designation.

         "Class A Principal Allocation Percentage": For each Group on any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Principal Funds for that Group on each date and the denominator of
which is the Principal Funds for both Groups on such date.

         "Class AF-1 Pass-Through Rate": With respect to any Distribution Date,
the least of :

                           (x)      One Month LIBOR, plus in the case of any
                                    Distribution Date prior to the Initial
                                    Optional Termination Date 0.120% per annum,
                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 0.240% per annum;

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Cap Rate for such Distribution
                                    Date.

         "Class AF-2 Pass-Through Rate": With respect to each Distribution Date,
the lesser of:

                           (x)      5.130% per annum; and

                           (y)      the Net WAC Cap for such Distribution Date.

          "Class AF-3 Pass-Through Rate": With respect to each Distribution
Date, the lesser of:

                  (x)      5.564% per annum; and

                  (y)      the Net WAC Cap for such Distribution Date.

         "Class AF-4 Pass-Through Rate": With respect to each Distribution Date,
the lesser of:

                  (x)      6.190% per annum; and

                  (y)      the Net WAC Cap for such Distribution Date.

         "Class AF-5 Pass-Through Rate": With respect to each Distribution Date,
the lesser of:

                  (x)      6.670% per annum plus, after the Initial Optional
                           Termination Date, 0.50%; and

                  (y)      the Net WAC Cap for such Distribution Date.

                                       11
<PAGE>

         "Class AF-6 Pass-Through Rate": With respect to each Distribution Date,
the lesser of:

                  (x)      6.312% per annum plus, after the Initial
                           Optimal Termination Date, 0.50%; and

                  (y)      the Net WAC Cap for such Distribution Date.

         "Class AF-6 Principal Distribution Amount": With respect to any
Distribution Date:

                  (x)      the product of :

                  (i)      a fraction the numerator of which is the Class AF-6
                           Certificate Principal Balance and the denominator of
                           which is the Group I Class A Certificate Principal
                           Balance, in each case immediately prior to such
                           Distribution Date,

                  (ii)     the Group I Class A Principal Distribution Amount for
                           such Distribution Date, and

                  (iii)    the applicable percentage for such Distribution Date
                           set forth below:

                              Distribution Date                Percentage
                              -----------------                ----------

                            August 2001 - July 2004                 0%

                            August 2004 - July 2006                45%

                            August 2006 - July 2007                80%

                            August 2007 - July 2008               100%

                            August 2008 and thereafter            300%

          "Class A-IO Pass-Through Rate": With respect to each Distribution
Date, 6.25% per annum.

         Class AV-1 Pass-Through Rate": With respect to each Distribution Date,
the least of:

                           (x)      One Month LIBOR plus, in the case of any
                                    Distribution Date on or prior to the Initial
                                    Optional Termination Date, 0.230% per annum,
                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 0.460% per annum;

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Cap Rate for such Distribution
                                    Date.

         "Class AV-2 Pass-Through Rate": With respect to each Distribution Date,
the least of :

                           (x)      One Month LIBOR plus, in the case of any
                                    Distribution Date on or prior to the Initial
                                    Optional Termination Date, 0.240% per annum,
                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 0.480% per annum;

                                       12
<PAGE>

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Cap Rate for such Distribution
                                    Date.

         "Class X-IO Pass-Through Rate": With respect to each Distribution Date,
the lesser of (i) up to and including the Distribution Date in July 2003, 0.275%
per annum, and thereafter, 0.10% per annum; and (ii) the excess of (a) the Net
WAC Cap over (b) the weighted average of the Pass-Through Rates of the Class A
Certificates (other than the Class A-IO Certificates) and the Subordinate
Certificates (other than the Class X-IO Certificates).

         "Class B-1 Pass-Through Rate": With respect to each Distribution Date,
the least of:

                           (x)      One Month LIBOR plus, in the case of any
                                    Distribution Date on or prior to the Initial
                                    Optional Termination Date, 1.600% per annum,
                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 2.400% per annum;

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Cap Rate for such Distribution
                                    Date.

         "Class B-1 Principal Distribution Amount": With respect to any
Distribution Date on and after the Stepdown Date and as long as a Trigger Event
is not in effect the excess of:

                  (i)      the sum of:

                           (A)      the Group I Class A Certificate Principal
                                    Balance and Group II Class A Certificate
                                    Principal Balance (after giving effect to
                                    distributions on that date),

                           (B)      the Certificate Principal Balance of the
                                    Class M-1 Certificates (after giving effect
                                    to distributions on that date),

                           (C)      the Certificate Principal Balance of the
                                    Class M-2 Certificates (after giving effect
                                    to distributions on that date), and

                           (D)      the Certificate Principal Balance of the
                                    Class B-1 Certificates immediately prior to
                                    such Distribution Date over

                  (ii)     the lesser of:

                           (A)      95.5% of the Assumed Principal Balance of
                                    the Mortgage Loans on the preceding Due
                                    Date, and

                           (B)      the excess, if any, of:

                                    (I)     the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date over

                                       13
<PAGE>

                                    (II)    the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date less 0.50% of the Assumed
                                            Principal Balance as of the Cut-Off
                                            Date (but in no event less than
                                            zero).

         "Class C Distribution Amount": With respect to any Distribution Date,
any amounts distributable pursuant to Section 3.01(h)(i) hereof.

         "Class M-1 Pass-Through Rate": With respect to each Distribution Date,
the least of:

                           (x)      One Month LIBOR plus, in the case of any
                                    Distribution Date on or prior to the Initial
                                    Optional Termination Date, 0.530% per annum,
                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 0.795% per annum;

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Cap Rate for such Distribution
                                    Date.

         "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect the excess of:

                  (i)      the sum of:

                           (A)      the Group I Class A Certificate Principal
                                    Balance and Group II Class A Certificate
                                    Principal Balance (after giving effect to
                                    distributions on that date), and

                           (B)      the Certificate Principal Balance of the
                                    Class M-1 Certificates immediately prior to
                                    such Distribution Date over

                  (ii)     the lesser of:

                           (A)      81.50% of the Assumed Principal Balance of
                                    the Mortgage Loans on the preceding Due
                                    Date, and

                           (B)      the excess, if any, of:

                                    (I)     the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date over

                                    (II)    the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date less 0.50% of the Assumed
                                            Principal Balance as of the Cut-Off
                                            Date (but in no event less than
                                            zero).

         "Class M-2 Pass-Through Rate": With respect to each Distribution Date,
the least of:

                           (x)      One Month LIBOR plus, in the case of any
                                    Distribution Date on or prior to the Initial
                                    Optional Termination Date, 0.850% per annum,

                                       14
<PAGE>

                                    or in the case of any Distribution Date that
                                    occurs after the Initial Optional
                                    Termination Date, plus 1.275% per annum;

                           (y)      the Net WAC Cap for such Distribution Date;
                                    and

                           (z)      the Maximum Rate Cap for such Distribution
                                    Date.

         "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect the excess of:

                  (i)      the sum of:

                           (A)      the Group I Class A Certificate Principal
                                    Balance and Group II Class A Certificate
                                    Principal Balance (after giving effect to
                                    distributions on that date),

                           (B)      the Certificate Principal Balance of the
                                    Class M-1 Certificates (after giving effect
                                    to distributions on that date), and

                           (C)      the Certificate Principal Balance of the
                                    Class M-2 Certificates immediately prior to
                                    such Distribution Date over

                  (ii)     the lesser of:

                           (A)      89.50% of the Assumed Principal Balance of
                                    the Mortgage Loans on the preceding Due
                                    Date, and

                           (B)      the excess, if any, of:

                                    (I)     the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date over

                                    (II)    the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date less 0.50% of the Assumed
                                            Principal Balance as of the Cut-Off
                                            Date (but in no event less than
                                            zero).

         "Class P Prepayment Amount": As to each Distribution Date, the excess,
if any, of Prepayment Penalties collected with respect to the Mortgage Loans
during the related Prepayment Period over the Pledged Prepayment Penalties for
such Distribution Date.

         "Class R Certificate": Any of the Certificates designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit R hereto and evidencing
an interest designated as the "residual interest" in REMIC 1, REMIC 2, and REMIC
3 for purposes of the REMIC Provisions.

         "Closing Date":  August 2, 2001.

         "Corresponding Class": With respect to any Lower Tier Interest in REMIC
2, the Class of Certificates that correspond to such interest in the manner
described in the Preliminary Statement.

                                       15
<PAGE>

         "Credit Enhancement Fee Rate":  None.

         "Credit Support Depletion Date": The Distribution Date on which the
Certificate Principal Balance of the Class M-1, Class M-2 and Class B-1
Certificates has been reduced to zero.

         "Current Interest": With respect to any Distribution Date and any Class
of Certificates, the interest accrued on the Certificate Principal Balance
immediately prior to such Distribution Date during the related Accrual Period at
the applicable Pass-Through Rate; provided, however, that such Current Interest
shall be reduced by such Class's pro rata share of any Month End Interest
Shortfalls for such Distribution Date.

         "Custodian": Bankers Trust Company, and its successors and assigns in
such capacity.

         "Cut-Off Date": As of the close of business on July 1, 2001 or on each
Subsequent Cut-Off Date, as applicable.

         "Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the last day of the Prepayment
Period immediately following the day such payment is scheduled to be due. A
Mortgage Loan is "30 days Delinquent" if such payment has not been received by
the close of business on the last day of the Prepayment Period of the month
immediately succeeding the month in which such payment was due. Similarly for
"60 days Delinquent," "90 days Delinquent" and so on.

         "Designated Class": There is no designated Class for purposes of
Section 9.02 of the Standard Terms.

         "Determination Date": As to any Distribution Date, the 17th Business
Day of the month occurring in the month of such Distribution Date (or if such
day is not a Business Day, the next succeeding Business Day).

         "Distribution Amount": As to each Distribution Date and Class of
Certificates, the aggregate amount to be distributed to such Class on such date
pursuant to Section 3.01 hereof.

         "Distribution Date": The 25th day of each month, or the next Business
Day if such 25th day is not a Business Day, commencing August 27th, 2001.

         "Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of

                  (x)      the Interest Funds available pursuant to Section
                           3.01(b)(v) hereof, and:

                  (y)      the excess of:

                           (i)      the Required Overcollateralization Amount
                                    for such date over

                           (ii)     the Overcollateralization Amount (assuming
                                    that all Principal Funds are distributed as
                                    principal to the Certificates on such date).

                                       16
<PAGE>

         "Funding Period": The period commencing on the Closing Date and ending
on the earliest to occur of :

                  (i)      the date on which the amount on deposit in the
                           Pre-Funding Account (exclusive of any investment
                           earnings) is less than $100,000,

                  (ii)     the date on which an Event of Default occurs, and

                  (iii)    August 31, 2001.

         "Group":  Either Group I or Group II.

         "Group I": The pool of Mortgage Loans identified in the related
Schedules of Mortgage Loans as having been assigned to Group I, including any
Group I Subsequent Mortgage Loans and any Group I Qualified Substitute Mortgage
Loans delivered in replacement thereof.

         "Group I Certificate": Any of the Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AF-5 and Class AF-6 Certificates.

         "Group I Class A Certificate": Any Group I Certificate.

         "Group I Class A Certificate Principal Balance": The sum of the
Certificate Principal Balances for the Group I Class A Certificates.

         "Group I Class A Principal Distribution Amount": As to any Distribution
Date, the Class A Principal Allocation Percentage for Group I of the Senior
Principal Distribution Amount on such date.

         "Group I Interest Funds": With respect to Group I and any Master
Servicer Remittance Date, to the extent actually deposited in the Master
Servicer Custodial Account, the sum, without duplication, of:

                  (i)      all scheduled interest due during the related Due
                           Period (and received by the related Determination
                           Date) with respect to Group I less the Group I
                           Servicing Fee and the Group I Master Servicing Fee,

                  (ii)     all Advances relating to interest with respect to
                           Group I,

                  (iii)    all Month End Interest with respect to Group I,

                  (iv)     Liquidation Proceeds with respect to Group I (to the
                           extent such Liquidation Proceeds relate to interest)
                           less all Non-Recoverable Advances relating to
                           interest and expenses pursuant to Section 6.03 of the
                           Standard Terms, and

                  (v)      Pledged Prepayment Penalties for Group I.

        The Group I Interest Funds for any Distribution Date shall be increased
        by the pro rata portion for such Group (based on the amount on deposit
        in the Pre-Funding Account in respect of such

                                       17
<PAGE>

         Group) of the Capitalized Interest Requirement withdrawn from the
         Capitalized Interest Account for such Distribution Date.

          "Group I Master Servicing Fee": With respect to each Master Servicer
Remittance Date, an amount payable (or allocable) to the Master Servicer equal
to the product of one-twelfth of the Group I Master Servicing Fee Rate and the
aggregate Scheduled Principal Balance of Group I on the first day of the Due
Period preceding such Master Servicer Remittance Date.

         "Group I Master Servicing Fee Rate":  0.05% per annum.

         "Group I Percentage": For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the Group I Principal Funds
and the denominator of which is the Group I and Group II Principal Funds.

          "Group I Pre-Funded Amount": With respect to any date, the amount
remaining on deposit in the Pre-Funding Account with respect to Group I
(exclusive of any Group I Pre-Funding Account Earnings).

         "Group I Pre-Funding Account Earnings": With respect to each
Distribution Date to and including the date immediately preceding the
Distribution Date immediately following the end of the Funding Period,
Pre-Funding Account earnings with respect to the Group I Pre-Funded Amount.

         "Group I Principal Distribution Amount": With respect to any
Distribution Date, the excess of:

                  (A)      the sum of:

                           (i)      the Group I Principal Funds, and

                           (ii)     the Group I Percentage of the Extra
                                    Principal Distribution Amount over

                  (B)      the Group I Percentage of the Released Principal
                           Amount.

         "Group I Principal Funds": With respect to Group I and any Master
Servicer Remittance Date, to the extent actually deposited in the Master
Servicer Custodial Account, the sum, without duplication, of:

                  (i)      all scheduled principal with respect to Group I
                           collected by the Servicer during the related Due
                           Period or advanced on or before such Master Servicer
                           Remittance Date,

                  (ii)     prepayments with respect to Group I collected by the
                           Servicer in the related Prepayment Period,

                  (iii)    the Scheduled Principal Balance of each Mortgage Loan
                           in Group I repurchased by the Depositor in the
                           related Prepayment Period,

                                       18
<PAGE>

                  (iv)     any Substitution Shortfall with respect to Group I
                           for such date, and

                  (v)      all Liquidation Proceeds with respect to Group I
                           collected by the Servicer during the related
                           Prepayment Period (to the extent such Liquidation
                           Proceeds related to principal) less all
                           non-recoverable Advances relating to principal with
                           respect to Group I reimbursed during the related
                           Prepayment Period, and

                  (vi)     any remaining Group I Pre-Funded Amount immediately
                           following the end of the Funding Period.

         "Group I Servicing Fee": With respect to each Mortgage Loan in Group I
and each Remittance Date, the product of :

                           (x)      one-twelfth of the Servicing Fee Rate, and

                           (y)      the aggregate Scheduled Principal Balance of
                                    such Mortgage Loan as of the opening of
                                    business on the first day of the Due Period
                                    preceding such Remittance Date.

         "Group I Servicing Fee Rate": With respect to each Mortgage Loan in
Group I, the fixed per annum rate payable to the Servicer as set out on Schedule
IA to this Agreement.

         "Group I Subsequent Mortgage Loans": The Mortgage Loans in Group I sold
to the Trust pursuant to Section 2.02 hereof, which shall be listed on the
Schedule of Mortgage Loans attached to the related Subsequent Sales Agreement.

         "Group II": The pool of Mortgage Loans identified in the related
Schedules of Mortgage Loans as having been assigned to Group II, including any
Group II Subsequent Mortgage Loans and any Group II Qualified Substitute
Mortgage Loans delivered in replacement thereof.

         "Group II Certificate": Any of the Class AV-1 and Class AV-2
Certificates.

         "Group II Class A Certificates":  Any Group II Certificate.

         "Group II Class A Certificate Principal Balance": The Certificate
Principal Balance of Group II Class A Certificates.

         "Group II Class A Principal Distribution Amount": With respect to any
Distribution Date, the Class A Principal Allocation Percentage for Group II of
the Senior Principal Distribution Amount on such date.

          "Group II Interest Funds": With respect to Group II and any Master
Servicer Remittance Date, to the extent actually deposited in the Master
Servicer Custodial Account, the sum, without duplication, of:

                  (i)      all scheduled interest due during the related Due
                           Period (and received by the related Determination
                           Date) with respect to Group II less the Group II
                           Servicing Fee and the Group II Master Servicing Fee,

                                     19
<PAGE>

                  (ii)     all Advances relating to interest with respect to
                           Group II,

                  (iii)    all Month End Interest with respect to Group II,

                  (iv)     Liquidation Proceeds with respect to Group II (to the
                           extent such Liquidation Proceeds relate to interest)
                           less all Non-Recoverable Advances relating to
                           interest and expenses pursuant to Section 6.03 of the
                           Standard Terms, and

                  (v)      Pledged Prepayment Penalties for Group II.

         The Group II Interest Funds for any Distribution Date shall be
         increased by the pro rata portion for such Group (based on the amount
         on deposit in the Pre-Funding Account in respect of such Group) of the
         Capitalized Interest Requirement withdrawn from the Capitalized
         Interest Account for such Distribution Date.

         "Group II Master Servicing Fee": With respect to each Master Servicer
Remittance Date, an amount payable (or allocable) to the Master Servicer equal
to the product of one-twelfth of the Group II Master Servicing Fee Rate and the
aggregate Scheduled Principal Balance of Group II on the first day of the Due
Period preceding such Master Servicer Remittance Date.

         "Group II Master Servicing Fee Rate":  0.05% per annum.

         "Group II Percentage": For any Distribution Date is the percentage
equivalent of a fraction, the numerator of which is the Group II Principal Fund
and the denominator of which is the Group I and Group II Principal Funds.

          "Group II Pre-Funded Amount": With respect to any Master Servicer
Reporting Date, the amount remaining on deposit in the Pre-Funding Account with
respect to Group II (exclusive of any Group II Pre-Funding Account Earnings).

         "Group II Pre-Funding Account Earnings": With respect to each
Distribution Date to and including the date immediately preceding the
Distribution Date immediately following the end of the Funding Period,
Pre-Funding Account earnings with respect to the Group II Pre-Funded Amount.

         "Group II Principal Distribution Amount": With respect to any
Distribution Date, the excess of:

                  (A)      the sum of:

                           (i)      the Group II Principal Funds, and

                           (ii)     the Group II Percentage of the Extra
                                    Principal Distribution Amount over

                  (B)      the Group II Percentage of the Released Principal
                           Amount.

                                       20
<PAGE>

         "Group II Principal Funds": With respect to Group II and any Master
Servicer Remittance Date, to the extent actually deposited in the Master
Servicer Custodial Account, the sum, without duplication, of:

                  (i)      all scheduled principal with respect to Group II
                           collected by the Servicers during the related Due
                           Period or advanced on or before such Master Servicer
                           Remittance Date,

                  (ii)     prepayments with respect to Group II collected by the
                           Servicers in the related Prepayment Period,

                  (iii)    the Scheduled Principal Balance of each Mortgage Loan
                           in Group II repurchased by the Depositor in the
                           related Prepayment Period,

                  (iv)     any Substitution Shortfall with respect to Group II
                           for such date,

                  (v)      all Liquidation Proceeds with respect to Group II
                           collected by the Servicer during the related
                           Prepayment Period (to the extent such Liquidation
                           Proceeds related to principal) less all
                           non-recoverable Advances relating to principal with
                           respect to Group II reimbursed during the related
                           Prepayment Period, and

                  (vi)     any remaining Group II Pre-Funded Amount immediately
                           following the end of the Funding Period.

         "Group II Servicing Fee": With respect to each Mortgage Loan in Group
II and each Remittance Date, the product of:

                           (x)      one-twelfth of the Servicing Fee Rate, and

                           (y)      the aggregate Scheduled Principal Balance of
                                    such Mortgage Loan as of the opening of
                                    business on the first day of the Due Period
                                    preceding such Remittance Date.

         "Group II Servicing Fee Rate": With respect to each Mortgage Loan in
Group II, the fixed per annum rate payable to the Servicer as set out on
Schedule IB to this Agreement.

         "Initial Capitalized Interest Amount":  $621,469.00.

         "Initial Optional Termination Date": The Distribution Date immediately
following the Due Period with respect to which the aggregate Assumed Principal
Balance is less than 10% of the aggregate Assumed Principal Balance as of the
Cut-Off Date.

         "Interest Carry Forward Amount": With respect to each Distribution Date
and Class, the sum of:

                  (i)      the excess of:

                                       21
<PAGE>

                           (A)      Current Interest for such Class with respect
                                    to prior Distribution Dates (excluding any
                                    Certificate Carryover Amount) over

                           (B)      the amount actually distributed to such
                                    Class (other than in respect of any
                                    applicable Certificate Carryover Amount)
                                    with respect to interest on such prior
                                    Distribution Dates, and

                  (ii)     interest thereon at the applicable Pass-Through Rate
                           for the related Accrual Period.

         "Interest Determination Date": With respect to the first Accrual Period
for the Variable Rate Certificates, July 31, 2001, and with respect to any
subsequent Accrual Period for the Variable Rate Certificates, the second London
Business Day preceding such Accrual Period.

         "London Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.

         "Lower Tier Interest":  Any interest created in REMIC 1 or REMIC 2.

         "Master Servicer": Saxon Mortgage, Inc., a Virginia corporation, and
its successors and assigns in such capacity.

         "Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.

         "Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.

         "Master Servicing Fee": As applicable, the Group I Master Servicing Fee
or the Group II Master Servicing Fee.

         "Maximum Cap Rate": For any Distribution Date, a per annum rate that
would equal the Net WAC Cap for such date if such Net WAC Cap were determined
under the assumption that (i) each Group II Mortgage Loan had an interest rate
equal to the maximum rate permitted under the terms of the related mortgage
note, and (ii) each Group I Mortgage Loan had an interest rate equal to its
stated fixed rate.

         "Meritech": Meritech Mortgage Services, Inc., a Texas corporation.

         "Moody's": Moody's Investors Service, Inc., and its successors (99
Church Street, New York, New York 10007).

         "Mortgage Loan Group": Either Group I or Group II.

         "Mortgage Loans": The mortgage loans listed on Schedule I (including
any Qualified Substitute Mortgage Loans).

         "Net Rate": As to each Mortgage Loan and Distribution Date, the related
Mortgage Interest Rate less the sum of the Group I or Group II Servicing Fee
Rate and the Group I or

                                       22

<PAGE>

Group II Master Servicing Fee Rate, in each case, as applicable, with respect
to each Mortgage Loan.

         "Net WAC Cap": For any Distribution Date and the Group I Certificates,
other than the Class AF-1 Certificates, a per annum rate equal to:

                           (x)      The Weighted Average Net Rate of the
                                    Mortgage Loans less,

                           (y)      The Pass-Through Rate for the Class A-IO
                                    Certificates for such Distribution Date
                                    multiplied by a fraction equal to:

                                    (i)     the Notional Principal Balance of
                                            the Class A-IO Certificates prior
                                            to such Distribution Date divided
                                            by;

                                    (ii)    the Assumed Principal Balance as of
                                            such Distribution Date.

                                     For any Distribution Date and the Variable
                                     Rate Certificates, however, the Net WAC Cap
                                     equals the product of

                           (a)      the rate determined under the
                                    above-described formula, and

                           (b)      a fraction, the numerator of which is 30 and
                                    the denominator of which is the actual
                                    number of days in the accrual period
                                    applicable to such Certificates.

         "Notice Address": For purposes of Section 11.05 of the Standard Terms,
the addresses of the Depositor, the Master Servicer and the Trustee, are as
follows:

         (i)      If to the Depositor:

                  Saxon Asset Securities Company
                  4880 Cox Road
                  Glen Allen, Virginia  23060

         (ii)     If to the Master Servicer:

                  Saxon Mortgage, Inc.
                  4880 Cox Road
                  Glen Allen, Virginia  23060
                  Attn:  Master Servicing

                                       23
<PAGE>

         (iii)    If to the Trustee:

                  Bankers Trust Company
                  1761 East St. Andrew Place
                  Santa Ana, California 92705
                  Attention:  Saxon 2001-2 [SX0102]

         "Notional Principal Balance": With respect to each Distribution Date
and the Class A-IO Certificates, the lesser of the Assumed Principal Balance and
the amount determined with reference to the following schedule:

                       Distribution Dates              Notional Amount
                       ------------------             -----------------
                                1-6                   $   148,228,000

                                7-12                      142,700,000

                               13-18                      135,806,000

                               19-21                      124,683,000

                               22-24                      109,464,000

                               25-27                       79,806,000

                               28-31                       68,748,000

                         32 and thereafter                          0

         With respect to each Distribution Date and the Class X-IO Certificates,
the Assumed Principal Balance of the Mortgage Loans for such date.

         "Odd Due Date Mortgage Loan": Any Mortgage Loan whose monthly payments
are due on a day other than the first day of the month.

         "Offered Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class AV-1, Class AV-2, Class M-1, Class M-2,
Class B-1, Class X-IO and Class A-IO Certificates.

         "One Month LIBOR": As of any Interest Determination Date, the rate for
one-month U.S. dollar deposits which appears in the Telerate Page 3750, as of
11:00 a.m., London time, on such Interest Determination Date. If such rate does
not appear on Telerate Page 3750, the rate for that day will be determined on
the basis of the rates at which deposits in United States dollars are offered by
the Reference Banks at approximately 11:00 a.m., London time, on that day to
prime banks in the London interbank market for a period equal to the relevant
Accrual Period (commencing on the first day of such Accrual Period). The
Calculation Agent, as agent for the Master Servicer, will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be the
arithmetic-mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that day will be the arithmetic-mean of the rates quoted
by major banks in New York City, selected by the Master Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a period equal

                                       24
<PAGE>

to the relevant Accrual Period (commencing on the first day of such Accrual
Period). The Calculation Agent, as agent for the Master Servicer, shall review
Telerate Page 3750 as of the required time, make the required requests to the
principal offices of the Reference Banks and selections of major banks in New
York City and shall determine the rate which constitutes One Month LIBOR for
each Interest Determination Date.

         "Original Pre-Funded Amount": $43,742,909.31, $28,974,537.62 of which
may be applied to the purchase of additional fixed rate Mortgage Loans for Group
I and $14,768,371.69 of which may be applied to the purchase of additional
adjustable rate Mortgage Loans for Group II (with such latter amount being
proportionately applied between the applicable subgroups).

         "Overcollateralization Amount": With respect to any Distribution Date
the excess of the Assumed Principal Balance of the Mortgage Loans over the
Aggregate Certificate Principal Balance of the Certificates after giving effect
to principal distributions on such Distribution Date.

         "Overfunded Interest Amount": With respect to each Subsequent Sales
Date, the excess of:

         (i)      interest accruing from the related Subsequent Cut-Off Date to
                  the Distribution Date immediately following the last date on
                  which the Funding Period may then end on the aggregate
                  Scheduled Principal Balances of the Subsequent Mortgage Loans
                  acquired by the Trust on such Subsequent Transfer Date,
                  calculated at a rate equal to the weighted average of the
                  Pass-Through Rates on the Certificates over

         (ii)     interest accruing from such Subsequent Cut-Off Date to such
                  Distribution Date on the aggregate Scheduled Principal
                  Balances of the Subsequent Mortgage Loans acquired by the
                  Trust on such Subsequent Sales Date, calculated at the Assumed
                  Investment Rate.

         "Pass-Through Rate": Each of the Class AF-1 Pass-Through Rate, the
Class AF-2 Pass-Through Rate, the Class AF-3 Pass-Through Rate, the Class AF-4
Pass-Through Rate, the Class AF-5 Pass-Through Rate, the Class AF-6 Pass-Through
Rate, the Class AV-1 Pass-Through Rate, the Class AV-2 Pass-Through Rate, the
Class M-1 Pass-Through Rate, the Class M-2 Pass-Through Rate, the Class B-1
Pass-Through Rate, the Class A-IO Pass-Through Rate and the Class X-IO
Pass-Through Rate.

         "Paying Agent": Bankers Trust Company, a New York corporation, and its
successors and assigns in such capacity.

         "Pledged Prepayment Penalties": For any Distribution Date and the Group
I Mortgage Loans and the Group II Mortgage Loans, an amount equal to the sum of
(i) the lesser of (x) Prepayment Penalties collected on Mortgage Loans in such
Group during the related Prepayment Period and (y) 60% of the Prepayment
Penalties owed and not waived by the Servicer pursuant to the terms of the
Servicing Agreement for the related Prepayment Period, and (ii) the aggregate
amount, if any, by which (i)(y) exceeded (i)(x) for prior Distribution Dates for
such Group.

         "Pre-Funded Amount": As of any Distribution Date, the sum of the Group
I Pre-Funded Amount and the Group II Pre-Funded Amount.

                                     25
<PAGE>

         "Pre-Funding Account": The account created and maintained with the
Paying Agent by the Trust pursuant to Section 2.03.

         "Pre-Funding Account Earnings": With respect to each Distribution Date
to and including the date immediately preceding the Distribution Date
immediately following the end of the Funding Period, the actual interest and
investment earnings on the Pre-Funded Amount as calculated by the Master
Servicer (based on information supplied by the Trustee) pursuant to Section
2.03(c) hereof.

         "Prepayment Penalty": With respect to any Prepayment Period, any
prepayment premium, penalty or charge collected by the Master Servicer from a
mortgagor in connection with any voluntary principal prepayment pursuant to the
terms of the related mortgage note and held from time to time as a part of the
Trust Fund.

         "Prepayment Period": The period from but excluding the Cut-Off Date to
and including the 17th day of the month in which the first Servicer Remittance
Date occurs and each period thereafter from and including the 18th day of a
month to and including the 17th day of the following month.

         "Private Certificate": Any of the Class P, Class C and Class R
Certificates.

         "Rating Agency": Each of Moody's and S&P (or, if any such agency or a
successor is no longer in existence, such other nationally recognized
statistical rating agency, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Trustee).

         "Reference Banks": Leading banks selected by the Master Servicer and
engaged in transactions in U.S. dollar deposits in the London interbank market.

         "Regular Certificates": Any of the Group I Class A Certificates, Group
II Class A Certificates, Class A-IO, Class X-IO, Class M-1, Class M-2, Class B-1
and Class C Certificates which represent the "Regular Interests" in the
Upper-Tier REMIC for purposes of the REMIC Provisions.

         "Released Principal Amount": With respect to any Distribution Date, the
amount by which the Overcollateralization Amount (assuming for such purpose that
all Principal Funds for such Distribution Date are distributed as principal to
the Certificates) exceeds the Required Overcollateralization Amount.

         "REMIC 1, REMIC 2 and REMIC 3": As described in the Preliminary
Statement.

         "REMIC Provisions": The provisions of the federal income tax laws
relating to real estate mortgage investment conduits contained in sections 860A
through 860G of the Internal Revenue Code of 1986, as amended, and the related
Treasury Regulations.

         "Remittance Date": With respect to each Servicing Agreement, the date
so specified therein which date shall in no case be later than the 21st of each
month, or if the 21st of any month does not fall on a Business Day, then the
Business Day immediately preceding the 21st.

                                       26
<PAGE>

         "Required Overcollateralization Amount": With respect to any
Distribution Date:

                  (i)      prior to the Stepdown Date, 2.25% of the Assumed
                           Principal Balance for the Mortgage Loans as of the
                           Cut-Off Date;

                  (ii)     on and after the Stepdown Date, if a Trigger Event is
                           not in effect, the greater of:

                           (x)      the lesser of:

                                    (I)     2.25% of the Assumed Principal
                                            Balance for the Mortgage Loans as of
                                            the Cut-Off Date, and

                                    (II)    4.50% of the Assumed Principal
                                            Balance for the Mortgage Loans on
                                            the preceding Due Date, and

                           (y)      0.50% of the Assumed Principal Balance for
                                    the Mortgage Loans as of the Cut- Off Date;
                                    and

                  (iii)    if a Trigger Event is in effect, the
                           Overcollateralization Amount as of the preceding
                           Distribution Date.

         "Required Reserve Fund Deposit": For any Distribution Date on which the
difference between (a) the excess of the Net WAC Cap over the rate payable on
the Class X-IO Certificates for such date, and (b) the weighted average of the
rates on the Offered Certificates, other than the Class A-IO and Class X-IO
Certificates, is less than 0.25%, an amount that would cause the balance held in
the Basis Risk Reserve Fund to equal 0.50% of the Assumed Principal Balance for
such date, and, for any other Distribution Date, the amount that would cause the
balance held in the Basis Risk Reserve Fund to equal $1,000.

          "Residual Certificates": The Class R Certificates, which represent the
"residual interest" in REMIC 1, REMIC 2, and REMIC 3 for purposes of the REMIC
Provisions.

         "S&P":  Standard & Poor's Ratings Service.

         "Sales Agreement": The Sales Agreement dated August 2, 2001, between
the Depositor and SMI regarding the sale of the Mortgage Loans.

         "Senior Class A Principal Distribution Amount": With respect to any
Distribution Date before the Stepdown Date or as to which a Trigger Event has
occurred, 100% of the Group I and Group II Principal Distribution Amount for
such Distribution Date and with respect to any Distribution Date on or after the
Stepdown Date and as to which a Trigger Event has not occurred, the excess of:

                  (i)      the Group I and Group II Class A Certificate
                           Principal Balance immediately prior to such
                           Distribution Date over

                  (ii)     the lesser of:

                                       27
<PAGE>

                           (A)      67.50% of the Assumed Principal Balance of
                                    the Mortgage Loans on the preceding Due
                                    Date, and

                           (B)      the excess, if any, of:

                                    (I)     the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date over

                                    (II)    the Assumed Principal Balance of the
                                            Mortgage Loans on the preceding Due
                                            Date less 0.50% of the Assumed
                                            Principal Balance as of the Cut-Off
                                            Date (but in no event less than
                                            zero).

         "Senior Credit Enhancement Percentage": As of any Distribution Date is
equal to a fraction, expressed as a percentage, the numerator of which is the
sum of the aggregate Certificate Principal Balance of the Subordinate
Certificates for such Distribution Date and the Overcollateralization Amount for
such Distribution Date, and the denominator of which is the Assumed Principal
Balance of the Mortgage Loans as of such Distribution Date.

         "Servicer":  Meritech and its permitted successors and assigns.

         "Servicing Agreement": The Servicing Agreement listed on Schedule III
hereto which shall be deemed to be a "Servicing Agreement" for purposes of the
Standard Terms.

         "Servicing Fee Rate": With respect to each Mortgage Loan, the Servicing
Rate specified on Schedule I.

         "State":  New York.

         "Stepdown Date":  The earlier to occur of:

                  (i)      the later to occur of:

                           (A)      the Distribution Date in August 2004, and

                           (B)      the first Distribution Date on which the
                                    Group I Class A Certificate Principal
                                    Balance and Group II Class A Certificate
                                    Principal Balance immediately prior to such
                                    Distribution Date (less the Principal Funds
                                    for such Distribution Date) is less than or
                                    equal to 67.50% of the Assumed Principal
                                    Balance on such date, and

                  (ii)     the Distribution Date after which the Group I and
                           Group II Class A Certificate Principal Balance has
                           been reduced to zero.

          "Subgroup IIA": The aggregate of the Mortgage Loan identified as such
in Schedule I hereto.

          "Subgroup IIB": The aggregate of the Mortgage Loans identified as such
in Schedule I hereto.

                                       28
<PAGE>

         "Subordinated Certificates": The Class M-1, Class M-2, Class B-1 and
Class X-IO Certificates.

         "Subsequent Cut-Off Date": The time and date specified in a Subsequent
Sales Agreement with respect to those Subsequent Mortgage Loans which are
transferred and assigned to the Trust pursuant to the related Subsequent Sales
Agreement.

         "Subsequent Mortgage Loans": The Group I Subsequent Mortgage Loans and
the Group II Subsequent Mortgage Loans.

         "Subsequent Sales Agreement": Each Subsequent Sales Agreement dated as
of a Subsequent Sales Date executed by the Master Servicer, the Seller and Saxon
Mortgage substantially in the form of Schedule IV hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.

         "Subsequent Sales Date": The date specified in each Subsequent Sales
Agreement which shall be a date no later than the end of the Prepayment Period
preceding the first Distribution Date after the end of the Funding Period.

         "Tax Matters Person": Bankers Trust Company, a New York corporation,
and its successors and assigns in such capacity.

         "Telerate Page 3750" the display page currently so designated on the
Bridge Telerate Market Report (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).

         "Trigger Event": With respect to any Distribution Date after the
Stepdown Date, a Trigger Event exists if the quotient (expressed as a
percentage) of:

                  (i)      the Scheduled Principal Balances of all 60 or more
                           days Delinquent Mortgage Loans (including Mortgage
                           Loans subject to bankruptcy or foreclosure
                           proceedings and REO Property), and

                  (ii)     the Assumed Principal Balance as of the preceding
                           Master Servicer Remittance Date

         equals or exceeds 50% of the Senior Credit Enhancement Percentage.

         "Trust Estate":  As defined in Section 2.01 hereof.

         "Trustee": Bankers Trust Company, a New York corporation, its successor
in interest or any successor trustee appointed in accordance with the Trust
Agreement.

         "Trustee Fee": The fee payable monthly to the Trustee by the Master
Servicer.

         "Underwriters": Greenwich Capital Markets, Inc., Credit Suisse First
Boston Corporation, First Union Securities, Inc., J.P. Morgan Securities Inc.

                                       29
<PAGE>

         "Underwriting Agreement": The Underwriting Agreement dated July 26,
2001, between the Depositor and SMI and the Underwriters.

         "Unpaid Realized Loss Amount": As to any Distribution Date and any
Class, the excess of:

                  (i)      the Applied Realized Loss Amount for such Class over

                  (ii)     the sum of all distributions in reduction of such
                           Applied Realized Loss Amount on all previous
                           Distribution Dates.

         "Variable Rate Certificates:" Any of the Class AF-1, Class AV-1, Class
AV-2, Class M-1, Class M-2 and Class B-1 Certificates.

         "Voting Rights": The voting rights of the trust will be allocated as
follows:

         (i)      1% to each of the Class A-IO and Class X-IO Certificates;

         (ii)     96% to the Group I Certificates and Group II Certificates in
                  proportion to their respective outstanding certificate
                  principal balances; and

         (iii)    1% to each of the Class C and Class R Certificates.

         "Weighted Average Net Rate": The weighted average of the Net Rates of
the Mortgage Loans.

         Section 1.03   Calculation of Certain Amounts.

         (a)      For purposes of calculating collections and other amounts in
                  respect of Odd Due Date Mortgage Loans,

                  (i)      the Due Date therefor on any Distribution Date shall
                           be the day Monthly Payments thereon are due in the
                           month preceding the Due Period for such Distribution
                           Date; and

                  (ii)     the scheduled payment for any Odd Due Date Mortgage
                           Loan for purposes of calculating Group I and Group II
                           Principal Funds on any Distribution Date shall be
                           such payment due during the month preceding the Due
                           Period for such Distribution Date

         (b)      For purposes of calculating the Assumed Principal Balance as
                  of any Due Date, the Scheduled Principal Balance of the
                  Mortgage Loans shall give effect to any principal prepayments
                  received thereon through the Determination Date following such
                  Due Date.

                                   Article II
                Formation of Trust; Conveyance of Mortgage Loans

         Section 2.01.  Conveyance of Mortgage Loans.

         To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, the distribution of all other sums
distributable under the Trust Agreement with respect to the Certificates and the
performance of the covenants contained in the Trust Agreement, the Depositor
hereby bargains, sells, conveys, assigns and transfers to the

                                       30
<PAGE>

Trustee, in trust, without recourse and for the exclusive benefit of the
Certificateholders as their interests may appear, all the Depositor's right,
title and interest in and to any and all benefits accruing to the Depositor
from: (i) the Mortgage Loans, which the Depositor is causing to be delivered to
the Trustee (or the Custodian) herewith (and all Qualified Substitute Mortgage
Loans substituted therefor as provided by Section 2.03 of the Standard Terms and
pursuant to the terms of the Sales Agreement), together in each case with the
related Trustee Mortgage Loan Files and the Depositor's interest in any
Collateral that secured a Mortgage Loan but that is acquired by foreclosure or
deed-in-lieu of foreclosure after the Closing Date, and all Monthly Payments due
after the Cut-Off Date and all curtailments or other principal prepayments
received with respect to the Mortgage Loans paid by the Borrower after the
Cut-Off Date and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (ii) the Subsequent Mortgage Loans; (iii) the Servicing Agreement;
(iv) the Sales Agreement, except that the Depositor does not assign to the
Trustee any of its rights under Sections 9 and 12 of the Sales Agreement; (v)
the Asset Proceeds Account, the Pre-Funding Account and the Capitalized Interest
Account, whether in the form of cash, instruments, securities or other
properties and (vi) all proceeds of any of the foregoing (including, but not
limited to, all proceeds of any mortgage insurance, hazard insurance, or title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables, which at any time constitute all or part or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified herein (items (i) through (vi) above, collectively, the "Trust
Estate").

         The Trustee acknowledges the sales, assignments and pledges created by
the foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
may be adequately and effectively protected in accordance with the terms and
conditions of this Agreement.

         By its execution of this Agreement, the Trustee acknowledges and
declares that it holds and will hold or has agreed to hold all documents
delivered to it from time to time with respect to the Mortgage Loans and all
assets included in the Trust Estate in trust for the exclusive use and benefit
of all present and future Certificateholders.

         Section 2.02.  Purchase of Subsequent Mortgage Loans.

         (a)      Subject to the satisfaction of the conditions set forth in
paragraph (b) below (based on the Master Servicer's review of such conditions)
in consideration of the delivery on a Subsequent Sales Date to or upon the order
of the Depositor of all or a portion of the Pre-Funded Amount, as the case may
be, the Depositor shall on such Subsequent Sales Date sell, transfer, assign,
set over and otherwise convey without recourse, to the Trust, and the Trustee
shall purchase on behalf of the Trust, all the Depositor's right, title and
interest in and to the Subsequent Mortgage Loans, together with the related
Trustee Mortgage Loan Files, covered by the Subsequent Sales Agreement delivered
on such date. The purchase of Subsequent Mortgage Loans shall be allocated
between Group I and Group II (and by Subgroup) in the proportions set forth in
the definition of Original Pre-Funded Amount.

         (b)      The obligation of the Trust to acquire Subsequent Mortgage
Loans is subject to the satisfaction of each of the following conditions on or
prior to the related Subsequent Sales Date:

                                       31
<PAGE>

                  (i)      the Depositor shall have delivered to the Trustee
                           with a copy to the Master Servicer a duly executed
                           written Subsequent Sales Agreement in substantially
                           the form of Schedule IV hereto, which shall include a
                           Schedule of Subsequent Mortgage Loans, and specifying
                           the amount to be withdrawn from the Pre-Funding
                           Account;

                  (ii)     the remaining term to maturity of each Subsequent
                           Mortgage Loan may not exceed 30 years;

                  (iii)    no Subsequent Mortgage Loan will have been selected
                           in a manner adverse to the interests of
                           Certificateholders;

                  (iv)     the addition of the Subsequent Mortgage Loans will
                           not result in the reduction, qualification or
                           withdrawal of the then current ratings of the
                           Certificates;

                  (v)      no Subsequent Mortgage Loan may have a Loan-to-Value
                           Ratio greater than 100.00%;

                  (vi)     each Subsequent Mortgage Loan will be underwritten in
                           accordance with the Seller's underwriting guidelines;

                  (vii)    after giving effect to the acquisition of all the
                           Subsequent Mortgage Loans, the Mortgage Loans in
                           Group I (which shall all be fixed interest rate
                           Mortgage Loans):

                           (A)      will have a weighted average Mortgage
                                    Interest Rate of not less than 9.75% per
                                    annum;

                           (B)      will have a weighted average Combined Loan
                                    to Value Ratio not in excess of 76.00%;

                           (C)      shall be Mortgage Loans no more than 73.00%
                                    of which (by Scheduled Principal Balance)
                                    were made in connection with a cash out
                                    refinancing;

                           (D)      shall be Mortgage Loans at least 75.00% of
                                    which (by Scheduled Principal Balance) shall
                                    be classified by Saxon Mortgage, Inc. as
                                    "A-" or better;

                           (E)      shall be Mortgage Loans at least 78.00% of
                                    which (by Scheduled Principal Balance) will
                                    have been originated pursuant to a full
                                    documentation program; and

                           (F)      will have a weighted average credit score of
                                    not less than 605.

                  (viii)   after giving effect to the acquisition of all the
                           Subsequent Mortgage Loans, the Mortgage Loans in
                           Group II (which shall all be first lien, ARM Loans):

                                       32
<PAGE>

                           (A)      will have a weighted average Mortgage
                                    Interest Rate of not less than 10.00% per
                                    annum;

                           (B)      will have a weighted average Loan to Value
                                    Ratio not in excess of 80.00%;

                           (C)      shall be Mortgage Loans at least 67% of
                                    which (by Scheduled Principal Balance) shall
                                    be classified by Saxon Mortgage, Inc. as
                                    "A-" or better; and

                           (D)      will have a weighted average credit score of
                                    not less than 576.

                           For purposes of making all calculations required by
                           clauses (vii) and (viii), the Scheduled Principal
                           Balances of the Initial Mortgage Loans at the Cut-Off
                           Date and of the Subsequent Mortgage Loans as of their
                           respective Subsequent Cut-Off Dates shall be used.

                  (ix)     the Depositor shall have provided the Master Servicer
                           and the Trustee any information reasonably requested
                           by any of them with respect to the Subsequent
                           Mortgage Loans then to be sold to the Trust;

                  (x)      the Depositor shall have delivered to the Master
                           Servicer for deposit in the Master Servicer Custodial
                           Account all principal and interest due in respect of
                           such Subsequent Mortgage Loans after the related
                           Subsequent Cut-Off Date;

                  (xi)     the Depositor shall have delivered to the Trustee,
                           the Underwriters and the Rating Agencies a letter
                           from an independent accountant stating whether or not
                           the characteristics of the Subsequent Mortgage Loans
                           conform to the characteristics of the Mortgage Loans
                           required in Section 2.02(b);

                  (xii)    as of each Subsequent Sales Date, neither the
                           Depositor nor Saxon Mortgage shall be insolvent, nor
                           will either of them be made insolvent by such
                           transfer;

                  (xiii)   the Funding Period shall not have ended;

                  (xiv)    any Subsequent Mortgage Loans allocated to Subgroup
                           IIA shall conform to the principal balance
                           requirements provided by the purchase guidelines of
                           Fannie Mae and Freddie Mac; and

                  (xv)     the Depositor and Saxon Mortgage, Inc. each shall
                           have delivered to the Master Servicer and the Trustee
                           an officer's certificate confirming the satisfaction
                           of each condition precedent specified in this
                           paragraph (b) and in the related Subsequent Sales
                           Agreement and opinions of counsel with respect to
                           corporate, bankruptcy and tax matters relating to the
                           transfer of Subsequent Mortgage Loans in the forms
                           substantially similar to those delivered on the
                           Closing Date.

                                       33
<PAGE>

         (c)      Pursuant to Section 2.03(b) hereof, the Trustee shall remit on
each Subsequent Sales Date to or upon the order of the Depositor from the
Pre-Funding Account the amount specified by the Master Servicer only upon the
Trustee's receipt of:

                  (i)      a fully executed Subsequent Sales Agreement;

                  (ii)     the two Officer's certificates required by Section
                           2.02(b) hereof;

                  (iii)     an Opinion or Opinions of Counsel from each of
                            the Depositor and Saxon Mortgage, Inc. required by
                            Section 2.02(b);

                  (iv)     a letter from each Rating Agency on the final
                           Subsequent Sale Date confirming the condition
                           provided in Section 2.02(b);

                   (v)     a letter from an independent accountant as required
                           by Section 2.02(b); and

                  (vi)     the written instruction from the Master Servicer
                           setting forth the amounts to be paid as required by
                           Section 2.03(b) hereof. The Trustee may rely and
                           shall be protected in relying on all such Officer's
                           certificates as evidencing full compliance with all
                           conditions precedent specified in Section 2.02(b),
                           without any further duty of inquiry with respect
                           thereto.

         (d)      On each Subsequent Sales Date and on the Master Servicer
Reporting Date immediately following the end of the Funding Period, the Master
Servicer shall determine:

                  (i)      the amount and correct disposition of the Pre-Funded
                           Amount and the amount remaining in the Capitalized
                           Interest Account, and

                  (ii)     any other necessary matters in connection with the
                           administration of the Pre-Funding Account and the
                           Capitalized Interest Account. With respect to each
                           Subsequent Sales Date, the Master Servicer shall
                           determine the Overfunded Interest Amount. If any
                           amounts are released as a result of an error in
                           calculation to the Holders or the Depositor from the
                           Pre-Funding Account or from the Capitalized Interest
                           Account, the Depositor shall immediately repay such
                           amounts to the Master Servicer.

         Section 2.03.  Pre-Funding Account and Capitalized Interest Account.

         (a)      The Trustee shall establish and maintain the Pre-Funding
Account and the Capitalized Interest Account, each to be held in trust for the
benefit of the Certificateholders. Each of the Pre-Funding Account and the
Capitalized Interest Account shall be an Eligible Account. On the Closing Date,
the Depositor will cause to be deposited in the Pre-Funding Account the Original
Pre-Funded Amount and in the Capitalized Interest Account the Initial
Capitalized Interest Amount.

         (b)      On any Subsequent Sales Date, the Master Servicer shall
instruct the Trustee, with a copy to the Depositor,

                  (i)      to withdraw from the Pre-Funded Amount in the
                           Pre-Funding Account an amount equal to 100% of the
                           aggregate Scheduled Principal Balances

                                       34
<PAGE>

                           of the Subsequent Mortgage Loans as of the applicable
                           Subsequent Cut-Off Date sold to the Trust on such
                           Subsequent Sales Date, and

                  (ii)     to pay such amounts to or upon the order of the
                           Depositor upon satisfaction of the conditions set
                           forth in Section 2.02(c) hereof with respect thereto.
                           In no event shall the Trustee withdraw from the
                           Pre-Funding Account an amount in excess of the
                           Original Pre-Funded Amount.

          (c)     On each Master Servicer Remittance Date to and including the
Master Servicer Remittance Date immediately following the end of the Funding
Period, the Master Servicer shall instruct the Paying Agent to transfer: (i) to
the Capitalized Interest Account from the Pre-Funding Account, the Pre-Funding
Account Earnings; and (ii) to the Asset Proceeds Account from the Capitalized
Interest Account, the Capitalized Interest Requirement.

         (d)      On each Subsequent Sales Date the Master Servicer shall
instruct the Trustee to distribute the Overfunded Interest Amount, if any, to
the Depositor. At the end of the Funding Period, all amounts, if any, remaining
in the Capitalized Interest Account shall be transferred to the Depositor and
the Capitalized Interest Account shall be closed.

         (e)      On the Master Servicer Remittance Date immediately following
the end of the Funding Period, the Master Servicer shall instruct the Trustee to
transfer the Pre-Funded Amount to the Asset Proceeds Account for distribution to
the Holders of the Certificates in accordance with Section 3.01 (c), (d) and (e)
hereof.

         (f)      The Pre-Funding Account and the Capitalized Interest Account
shall not be assets of any REMIC created pursuant to this Agreement.

                                   Article III
                         Remitting to Certificateholders

         Section 3.01.  Certificate Distributions.

         (a)      On each Distribution Date, the Trustee shall make the
following distributions from the Asset Proceeds Account of an amount equal to
the Group I and Group II Interest Funds in the following order of priority:

                  (i)      from the Interest Funds for each Group, to the
                           related Class A Certificates and the Class A-IO
                           Certificate, the Current Interest and any Interest
                           Carry Forward Amount for the such Class A
                           Certificates (or, in the case of the Class A-IO
                           Certificates, the applicable Allocable Portion
                           thereof); provided, however, that any Group II
                           Interest Funds distributable to the Class AV-1
                           Certificates shall be derived solely from the
                           Subgroup IIA Mortgage Loans, and any such funds
                           distributable to the Class AV-2 Certificates shall be
                           derived solely from the Subgroup IIB Mortgage Loans;
                           provided further, that any shortfall in available
                           amounts in respect of the Group I Class A
                           Certificates shall be applied, pro rata, among the
                           Group I Class A Certificates.

                  (ii)     any remaining amounts from both the Group I and Group
                           II Interest Funds shall be combined and distributed
                           pursuant to Section 3.01(b) hereof.

                                       35
<PAGE>

         (b)      On each Distribution Date, the Trustee shall apply all amounts
remaining pursuant to Section 3.01(a)(ii) in the following order of priority:

                  (i)      to the Class M-1 Certificates, the Current Interest
                           thereon;

                  (ii)     to the Class M-2 Certificates, Current Interest
                           thereon;

                  (iii)    to the Class B-1 Certificates, Current Interest
                           thereon;

                  (iv)     to the Class X-IO Certificates, Current Interest
                           thereon; and

                  (v)      any remaining amounts pursuant to Section 3.01(f)
                           hereof.

         (c)      On each Distribution Date, the Trustee shall make the
following distributions from the Asset Proceeds Account of an amount equal to
the Group I and Group II Principal Distribution Amounts as follows:

                  o        From the Group I Principal Distribution Amount, in an
                           amount up to the Group I Class A Principal
                           Distribution Amount as follows: (x) the Class AF-6
                           Principal Distribution Amount to the Class AF-6
                           Certificates until the Certificate Principal Balance
                           thereof has been reduced to zero, and (y) the balance
                           of the Group I Class A Principal Distribution Amount
                           sequentially to the Class AF-1, Class AF-2, Class
                           AF-3, Class AF-4, Class AF-5 and Class AF-6
                           Certificates, in that order, so that no such
                           distribution pursuant to this clause (y) will be made
                           to any such Class until the Certificate Principal
                           Balances of all Group I Class A Certificates with a
                           lower numeral designation shall have been reduced to
                           zero; provided, however, that, on any Distribution
                           Date on or after the Credit Support Depletion Date,
                           the Group I Class A Principal Distribution Amount
                           will be distributed pro rata and not sequentially to
                           the Group I Class A Certificates;

                  o        From the Group II Principal Distribution Amount, in
                           an amount up to the Group II Class A Principal
                           Distribution Amount as follows: (x) amounts
                           constituting Principal Funds for the Subgroup IIA
                           Mortgage Loan will be distributed to the Class AV-1
                           Certificates until the Certificate Principal Balance
                           thereof has been reduced to zero; and (y) amounts
                           constituting Principal Funds for the Subgroup IIB
                           Mortgage Loans will be distributed to the Class AV-2
                           Certificates until the Certificate Principal Balance
                           thereof has been reduced to zero; provided that any
                           excess interest (representing the allocable portion
                           of the Extra Principal Distribution Amount) included
                           in the Group II Class A Principal Distribution Amount
                           will be distributed to the Class AV-1 and Class AV-2
                           Certificate pro rata, based on the Principal Funds
                           received for each Subgroup;

                  o        In the event the Certificate Principal Balance of one
                           or more of the (A) Group I Class A Certificates, (B)
                           the Class AV-1 Certificates or (C) the Class AV-2
                           Certificates has been reduced to zero, on each
                           Distribution Date thereafter principal distributions
                           otherwise distributable to such

                                       36
<PAGE>

                           retired Certificates will be applied to such
                           remaining Classes, pro rata, on the basis of their
                           Certificate Principal Balances. Any such
                           distributions in respect of the Group I Class A
                           Certificates will be distributed to such Classes in
                           the manner provided in the first subparagraph of this
                           Section.

         (d)      On each Distribution Date, the Trustee shall distribute the
aggregate Group I and Group II Principal Distribution Amount remaining after
distributions pursuant to Section 3.01(c) in the following order of priority:

                  (i)      to the Class M-1 Certificates, the Class M-1
                           Principal Distribution Amount, until the Certificate
                           Principal Balance thereof has been reduced to zero;

                  (ii)     to the Class M-2 Certificates, the Class M-2
                           Principal Distribution Amount, until the Certificate
                           Principal Balance thereof has been reduced to zero;
                           and

                  (iii)    to the Class B-1 Certificates, the Class B-1
                           Principal Distribution Amount, until the Certificate
                           Principal Balance thereof has been reduced to zero.

         (e)      Notwithstanding Section 3.01(c) and (d) hereof, before the
Stepdown Date or if a Trigger Event is in effect on any Distribution Date each
Principal Distribution Amount shall be distributed in the following order of
priority:

                  (i)      to the related Class A Certificates in the manner
                           described in Section 3.01(c) until the Certificate
                           Principal Balance of such Class A Certificates has
                           been reduced to zero;

                  (ii)     after the Certificate Principal Balance of the Class
                           A Certificates has been reduced to zero, the
                           remaining combined Principal Distribution Amounts
                           shall be distributed to the Class M-1 Certificates
                           until the Certificate Principal Balance of the Class
                           M-1 Certificates has been reduced to zero;

                  (iii)    after the Certificate Principal Balance of the Class
                           M-1 Certificates has been reduced to zero, the
                           remaining combined Principal Distribution Amounts
                           shall be distributed to the Class M-2 Certificates
                           until the Certificate Principal Balance of the Class
                           M-2 Certificates has been reduced to zero, and

                  (iv)     after the Certificate Principal Balance of the Class
                           M-2 Certificates has been reduced to zero, the
                           remaining combined Principal Distribution Amounts
                           shall be distributed to the Class B-1 Certificates
                           until the Certificate Principal Balance of the Class
                           B-1 Certificates has been reduced to zero.

         (f)      On each Distribution Date, the Trustee shall make the
following allocations from the Asset Proceeds Account of any remaining amounts
pursuant to Sections 3.01(b)(v) hereof in the following order of priority:

                                       37
<PAGE>

                  (i)      the Group I Percentage of the Extra Principal
                           Distribution Amount will be added to the Group I
                           Principal Distribution Amount; and the Group II
                           Percentage of the Extra Principal Distribution Amount
                           will be added to the Group II Principal Distribution
                           Amount;

                  (ii)     to the Class X-IO Certificates, any related Interest
                           Carry Forward Amount;

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

                  (iv)     to the Class M-1 Certificates, any related Unpaid
                           Realized Loss Amount;

                  (v)      to the Class M-2 Certificates, any related Interest
                           Carry Forward Amount;

                  (vi)     to the Class M-2 Certificates, any related Unpaid
                           Realized Loss Amount;

                  (vii)    to the Class B-1 Certificates, any related Interest
                           Carry Forward Amount;

                  (viii)   to the Class B-1 Certificates, any related Unpaid
                           Realized Loss Amount;

                  (ix)     to the Basis Risk Reserve Fund, any Basis Risk
                           Payment for such date;

                  (x)      on any Distribution Date on or before the
                           Distribution Date on which the Certificate Principal
                           Balance thereof has been reduced to zero, from and to
                           the extent of amounts held in the Basis Risk Reserve
                           Fund, to the Class A Certificates, on a pro rata
                           basis any applicable Certificate Carryover Amount;

                  (xi)     on any Distribution Date on or before the
                           Distribution Date on which the Certificate Principal
                           Balance of the Class M-1 Certificates has been
                           reduced to zero, from and to the extent of amounts
                           held in the Basis Risk Reserve Fund, to the Class M-1
                           Certificates, any applicable Certificate Carryover
                           Amount;

                  (xii)    on any Distribution Date on or before the
                           Distribution Date on which the Certificate Principal
                           Balance of the Class M-2 Certificates has been
                           reduced to zero, from and to the extent of amounts
                           held in the Basis Risk Reserve Fund, to the Class M-2
                           Certificates, any applicable Certificate Carryover
                           Amount;

                  (xiii)   on any Distribution Date on or before the
                           Distribution Date on which the Certificate Principal
                           Balance of the Class B-1 Certificates has been
                           reduced to zero, from and to the extent of amounts
                           held in the Basis Risk Reserve Fund, to the Class B-1
                           Certificates, any applicable Certificate Carryover
                           Amount

                  (xiv)    the remainder pursuant to Section 3.01(h) hereof.

                                       38
<PAGE>

         (g)      On each Distribution Date, the Trustee shall distribute an
amount equal to the Class P Prepayment Amount for such Distribution Date to the
Class P Certificates.

         (h)      On each Distribution Date, the Trustee shall distribute to the
Class C Certificates any remaining amounts pursuant to Section 3.01(c) hereof,
to the extent of the sum of the interest accrued thereon at the rate described
in the Preliminary Statement and that has not been distributed thereon (amounts
deposited in the Basis Risk Reserve Fund under Section 3.01(f)(ix) are treated
as distributed for this purpose), amounts representing earnings on the Basis
Risk Reserve Fund, and any amounts released from the Basis Risk Reserve Fund.

         (i)      On each Distribution Date, the Trustee shall allocate any
excess of the aggregate Certificate Principal Balance of the Certificates over
the Scheduled Principal Balances of the Mortgage Loans to reduce the Certificate
Principal Balances of the Subordinated Certificates in the following order of
priority:

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

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

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

         (j)      On each Distribution Date, the Trustee shall distribute to the
Class C Certificates any Released Principal Amount.

         (k)      On each Distribution Date the Trustee shall distribute to the
Class R Certificates any remaining amounts in the Asset Proceeds Account after
the distributions pursuant to Section 3.01(a) through (j).

         Section 3.02.  Reports to the Depositor and the Trustee.

         On or before the Business Day preceding each Distribution Date, based
on information provided by the Servicer, the Master Servicer shall notify, or
cause to be notified, the Depositor and the Trustee of the following information
with respect to the next Distribution Date (which notification may be given by
facsimile, electronic transmission or by telephone promptly confirmed in
writing):

         (a)      the aggregate amount then on deposit in the Asset Proceeds
Account and the source thereof (identified as interest, scheduled principal or
unscheduled principal);

         (b)      the amount of any Realized Losses, Applied Realized Loss
Amounts and Unpaid Realized Loss Amounts;

         (c)      the application of the amounts distributed on such
Distribution Date pursuant to Section 3.01 hereof;

         (d)      whether a Trigger Event has occurred; and

                                       39
<PAGE>

         (e)      For each Distribution Date during the Funding Period,

                  (i)      the Group I Pre-Funded Amount and the Group II
                           Pre-Funded Amount previously used to acquire
                           Subsequent Mortgage Loans;

                  (ii)     the Group I Pre-Funding Account Earnings and the
                           Group II Pre-Funding Account Earnings transferred to
                           the Asset Proceeds Account;

                  (iii)    the Group I Capitalized Interest Requirement and the
                           Group II Capitalized Interest Requirement transferred
                           to the Asset Proceeds Account; and

                  (iv)     the Group I Pre-Funded Amount and the Group II
                           Pre-Funded Amount; and for the Distribution Dated
                           following the end of the Funding Period, the Group I
                           Pre-Funded Amount distributed as a part of a Group I
                           Principal Distribution and the Group II Pre-Funded
                           Amount distributed as a part of a Group II Principal
                           Distribution Amount.

         Section 3.03.  Reports by or on Behalf of the Master Servicer.

         (a)      On or as soon as practicable following each Distribution Date,
based on information provided by the Servicer, the Master Servicer shall report
or cause to be published on the Trustee's website located at
http://www.apps.gis.deutsche-bank.com/invr, or such other website as may be set
forth in a notice provided to the Holder of each of the Certificates and each
Rating Agency, the following information:

                  (i)      with respect to each Class of Certificates (other
                           than Class C and Class R) (based on a Certificate in
                           the original principal amount of $1,000):

                           (a)      the amount of the distributions on such
                                    Distribution Date;

                           (b)      the amount of such distribution allocable to
                                    interest;

                           (c)      the amount of such distributions allocable
                                    to principal, separately identifying the
                                    aggregate amount of any prepayments,
                                    Substitution Shortfalls, repurchase amounts
                                    pursuant to Section 2.03 of the Standard
                                    Terms or other recoveries of principal
                                    included therein, any Group I or Group II
                                    Extra Principal Distribution Amount and any
                                    Class M-1, Class M-2, Class B-1, Applied
                                    Realized Loss Amount with respect to, and
                                    any Class M-1, Class M-2, and Class B-1,
                                    Unpaid Realized Loss Amount at, such
                                    Distribution Date;

                           (d)      the principal balance after giving effect to
                                    any distribution allocable to principal; and

                           (e)      any Interest Carry Forward Amount and any
                                    Certificates Carryover Amount;

                  (ii)     the Net WAC Cap and the Maximum Cap Rate;

                                       40
<PAGE>

                  (iii)    the Realized Losses for Group I and Group II for the
                           period and since the Cut-Off Date;

                  (iv)     the largest Mortgage Loan balance outstanding in each
                           Group;

                  (v)      the Prepayment Penalties owed by borrowers and (if
                           different) collected by the Servicer or the Master
                           Servicer;

                  (vi)     the Servicing Fees and Master Servicing Fees
                           allocable to each Group;

                  (vii)    One-Month LIBOR on the most recent Interest
                           Determination Date;

                  (viii)   the Pass-Through Rates for the Certificates for the
                           current Accrual Period; and

                  (ix)     for each Distribution Date during the Funding Period,
                           the Pre-Funded Amount allocable to each Group.

                  (x)      the number and aggregate principal balances of
                           Mortgage Loans in each Group (a) 30-59 days
                           Delinquent, (b) 60-89 days Delinquent and (c) 90 or
                           more days Delinquent, as of the close of business as
                           of the end of the related prepayment period;

                  (xi)     the percentage that each of the Scheduled Principal
                           Balances set forth pursuant to clauses (a), (b) and
                           (c) of paragraph (i) above represent with respect to
                           all Mortgage Loans in each Group;

                  (xii)    the number and Scheduled Principal Balance of all
                           Mortgage Loans in each Group in foreclosure
                           proceedings as of the close of business as of the end
                           of the related Prepayment Period and in the
                           immediately preceding Prepayment Period;

                  (xiii)   the number of Mortgagors and the Scheduled Principal
                           Balances of Mortgage Loans in each Group involved in
                           bankruptcy proceedings as of the close of business as
                           of the end of the related Prepayment Period;

                  (xiv)    the aggregate number and aggregate book value of any
                           REO Property in each Group as of the close of
                           business as of the end of the related Prepayment
                           Period; and

                  (xv)     the number and amount by principal balance of 60+ Day
                           Delinquent Loans in each Group, in each case by
                           Servicer and as of the end of the related Prepayment
                           Period.

         (b)      All allocations made by the Trustee shall be based on
information the Trustee receives from the Master Servicer which the Trustee
shall be protected in relying on.

                                       41
<PAGE>

         Section 3.04.  Advance Facility.

         (a)      The Servicer is hereby authorized to enter into any facility
with any Person (any such Person, an "Advance Facility Counterparty") which
provides that the Servicer may pledge or sell its rights to receive
reimbursement of Advances pursuant to this Agreement or the Servicing Agreement
("Advance Reimbursement Rights") pursuant to credit facilities, repurchase
facilities, or similar facilities providing liquidity for the funding of
Advances, including facilities providing that such Advance Facility Counterparty
may make all or a portion of the Advances (any such facility, an "Advance
Facility"), although no Advance Facility shall reduce or otherwise affect the
Servicer's obligations to fund such Advances. If so required pursuant to the
terms of an Advance Facility, to the extent that an Advance Facility
Counterparty makes all or a portion of any Advance and the Advance Facility
Counterparty and the Servicer provide the Trustee with notice acknowledged by
the Servicer that such Advancing Servicer is entitled to reimbursement, such
Advancing Servicer shall be entitled to receive reimbursement pursuant to this
Agreement for such amount to the extent provided in Section 3.04(b). Such notice
from the Advance Facility Counterparty and the Servicer must specify the amount
of the reimbursement and must specify which Section of this Agreement permits
the Advance to be reimbursed. The Trustee shall be entitled to rely without
independent investigation on the Advance Facility Counterparty's statement with
respect to the amount of any reimbursement pursuant to this Section 3.04 and
with respect to the Advance Facility Counterparty's statement with respect to
the Section of this Agreement permits the Advance to be reimbursed. An Advance
Facility Counterparty whose obligations are limited to the making of Advances
will not be deemed to be a Sub-Servicer under this Agreement.

         (b)      If so required pursuant to the terms of an Advance Facility,
the Servicer may direct, and if so directed the Trustee is hereby authorized to
and shall pay to the Advance Facility Counterparty (i) reimbursements for
Advances; and (ii) all or such portion of the Servicing Fee as may be so
specified in the Advance Facility, that would otherwise be payable to the
Servicer pursuant to this Agreement or the Servicing Agreement.

         (c)      Upon request of the Servicer, the Trustee agrees to execute
such acknowledgments, certificates, and other documents recognizing the
interests of any Advance Facility Counterparty in such Advance Reimbursement
Rights and Servicing Fees as the Servicer may cause to be made subject to
Advance Facilities pursuant to this Section 3.04, and such other documents in
connection with such Advance Facilities as may be reasonably requested from time
to time by any Advance Facility Counterparty. The implementation of the
arrangement described in this Section shall not require the consent of
Certificateholders or the Trustee

         Section 3.05   Basis Risk Reserve Fund

         (a)      On the Closing Date, the Trustee shall establish and maintain
in its name, in trust for the benefit of the holders of the Certificates, other
than the Class A-IO, Class X-IO, Class P, and Class R Certificates, the Basis
Risk Reserve Fund, into which the Seller shall deposit $1,000. The Basis Risk
Reserve Fund shall be an Eligible Account, and funds on deposit therein shall be
held separate and apart from, and shall not be commingled with, any other
moneys, including, without limitation, other moneys of the Trustee held pursuant
to this Agreement.

                                       42
<PAGE>

         (b)      The Trustee shall make withdrawals from the Basis Risk Reserve
Fund to make distributions pursuant to Section 3.01(e)(x) through (xiii).

         (c)      Funds in the Basis Risk Reserve Fund shall be invested in
Eligible Investments. Any earnings on such amounts shall be distributed to the
Class C Certificateholder pursuant to Section 3.01(h). The Class C Certificate
shall evidence ownership of the Basis Risk Reserve Fund for federal income tax
purposes and the Holder thereof shall direct the Trustee, in writing, as to
investment of amounts on deposit therein. The Class C Certificateholder shall be
liable for any losses incurred on such investments. In the absence of written
instructions from the Class C Certificateholder as to investment of funds on
deposit in the Basis Risk Reserve Fund, such funds shall be invested in the
Wells Fargo Prime Investment Money Market Fund or comparable investment vehicle.
Any amounts on deposit in the Basis Risk Reserve Fund in excess of the Required
Reserve Fund Deposit on any Distribution Date shall be distributed to the Class
C Certificateholder on the following Distribution Date. For all Federal income
tax purposes, amounts transferred by REMIC 3 to the Basis Risk Reserve Fund
shall be treated as amounts distributed by REMIC 3 to the Class C
Certificateholder.

         (d)      Upon termination of the Trust Fund, any amounts remaining in
the Basis Risk Reserve Fund shall be distributed to the Class C
Certificateholder pursuant to Section 3.01(h).

         Section 3.06   The Instrument

         At any time on or after the Closing Date, the Depositor shall have the
right to deposit into the Trust, solely for the benefit of the Holder of the
Class C Certificates, a derivative contract or comparable instrument. Any such
instrument shall constitute a fully prepaid agreement. All collections, proceeds
and other amounts in respect of such an instrument shall be distributed to the
Class C Certificates on the Distribution Date following receipt thereof by the
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 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 other than the instrument and the assets of the other sub-Trust shall
consist solely of such instrument.

                                   Article IV
                                The Certificates

         Section 4.01.  The Certificates.

         The Certificates shall be designated generally as the Mortgage Loan
Asset Backed Certificates, Series 2001-2. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $650,410,000, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates, the initial Certificate
Principal Balance for each such Class and CUSIP Numbers:

                                       43
<PAGE>

                                Initial Certificate         CUSIP
              Class              Principal Balance          Number

              AF-1                 $111,500,00             805564JG7

              AF-2                  37,100,000             805564JH5

              AF-3                  53,200,000             805564JJ1

              AF-4                  32,800,000             805564JK8

              AF-5                  38,862,000             805564JL6

              AF-6                  26,000,000             805564JM4

              AV-1                 185,000,000             805564JN2

              AV-2                  74,891,000             805564JP7

              M-1                   45,529,000             805564JR3

              M-2                   26,016,000             805564JS1

              B-1                   19,512,000             805564JT9

              A-IO                     (1)                 805564JQ5

              X-IO                     (1)                 805564JU6

               C                       (2)                    N/A

               P                       (3)                    N/A

               R                       (3)                    N/A

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

(1) The Class A-IO and Class X-IO Certificates have no stated principal balance
    and are not entitled to any scheduled distributions of principal.

(2) The Class C Certificates have no stated principal balance or Pass-Through
    Rate and are entitled to receive the Class C Distribution Amount.

(3) The Class R and Class P Certificates have no stated principal balance or
    Pass-Through Rate and are not entitled to any scheduled distributions of
    principal or interest.

         Section 4.02.  Denominations.

         The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof in the case of the Public Certificates. So long as the Private
Certificates are Book-Entry

                                       44
<PAGE>

Certificates, each Person which becomes a Beneficial Owner of Private
Certificates will be deemed to make the representations and agreements set forth
in the form of Rule 144A Agreement-QIB Certification attached as Exhibit D to
the Standard Terms, and to indemnify the Depositor, the Trustee and the Master
Servicer against any liability that may result if any transfer of a Private
Certificate by such person is not exempt from registration under the Securities
Act and all applicable state securities laws or is not made in accordance with
such federal and state laws. The Class C and Class R Certificates shall be
issued in certificated, fully-registered form in minimum Percentage Interests of
25% and integral multiples of 1% in excess thereof, except that two Class R
Certificates may be issued in different denominations.

                                    Article V
                            Miscellaneous Provisions

         Section 5.01.  Request for Opinions.

         (a)      The Depositor and the Master Servicer hereby request and
authorize McKee Nelson LLP, as their counsel in this transaction, to issue on
behalf of the Depositor and the Master Servicer such legal opinions to the
Trustee and each Rating Agency as may be (i) required by any and all documents,
certificates or agreements executed in connection with the Trust or (ii)
requested by the Trustee, any Rating Agency or their respective counsels.

         (b)      The Trustee hereby requests and authorizes its counsel to
issue on behalf of the Trustee such legal opinions to the Depositor, the Master
Servicer, and each Rating Agency as may be required by any and all documents,
certificates or agreements executed in connection with the establishment of the
Trust and the issuance of the Certificates.

         Section 5.02.  Form of Certificates; Schedules and Exhibits; Governing
                        Law.

         (a)      The Certificates shall be substantially in the respective
forms set forth in the Exhibits hereto. All Certificates shall be dated the date
of their execution.

         (b)      Each of the Schedules and Exhibits attached hereto or
referenced herein is incorporated herein by reference as contemplated by the
Standard Terms.

         (c)      In accordance with Section 11.04 of the Standard Terms, this
Agreement shall be construed in accordance with and governed by the laws of the
State, without regard to any conflicts of laws principles thereof.

         Section 5.03.  Optional Termination.

         (a)      On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, the Master Servicer may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans
and all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the Mortgage
Loans during the current Remittance Period,

                                       45
<PAGE>

plus one month's interest on such amount, plus in all cases all accrued and
unpaid Servicing Fees and Master Servicing Fees plus the aggregate amount of any
unreimbursed Advances and any Advances which the Servicer or the Master Servicer
has theretofore failed to remit; but in any event such purchase amount shall be
sufficient to retire all Group I and Group II Certificates in full. In
connection with such purchase, the Master Servicer shall remit to the Trustee
all amounts then on deposit in the Master Servicer Custodial Account for deposit
to the Asset Proceeds Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.

         (b)      The Master Servicer shall direct the Trustee to adopt and the
Trustee shall adopt, as to each REMIC established hereunder, a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and as prepared by
the Master Servicer, and shall provide to the Trustee an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such purchase and liquidation constitutes, as to each REMIC, a
Qualified Liquidation.

         (c)      Promptly following any purchase described in this Section
5.04, the Trustee will release the Trustee Mortgage Loan File to the Master
Servicer or otherwise upon its order.

         Section 5.04.  Master Servicer; Certificate Registrar, Paying Agent and
Calculation Agent.

         (a)      Saxon Mortgage, Inc. is hereby appointed as Master Servicer
hereunder.

         (b)      Bankers Trust Company is hereby appointed as Certificate
Registrar, Paying Agent, and Calculation Agent. As Calculation Agent, Bankers
Trust Company will be responsible for calculating and distributing to holders of
Certificates on a timely basis all amounts of principal and interest on each
Distribution Date and for (i) preparing and distributing on behalf of the Master
Servicer on a timely basis all related payment distribution statements to
Holders of Certificates containing all of the information required to be
provided pursuant to Section 3.03(a) hereof, and (ii) preparing and filing on a
timely basis with the Securities and Exchange Commission all required reports
under the Securities Exchange Act of 1934 relating to the Trust. The Master
Servicer can remove the Certificate Registrar, Paying Agent or Calculation Agent
upon 30 days written notice.

         (c)      In the event that the Person serving as Trustee hereunder is
also serving as the Certificate Registrar, Paying Agent and Calculation Agent,
the rights, powers, immunities and indemnities afforded to the Trustee hereunder
shall also be afforded to such Certificate Registrar, Paying Agent and
Calculation Agent.

         (d)      In connection with the performance of the Servicer's duties
and obligations under the Servicing Agreement in the management of defaulted
Mortgage Loans and otherwise, the Trustee shall fully cooperate with the
Servicer in its performance of such duties, including, without limitation,
executing and delivering all documents and instruments necessary to facilitate
the performance thereof.

         (e)      The Master Servicer may appoint any entity of its choosing to
perform any or all REMIC tax administration duties.

                                      * * *

                                       46
<PAGE>

         IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized and their respective signatures duly attested all as
of August 2, 2001.

                                            SAXON ASSET SECURITIES COMPANY

                                            By:   /s/ BRADLEY D. ADAMS
                                                  ------------------------------
                                                  Bradley D. Adams, Senior Vice
                                                  President

                                            SAXON MORTGAGE, INC.
                                             as Master Servicer

                                            By:   /s/ BRADLEY D. ADAMS
                                                  ------------------------------
                                                  Bradley D. Adams, Senior Vice
                                                  President

                                            BANKERS TRUST COMPANY
                                             as Trustee

                                            By:   /s/ BARBARA CAMPBELL
                                                  ------------------------------
                                                  Barbara Campbell, Assistant
                                                  Secretary

<PAGE>

COUNTY OF HENRICO            )
                             ) ss.:
COMMONWEALTH OF VIRGINIA     )

        The foregoing instrument was acknowledged before me on August 2, 2001,
by Bradley D. Adams, Senior Vice President of Saxon Asset Securities Company, a
Virginia corporation, on behalf of the corporation.

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

My Commission expires:

<PAGE>

COUNTY OF HENRICO            )
                             ) ss.:
COMMONWEALTH OF VIRGINIA     )

             The foregoing instrument was acknowledged before me on August 2,
2001, by Bradley D. Adams, Senior Vice President of Saxon Mortgage, Inc., a
Virginia corporation, on behalf of the corporation.

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

My Commission expires:

<PAGE>

COUNTY OF                    )
         -----------------   ) ss.:
STATE OF CALIFORNIA          )

             The foregoing instrument was acknowledged before me on August 2,
2001, by Barbara Campbell, Assistant Secretary of Bankers Trust Company, a New
York corporation, on behalf of the bank.

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

My Commission expires:

<PAGE>

                                   Schedule I

                                 Mortgage Loans

         A.       Group I Mortgage Loans.

         B.       Group II Mortgage Loans.

                  o        Subgroup IIA

                  o        Subgroup IIB

<PAGE>

                                   Schedule II

                                 Sales Agreement

<PAGE>

                                  Schedule III

                               Servicing Agreement

<PAGE>

                                   Schedule IV

                       Form of Subsequent Sales Agreement

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