Document:

<PAGE>
                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                            LITTON LOAN SERVICING LP,
                                    Servicer

                                       and

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT
                           Dated as of October 1, 2003

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

                              TERWIN MORTGAGE TRUST
                 ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-4HE

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
ARTICLE I             DEFINITIONS...............................................................................    1

ARTICLE II            CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..............................   36

         SECTION 2.01.              Conveyance of Mortgage Loans................................................   36

         SECTION 2.02.              Acceptance by Trustee of the Mortgage Loans.................................   38

         SECTION 2.03.              Representations, Warranties and Covenants of the Depositor..................   39

         SECTION 2.04.              Representations and Warranties of the Servicer..............................   43

         SECTION 2.05.              Substitutions and Repurchases of Mortgage Loans which are not
                                    "Qualified Mortgages".......................................................   44

         SECTION 2.06.              Authentication and Delivery of Certificates.................................   44

         SECTION 2.07.              REMIC Elections.............................................................   45

         SECTION 2.08.              Covenants of the Servicer...................................................   48

         SECTION 2.09.              Cap Contract................................................................   48

         SECTION 2.10.              Permitted Activities of the Trust...........................................   48

         SECTION 2.11.              Qualifying Special Purpose Entity...........................................   49

ARTICLE III           ADMINISTRATION AND SERVICING  OF MORTGAGE LOANS...........................................   49

         SECTION 3.01.              Servicer to Service Mortgage Loans..........................................   49

         SECTION 3.02.              Servicing and Subservicing; Enforcement of the Obligations of Servicer......   50

         SECTION 3.03.              Rights of the Depositor and the Trustee in Respect of the Servicer..........   51

         SECTION 3.04.              Trustee to Act as Servicer..................................................   51

         SECTION 3.05.              Collection of Mortgage Loan Payments; Collection Account; Certificate
                                    Account.....................................................................   52

         SECTION 3.06.              Collection of Taxes, Assessments and Similar Items; Escrow Accounts.........   55

         SECTION 3.07.              Access to Certain Documentation and Information Regarding the
                                    Mortgage Loans..............................................................   55

         SECTION 3.08.              Permitted Withdrawals from the Collection Account and Certificate
                                    Account.....................................................................   55

         SECTION 3.09.              Servicing Transfer Dates....................................................   57

         SECTION 3.10.              Maintenance of Hazard Insurance.............................................   58

         SECTION 3.11.              Enforcement of Due-On-Sale Clauses; Assumption Agreements...................   58

         SECTION 3.12.              Realization Upon Defaulted Mortgage Loans; Determination of Excess
                                    Proceeds....................................................................   59
</TABLE>

                                        i

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
         SECTION 3.13.              Trustee to Cooperate; Release of Mortgage Files.............................   61

         SECTION 3.14.              Documents, Records and Funds in Possession of Servicer to be Held for
                                    the Trustee.................................................................   63

         SECTION 3.15.              Servicing Compensation......................................................   63

         SECTION 3.16.              Access to Certain Documentation.............................................   63

         SECTION 3.17.              Annual Statement as to Compliance...........................................   63

         SECTION 3.18.              Annual Independent Public Accountants' Servicing Statement; Financial
                                    Statements..................................................................   64

         SECTION 3.19.              Rights of the NIMs Insurer..................................................   64

         SECTION 3.20.              Periodic Filings............................................................   64

         SECTION 3.21.              Annual Certificate by Trustee...............................................   65

         SECTION 3.22.              Annual Certificate by Servicer..............................................   65

         SECTION 3.23.              Prepayment Penalty Reporting Requirements...................................   66

         SECTION 3.24.              Statements to Trustee.......................................................   66

         SECTION 3.25.              Indemnification.............................................................   67

         SECTION 3.26.              Nonsolicitation.............................................................   67

         SECTION 3.27.              Maintenance of LPMI Policy..................................................   67

ARTICLE IV            DISTRIBUTIONS.............................................................................   68

         SECTION 4.01.              Advances....................................................................   68

         SECTION 4.02.              Reduction of Servicing Compensation in Connection with Prepayment
                                    Interest Shortfalls.........................................................   68

         SECTION 4.03.              Distributions on the REMIC Interests........................................   69

         SECTION 4.04.              Distributions...............................................................   69

         SECTION 4.05.              Monthly Statements to Certificateholders....................................   73

ARTICLE V             THE CERTIFICATES..........................................................................   75

         SECTION 5.01.              The Certificates............................................................   75

         SECTION 5.02.              Certificate Register; Registration of Transfer and Exchange of
                                    Certificates................................................................   76

         SECTION 5.03.              Mutilated, Destroyed, Lost or Stolen Certificates...........................   80

         SECTION 5.04.              Persons Deemed Owners.......................................................   81

         SECTION 5.05.              Access to List of Certificateholders' Names and Addresses...................   81

         SECTION 5.06.              Book-Entry Certificates.....................................................   81

         SECTION 5.07.              Notices to Depository.......................................................   82
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
         SECTION 5.08.              Definitive Certificates.....................................................   82

         SECTION 5.09.              Maintenance of Office or Agency.............................................   82

ARTICLE VI            THE DEPOSITOR AND THE SERVICER............................................................   83

         SECTION 6.01.              Respective Liabilities of the Depositor and the Servicer....................   83

         SECTION 6.02.              Merger or Consolidation of the Depositor or the Servicer....................   83

         SECTION 6.03.              Limitation on Liability of the Depositor, the Servicer and Others...........   83

         SECTION 6.04.              Limitation on Resignation of Servicer.......................................   84

         SECTION 6.05.              Errors and Omissions Insurance; Fidelity Bonds..............................   84

ARTICLE VII           DEFAULT; TERMINATION OF SERVICER..........................................................   84

         SECTION 7.01.              Events of Default...........................................................   84

         SECTION 7.02.              Trustee to Act; Appointment of Successor....................................   86

         SECTION 7.03.              Notification to Certificateholders..........................................   87

ARTICLE VIII          CONCERNING THE TRUSTEE....................................................................   87

         SECTION 8.01.              Duties of Trustee...........................................................   87

         SECTION 8.02.              Certain Matters Affecting the Trustee.......................................   88

         SECTION 8.03.              Trustee Not Liable for Mortgage Loans.......................................   90

         SECTION 8.04.              Trustee May Own Certificates................................................   90

         SECTION 8.05.              Trustee's Fees..............................................................   90

         SECTION 8.06.              Indemnification of Trustee..................................................   90

         SECTION 8.07.              Eligibility Requirements for Trustee........................................   91

         SECTION 8.08.              Resignation and Removal of Trustee..........................................   91

         SECTION 8.09.              Successor Trustee...........................................................   92

         SECTION 8.10.              Merger or Consolidation of Trustee..........................................   93

         SECTION 8.11.              Appointment of Co-Trustee or Separate Trustee...............................   93

         SECTION 8.12.              Tax Matters.................................................................   94

ARTICLE IX            TERMINATION...............................................................................   97

         SECTION 9.01.              Termination upon Liquidation or Repurchase of all Mortgage Loans............   97

         SECTION 9.02.              Final Distribution on the Certificates......................................   98

         SECTION 9.03.              Additional Termination Requirements.........................................   99

ARTICLE X             MISCELLANEOUS PROVISIONS..................................................................   99

         SECTION 10.01.             Amendment...................................................................   99
</TABLE>

                                      iii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
         SECTION 10.02.             Counterparts................................................................  101

         SECTION 10.03.             Governing Law...............................................................  101

         SECTION 10.04.             Intention of Parties........................................................  101

         SECTION 10.05.             Notices.....................................................................  102

         SECTION 10.06.             Severability of Provisions..................................................  102

         SECTION 10.07.             Assignment..................................................................  103

         SECTION 10.08.             Limitation on Rights of Certificateholders..................................  103

         SECTION 10.09.             Inspection and Audit Rights.................................................  103

         SECTION 10.10.             Certificates Nonassessable and Fully Paid...................................  104

         SECTION 10.11.             Third Party Rights..........................................................  104

         SECTION 10.12.             Additional Rights of the NIMs Insurer.......................................  104

         SECTION 10.13.             [Reserved]..................................................................  104

         SECTION 10.14.             Assignment; Sales; Advance Facilities.......................................  104
</TABLE>

<TABLE>
<S>                   <C>
EXHIBIT A             FORMS OF OFFERED CERTIFICATES
EXHIBIT B             MORTGAGE LOAN SCHEDULE
EXHIBIT C             SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT
                      ENFORCEMENT
EXHIBIT D             FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1           FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2           FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F             FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G             FORM OF INVESTMENT LETTER
EXHIBIT H             FORM OF RULE 144A LETTER
EXHIBIT I             REQUEST FOR RELEASE
EXHIBIT J             LIST OF INTERIM SERVICING AGREEMENTS
EXHIBIT K             FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L             FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M             CUSTODIAL AGREEMENT
EXHIBIT N             FORM OF CAP CONTRACT
</TABLE>

                                       iv

<PAGE>

         POOLING AND SERVICING AGREEMENT, dated as of October 1, 2003, among
MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), LITTON LOAN SERVICING LP, a Delaware limited partnership, as
servicer (the "Servicer") and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
a national banking association, as trustee (the "Trustee").

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. It is intended that for federal
income tax purposes the Trust Fund will include (i) four real estate mortgage
investment conduits (the "Lower Tier REMIC", the "Upper Tier REMIC", the "Upper
Tier Class B REMIC" and the "Upper Tier Class XN REMIC")), (ii) the Cap Contract
and the Cap Contract Account, (iii) the regular interests in the Lower Tier
REMIC, the Upper Tier REMIC, the Upper Tier Class B REMIC and the Upper Tier
Class XN REMIC and (iv) the grantor trusts described in Section 2.07 hereof. The
Lower Tier REMIC will consist of all of the assets constituting the Trust Fund
(other than the assets described in clauses (ii), (iii) and (iv) above) and will
be evidenced by the Lower Tier REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Lower Tier
REMIC) and the Class LTR Interest as the single "residual interest" in the Lower
Tier REMIC. The Trustee will hold the Lower Tier REMIC Regular Interests. The
Upper Tier REMIC will consist of the Lower Tier REMIC Regular Interests and will
be evidenced by the Upper Tier REMIC Regular Interests (which will represent the
"regular interests" in the Upper Tier REMIC) and the Residual Interest as the
single "residual interest" in the Upper Tier REMIC.

         The Upper Tier Class B REMIC will consist of the Class UTB Interest and
will be evidenced by the Upper Tier Class B REMIC Regular Interests (which will
represent the "regular interests" in the Upper Tier Class B REMIC) and the Class
UTBR Interest as the single "residual interest" in the Upper Tier Class B REMIC.
The Upper Tier Class XN REMIC will consist of the Class UTXN Interest and will
be evidenced by the Upper Tier Class XN REMIC Regular Interests (which will
represent the "regular interests" in the Upper Tier Class XN REMIC) and the
Class UTXNR Interest as the single "residual interest" in the Upper Tier Class
XN REMIC.

         The Class R Certificate will represent beneficial ownership of the
Class LTR Interest and the Residual Interest. The Class R-X Certificates will
represent beneficial ownership of the Class UTBR Interest and the Class UTXNR
Interest. The "latest possible maturity date" for federal income tax purposes of
all interests created hereby will be the Latest Possible Maturity Date.

         All covenants and agreements made by the Seller in the Sale Agreement
and by the Depositor and the Trustee herein with respect to the Mortgage Loans
and the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.

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

                                   ARTICLE I
                                  DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

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

<PAGE>

         Accrual Period: With respect to the Certificates (other than the Class
B 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
such Distribution Date. With respect to the Class B Certificates and any
Distribution Date, the calendar month immediately preceding the month in which
such Distribution Date occurs. All calculations of interest on the Certificates
(other than the Class B Certificates) will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a 360 day year. All
calculations of interest on the Class B Certificates will be made on the basis
of a 360-day year consisting of twelve 30-day months.

         Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable.

         Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.

         Advance: The aggregate of the advances required to be made by the
Servicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such advances being equal to the sum of the aggregate of payments
of principal (except with respect to Mortgage Loans secured by a second lien on
real property) and interest (net of the Servicing Fee Rate) on the Mortgage
Loans that were due during the applicable Due Period and not received as of the
close of business on the related Determination Date, less the aggregate amount
of any such Delinquent payments that the Servicer has determined would
constitute a Non-Recoverable Advance were an advance to be made with respect
thereto; provided, however, that with respect to any Mortgage Loan that has been
converted to an REO Property, the obligation to make Advances shall only be to
payments of interest.

         Advance Facility: A financing or other facility as described in Section
10.14(a).

         Advance Facility Notice: As defined in Section 10.14(b).

         Advance Financing Person: As defined in Section 10.14(a).

         Advance Reimbursement Amounts: As defined in Section 10.14(b).

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

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

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

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

                                      -2-
<PAGE>

         Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.

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

         Available Funds Cap: As of any Distribution Date with respect to the
Certificates, a per annum rate equal to 12 times the quotient of (i) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates as of
the related Due Date, divided by (ii) the Aggregate Certificate Principal
Balance as of the first day of the applicable Accrual Period. In the case of the
Class A, Class M and Class R Certificates such rate is to be multiplied by 30
and divided by the actual number of days in the related Accrual Period.

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

         Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each of the Class A-1, Class A-2, Class A-3, Class M-1, Class M-2 and
Class B Certificates constitutes a Class of Book-Entry Certificates.

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

         Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trust and Bear Stearns Financial Products,
Inc. (in the form of Exhibit N hereto).

         Cap Contract Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04(k) in the name of the Trustee
for the benefit of the Trust Fund and designated "Wells Fargo Bank Minnesota,
National Association, as trustee, in trust for registered holders of Terwin
Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-4HE." Funds in the
Cap Contract Account shall be held in trust for the Trust Fund for the uses and
purposes set forth in this Agreement.

         Cap Contract Notional Balance: With respect to any Distribution Date,
the Cap Contract Notional Balance set forth below for such Distribution Date:

                                      -3-
<PAGE>

<TABLE>
<CAPTION>
    BEGINNING                                   NOTIONAL       1ML LOWER       1ML UPPER
     ACCRUAL            ENDING ACCRUAL         BALANCE($)     COLLAR(%)(1)     COLLAR(%)
     -------            --------------         ----------     ------------     ---------
<S>                    <C>                   <C>              <C>              <C>
October 30, 2003       November 25, 2003     236,806,282.72     6.37834        10.00000
November 25, 2003      December 25, 2003     232,989,614.57     6.37887        10.00000
December 25, 2003      January 25, 2004      229,065,290.76     6.37937        10.00000
January 25, 2004       February 25, 2004     225,030,000.18     6.37984        10.00000
February 25, 2004      March 25, 2004        220,881,480.93     6.38029        10.00000
March 25, 2004         April 25, 2004        216,618,618.77     6.38070        10.00000
April 25, 2004         May 25, 2004          212,241,327.88     6.39267        10.00000
May 25, 2004           June 25, 2004         207,751,060.34     6.39295        10.00000
June 25, 2004          July 25, 2004         203,149,870.78     6.39321        10.00000
July 25, 2004          August 25, 2004       198,463,389.78     6.39343        10.00000
August 25, 2004        September 25, 2004    193,826,064.87     6.39363        10.00000
September 25, 2004     October 25, 2004      189,299,345.80     6.39383        10.00000
October 25, 2004       November 25, 2004     184,880,529.96     6.40483        10.00000
November 25, 2004      December 25, 2004     180,567,278.65     6.40499        10.00000
December 25, 2004      January 25, 2005      176,356,710.91     6.40607        10.00000
January 25, 2005       February 25, 2005     172,246,347.02     6.40622        10.00000
February 25, 2005      March 25, 2005        168,233,719.17     6.40637        10.00000
March 25, 2005         April 25, 2005        164,316,446.49     6.40652        10.00000
April 25, 2005         May 25, 2005          160,492,207.51     6.41719        10.00000
May 25, 2005           June 25, 2005         156,758,955.73     6.41730        10.00000
June 25, 2005          July 25, 2005         153,114,255.71     6.41789        10.00000
July 25, 2005          August 25, 2005       149,555,964.76     6.41800        10.00000
August 25, 2005        September 25, 2005    146,081,975.04     6.41811        10.00000
September 25, 2005     October 25, 2005      142,690,240.53     6.54151        10.00000
October 25, 2005       November 25, 2005     139,380,994.18     7.46363        10.00000
November 25, 2005      December 25, 2005     136,165,724.71     7.45903        10.00000
December 25, 2005      January 25, 2006      133,025,958.06     7.45492        10.00000
January 25, 2006       February 25, 2006     129,959,885.45     7.45033        10.00000
February 25, 2006      March 25, 2006        126,965,729.16     7.44576        10.00000
March 25, 2006         April 25, 2006        124,041,762.05     7.48618        10.00000
April 25, 2006         May 25, 2006          121,186,811.31     7.83987        10.00000
May 25, 2006           June 25, 2006         118,402,443.59     7.83356        10.00000
June 25, 2006          July 25, 2006         115,683,126.52     7.82774        10.00000
July 25, 2006          August 25, 2006       113,027,309.23     7.82146        10.00000
August 25, 2006        September 25, 2006    110,433,468.91     7.81519        10.00000
September 25, 2006     October 25, 2006      107,900,125.09     7.85607        10.00000
October 25, 2006       November 25, 2006     105,426,255.74     8.39610        10.00000
November 25, 2006      December 25, 2006     103,015,498.07     8.38920        10.00000
December 25, 2006      January 25, 2007      100,660,746.23     8.38051        10.00000
January 25, 2007       February 25, 2007      98,360,640.84     8.37159        10.00000
February 25, 2007      March 25, 2007         96,113,882.18     8.36269        10.00000
March 25, 2007         April 25, 2007         93,919,204.36     8.39531        10.00000
April 25, 2007         May 25, 2007           91,775,639.22     8.65096        10.00000
May 25, 2007           June 25, 2007          89,683,441.96     8.64560        10.00000
June 25, 2007          July 25, 2007          87,639,659.40     8.63540        10.00000
July 25, 2007          August 25, 2007        85,643,099.98     8.62522        10.00000
August 25, 2007        September 25, 2007     83,692,647.73     8.61506        10.00000
September 25, 2007     October 25, 2007       81,787,213.77     8.60599        10.00000
October 25, 2007       November 25, 2007      79,925,743.70     8.65800        10.00000
November 25, 2007      December 25, 2007      78,107,625.17     8.64827        10.00000
December 25, 2007      January 25, 2008       76,331,397.04     8.64196        10.00000
January 25, 2008       February 25, 2008      74,596,096.47     8.63162        10.00000
February 25, 2008      March 25, 2008         72,900,730.84     8.62130        10.00000
March 25, 2008         April 25, 2008         71,244,360.81     8.61152        10.00000
April 25, 2008         May 25, 2008           69,626,072.81     8.66160        10.00000
May 25, 2008           June 25, 2008          68,045,288.35     8.65109        10.00000
June 25, 2008          July 25, 2008          66,500,799.71     8.64061        10.00000
July 25, 2008          August 25, 2008        64,991,755.39     8.63406        10.00000
August 25, 2008        September 25, 2008     63,517,345.33     8.64605        10.00000
September 25, 2008     October 25, 2008       62,076,909.20     8.67022        10.00000
October 25, 2008       November 25, 2008      60,669,798.01     8.71694        10.00000
November 25, 2008      December 25, 2008      59,295,308.07     8.70599        10.00000
December 25, 2008      January 25, 2009       57,952,256.60     8.69508        10.00000
January 25, 2009       February 25, 2009      56,639,909.47     8.68420        10.00000
February 25, 2009      March 25, 2009         55,357,550.14     8.67576        10.00000
March 25, 2009         April 25, 2009         54,104,489.32     8.67330        10.00000
April 25, 2009         May 25, 2009           52,880,081.80     8.66556        10.00000
May 25, 2009           June 25, 2009          51,683,626.72     8.65475        10.00000
June 25, 2009          July 25, 2009          50,514,457.07     8.64397        10.00000
</TABLE>

                                      -4-
<PAGE>

<TABLE>
<S>                    <C>                    <C>               <C>            <C>
July 25, 2009          August 25, 2009        49,371,938.04     8.63323        10.00000
August 25, 2009        September 25, 2009     48,255,449.98     8.62252        10.00000
September 25, 2009     October 25, 2009       47,164,388.07     8.61194        10.00000
October 25, 2009       November 25, 2009      46,098,162.27     8.60130        10.00000
November 25, 2009      December 25, 2009      45,056,195.72     8.59070        10.00000
December 25, 2009      January 25, 2010       44,037,925.74     8.58013        10.00000
January 25, 2010       February 25, 2010      43,042,803.02     8.56960        10.00000
February 25, 2010      March 25, 2010         42,070,291.31     8.55911        10.00000
March 25, 2010         April 25, 2010         41,119,867.11     8.54865        10.00000
April 25, 2010         May 25, 2010           40,191,019.33     8.53823        10.00000
May 25, 2010           June 25, 2010          39,283,249.01     8.52785        10.00000
June 25, 2010          July 25, 2010          38,396,069.01     8.51750        10.00000
July 25, 2010          August 25, 2010        37,529,003.72     8.50720        10.00000
August 25, 2010        September 25, 2010     36,681,588.81     8.49693        10.00000
September 25, 2010     October 25, 2010       35,853,370.94     8.48670        10.00000
October 25, 2010       November 25, 2010      35,043,907.46     8.48108        10.00000
November 25, 2010      December 25, 2010      34,252,797.37     8.47090        10.00000
December 25, 2010      January 25, 2011       33,479,585.86     8.46075        10.00000
January 25, 2011       February 25, 2011      32,723,860.97     8.45065        10.00000
February 25, 2011      March 25, 2011         31,985,220.49     8.44058        10.00000
March 25, 2011         April 25, 2011         31,263,271.65     8.43056        10.00000
April 25, 2011         May 25, 2011           30,557,630.94     8.42057        10.00000
May 25, 2011           June 25, 2011          29,867,923.90     8.41062        10.00000
June 25, 2011          July 25, 2011          29,193,784.85     8.40072        10.00000
July 25, 2011          August 25, 2011        28,534,856.72     8.39085        10.00000
August 25, 2011        September 25, 2011     27,890,790.82     8.38102        10.00000
September 25, 2011     October 25, 2011       27,261,246.66     8.37124        10.00000
October 25, 2011       November 25, 2011      26,645,891.70     8.36149        10.00000
November 25, 2011      December 25, 2011      26,044,401.26     8.35179        10.00000
December 25, 2011      January 25, 2012       25,456,458.21     8.34212        10.00000
January 25, 2012       February 25, 2012      24,881,752.87     8.33250        10.00000
February 25, 2012      March 25, 2012         24,319,982.79     8.32292        10.00000
March 25, 2012         April 25, 2012         23,770,852.64     8.31338        10.00000
</TABLE>

(1)      With respect to any Distribution Date, if One-Month LIBOR exceeds the
lower collar, the Trust Fund will receive payments pursuant to the Cap Contract.

         Cap Contract Termination Date: The Distribution Date in April 2012.

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

         Certificate Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(e) in the name of the Trustee
for the benefit of the Certificateholders and designated "Wells Fargo Bank
Minnesota, National Association, as trustee, in trust for registered holders of
Terwin Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-4HE." Funds
in the Certificate Account shall be held in trust for the Certificateholders for
the uses and purposes set forth in this Agreement.

         Certificate Notional Balance: As to the Class N Certificates and as of
any Distribution Date, the Initial Certificate Notional Balance of such
Certificate less the sum of all amounts distributed with respect to such
Certificate in reduction of the Certificate Notional Balance thereof on previous
Distribution Dates.

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

         Certificate Principal Balance: As to any Certificate (other than the
Class N and Class X Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (1) all
amounts distributed with respect to such Certificate in reduction of the
Certificate

                                      -5-
<PAGE>

Principal Balance thereof on previous Distribution Dates pursuant to Section
4.04, and (2) any Applied Realized Loss Amounts allocated to such Certificate on
previous Distribution Dates pursuant to Section 4.04(i).

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

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

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

         Class A Certificate Principal Balance: For any date of determination,
the sum of the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class A-3 Certificate Principal Balance, and
the Class R Certificate Principal Balance.

         Class A Certificate: Any Certificate designated as a "Class A-1
Certificate", "Class A-2 Certificate" or "Class A-3 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

         Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (i) 68.00% of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period and (ii) the excess of the Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period over $1,184,031; provided,
however, that in no event will the Class A Principal Distribution Amount with
respect to any Distribution Date exceed the aggregate Certificate Principal
Balance of the Class A and Class R Certificates.

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

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

                                      -6-
<PAGE>

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

         Class A-1 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-1 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A Certificates at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class A-1 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(v), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class A-1 Margin for such
Distribution Date.

         Class A-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.43% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.86% per annum.

         Class A-1 Pass-Through Rate: For the first Distribution Date, 1.55% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

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

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

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

         Class A-2 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-2 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A Certificates at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class A-2 Interest

                                      -7-
<PAGE>

Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(v), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class A-2 Margin for such
Distribution Date.

         Class A-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.20% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.40% per annum.

         Class A-2 Pass-Through Rate: For the first Distribution Date, 1.32% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

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

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

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

         Class A-3 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-3
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-3 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-3 Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (B) the amount of interest payable on the Class
A Certificates at the Available Funds Cap, up to but not exceeding the Weighted
Maximum Rate Cap for such Distribution Date and (2) the Class A-3 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(v), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class A-3 Margin for such
Distribution Date.

         Class A-3 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.43% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.86% per annum.

         Class A-3 Pass-Through Rate: For the first Distribution Date, 1.55% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-3 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

                                      -8-
<PAGE>

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

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

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

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

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

         Class B Pass-Through Rate: As of any Distribution Date, the least of
(1) 6.50% per annum, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class B Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M-1 Certificate Principal Balance and the Class M-2 Certificate Principal
Balance have been reduced to zero and a Trigger Event exists, or as long as a
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance (after taking into account distributions of
the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date) and
(D) the Class B Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 96.10% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over $1,184,031; provided,
however, that on any Distribution Date prior to the Stepdown Date on which the
Class A Certificate Principal Balance, the Class M-1 Certificate Principal
Balance and the Class M-2 Certificate Principal Balance have been reduced to
zero, the Class B Principal Distribution Amount for such Distribution Date will
equal 100% of the Principal Distribution Amount remaining after any
distributions on such Class A, Class M-1 and Class M-2 Certificates; and
provided further, however, that in no event will the Class B Principal
Distribution Amount with respect to any Distribution Date exceed the Certificate
Principal Balance of the Class B Certificates.

         Class B Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class B Applied Realized Loss Amounts on all
previous Distribution Dates.

                                      -9-
<PAGE>

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

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

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

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

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

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

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

         Class LTX Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to the excess of (i) the
aggregate principal balances of the Mortgage Loans over (ii) the aggregate
principal balances of the Lower Tier REMIC Marker Classes and an interest rate
equal to the Net Rate. The Class LTX Interest shall also be entitled to all
payments received in respect of Prepayment Penalties on the Mortgage Loans and
all amounts payable by the Servicer in respect of Prepayment Penalties under the
Agreement.

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

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

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

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

                                      -10-
<PAGE>

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

         Class M-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.75% per annum and, as of any
Distribution Date after the Optional Termination Date, 1.125% per annum.

         Class M-1 Pass-Through Rate: For the first Distribution Date, 1.87% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

         Class M-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance has been reduced to zero and a Trigger Event exists, or as
long as a Trigger Event does not exist, the excess of (1) the sum of (A) the
Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date) and (B)
the Class M-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 79.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances for the Mortgage
Loans as of the end of the immediately preceding Due Period over $1,184,031.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A Certificates has been reduced to zero, the Class M-1 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-1 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A Certificates and (II)
in no event will the Class M-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-1 Certificate Principal Balance.

         Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-1 Applied Realized Loss Amounts on all
previous Distribution Dates.

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

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

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

         Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the Current Interest and Interest
Carryforward Amount portions of any previous distributions on such Class that
are recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class M-

                                      -11-
<PAGE>

2 Certificates. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the
Accrual Period in which such Distribution Date occurs.

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

         Class M-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 1.75% per annum and, as of any
Distribution Date after the Optional Termination Date, 2.625% per annum.

         Class M-2 Pass-Through Rate: For the first Distribution Date, 2.87% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Maximum Rate Cap and (3) the
Available Funds Cap for such Distribution Date.

         Class M-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance and the Class M-1 Certificate Principal Balance have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date) and (C) the Class M-2
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 89.00% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period over $1,184,031. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A Certificates and the Class M-1
Certificates has been reduced to zero, the Class M-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A and Class M-1
Certificates and (II) in no event will the Class M-2 Principal Distribution
Amount with respect to any Distribution Date exceed the Class M-2 Certificate
Principal Balance.

         Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of all
distributions in reduction of the Class M-2 Applied Realized Loss Amounts on all
previous Distribution Dates.

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

         Class N Certificate Notional Balance: As of any date of determination,
the aggregate Certificate Notional Balance of the Class N Certificates.

         Class N Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class N Distributable Interest
Rate on the Class N Certificate Notional Balance, plus the interest portion of
any previous distributions on such Class that is recovered as a voidable
preference by a trustee in bankruptcy.

                                      -12-
<PAGE>

         Class N Distributable Interest Rate: For any Distribution Date, 8.50%
per annum.

         Class N Interest Carryforward Amount: As of any Distribution Date, the
excess of (A) the Class N Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class N Certificates with
respect to interest on such prior Distribution Dates.

         Class R Certificate: The Class R Certificate executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.

         Class R-X Certificate: The Class R-X Certificate executed by the
Trustee and authenticated by the Trustee in substantially the form set forth in
Exhibit A.

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

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

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

         Class R Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.43% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.86% per annum.

         Class R Pass-Through Rate: For the first Distribution Date, 1.55% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Weighted Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class UTA-1 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class A-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.55%.

         Class UTA-2 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class A-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.32%.

         Class UTA-3 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at

                                      -13-
<PAGE>

the lesser of (i) One-Month LIBOR plus the Class A-3 Margin and (ii) the Net
Rate. For the first Distribution Date, the percentage described in clause (i) of
the preceding sentence will equal 1.55%.

         Class UTB Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
6.50% and (ii) the Net Rate.

         Class UTB-B Interest: An uncertificated regular interest in the Upper
Tier Class B REMIC that is entitled to all payments received on the Class UTB
Interest.

         Class UTBR Interest: The sole class of "residual interest" in the Upper
Tier Class B REMIC.

         Class UTM-1 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class M-1 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 1.87%.

         Class UTM-2 Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
One-Month LIBOR plus the Class M-2 Margin and (ii) the Net Rate. For the first
Distribution Date, the percentage described in clause (i) of the preceding
sentence will equal 2.87%.

         Class UTXN Interest: An uncertificated regular interest in the Upper
Tier REMIC with an initial principal balance equal to the excess of the
principal balance of the Mortgage Loans over the aggregate Certificate Principal
Balance of the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class B Certificates, Class M-1 Certificates, Class M-2
Certificates and Class R Certificates and bearing interest on a notional amount
equal to the aggregate of the outstanding principal balance of the Lower Tier
REMIC Regular Interests as of the beginning of the related Accrual Period at a
rate equal to the Class UTXN Interest Rate. The Class UTXN Interest will also be
treated as entitled to all payments received on the Class LTX Interest in
respect of Prepayment Penalties on the Mortgage Loans and all amounts payable by
the Servicer in respect of Prepayment Penalties pursuant to this Agreement. The
Class UTXN Interest will not include any obligation to make any payments in
respect of the interest rate cap contracts described in Section 2.07.

         Class UTXN Interest Rate: The excess, if any, of (a) the weighted
average of the interest rates on the Lower Tier REMIC Regular Interests over (b)
two times the weighted average of the interest rates on the Lower Tier REMIC
Regular Interests (treating for purposes of this clause (b) the interest rate on
each of the Lower Tier REMIC Marker Classes as being capped at the interest rate
on the Corresponding Upper Tier REMIC Interest (after multiplying the rates on
each of the Class UTA-1 Interest, the Class UTA-2 Interest, the Class UTA-3
Interest, the Class UTM-1 Interest, the Class UTM-2 Interest and the Residual
Interest by a fraction, the numerator of which is the number of actual days in
the related Accrual Period and the denominator of which is 30) and treating the
Class LTX Interest as being capped at zero). The averages described in the
preceding sentence shall be weighted on the basis of the respective principal
balances of the Lower Tier REMIC Regular Interests immediately prior to any date
of determination.

         Class UTXNR Interest: The sole class of "residual interest in the Upper
Tier Class XN REMIC.

         Class X Certificates: The Class X Certificates executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.

                                      -14-
<PAGE>

         Class X Distributable Amount: The excess of (x) the sum of (i) the
initial Overcollateralization Amount, (ii) all payments accrued on the Class XN
Interest, including all prepayment charges in respect of the Mortgage Loans and
all amounts payable by the Servicer in respect of prepayment charges pursuant to
the Agreement, and (iii) all payments received on the Cap Contract over (y) the
sum of (i) all prior distributions to the Class X and Class N Certificates and
(ii) all payments treated as (x) distributed by the Upper Tier REMIC to the
Class UTXN Interest, (y) distributed by the Upper Tier Class XN REMIC to the
Class XN Interest and then (z) paid to the holders of the Offered Certificates
pursuant to an interest rate cap contract as described in Section 2.07.

         Class XN Interest: An uncertificated regular interest in the Upper Tier
Class XN REMIC that is entitled to all payments received on the Class UTXN
Interest.

         Closing Date: October 30, 2003.

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

         Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Litton Loan
Servicing LP, in trust for registered holders of Terwin Mortgage Trust,
Asset-Backed Certificates, Series TMTS 2003-4HE". Funds in the Collection
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.

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

         Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.

         Corresponding Upper Tier REMIC Interests: With respect to the Class
LTA-1 Interest, the Class UTA-1 Interest and the Residual Interest. With respect
to the Class LTA-2 Interest, the Class UTA-2 Interest. With respect to the Class
LTA-3 Interest, the Class UTA-3 Interest. With respect to the Class LTM-1
Interest, the Class UTM-1 Interest. With respect to the Class LTM-2 Interest,
the Class UTM-2 Interest. With respect to the Class LTB Interest, the Class UTB
Interest.

         Custodian: Deutsche Bank National Trust Company or any successor
thereto.

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

         Cut-off Date: October 1, 2003.

         Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal

                                      -15-
<PAGE>

Prepayments received prior to the Cut-off Date, but without giving effect to any
installments of principal received in respect of Due Dates on and after the
Cut-off Date.

         Definitive Certificates: As defined in Section 5.06.

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

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

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

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

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

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

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

         Designated Transaction: For Certificates transferred on or after August
23, 2000, a transaction in which the assets underlying the Certificates consist
of single-family residential, multi-family residential, home equity,
manufactured housing and/or commercial mortgage obligations that are secured by
single-family residential, multi-family residential, commercial real property or
leasehold interests therein.

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

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

                                      -16-
<PAGE>

         Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in November 2003.

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

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

         Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or P-1 by Moody's, or (iii) an account or accounts the deposits
in which are fully insured by the FDIC, or (iv) an account or accounts,
acceptable to each Rating Agency without reduction or withdrawal of the rating
of any Class of Certificates, as evidenced in writing, by a depository
institution in which such accounts are insured by the FDIC (to the limit
established by the FDIC), the uninsured deposits in which accounts are otherwise
secured such that, as evidenced by an Opinion of Counsel delivered to and
acceptable to the Trustee, the NIMs Insurer and each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account and a
perfected first security interest against any collateral (which shall be limited
to Permitted Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution with which such
account is maintained, or (v) maintained at an eligible institution whose
commercial paper, short-term debt or other short-term deposits are rated at
least A-1+ by S&P and P-1+ by Moody's, or (vi) maintained with a federal or
state chartered depository institution the deposits in which are insured by the
FDIC to the applicable limits and the short-term unsecured debt obligations of
which (or, in the case of a depository institution that is a subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated A-1 by S&P or Prime-1 by Moody's at the time any deposits are
held on deposit therein, or (vii) otherwise acceptable to each Rating Agency, as
evidenced by a letter from each Rating Agency to the Trustee and the NIMs
Insurer.

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

         ERISA Restricted Certificates: The Class N Certificates, Class X
Certificates, Class R-X Certificate and Class R Certificate and any other
Certificate, unless such other Certificate shall have received a rating from a
Rating Agency at the time of a transfer of such other Certificate that is in one
of the three (or in the case of Designated Transactions, four) highest generic
rating categories.

         Event of Default: As defined in Section 7.01 hereof.

         Excess Interest: On any Distribution Date, all amounts received by any
of the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class R Certificate, Class M-1 Certificates, Class M-2 Certificates and Class B
Certificates attributable to Pass-Through Rates on such Certificates to the
extent that such Pass-Through Rates are in excess of the Net Rate.

         Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or

                                      -17-
<PAGE>

advanced to Certificateholders (and not reimbursed to the Servicer) up to the
Due Date in the month in which such Liquidation Proceeds are required to be
distributed on the unpaid principal balance of such Liquidated Loan outstanding
during each Due Period as to which such interest was not paid or advanced.

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

         Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $4,617,723 over (B) the Pool Stated Principal Balance of the Mortgage Loans
as of such Distribution Date and (2) on and after the Stepdown Date, (A) the sum
of (i) the Aggregate Certificate Principal Balance immediately preceding such
Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (ii) the greater of (a) 3.90% of the Pool Stated Principal
Balance of the Mortgage Loans and (b) $1,184,031 less (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date; provided,
however, that if on any Distribution Date a Trigger Event is in effect, the
Extra Principal Distribution Amount will not be reduced to the applicable
percentage of the then-current Pool Stated Principal Balance of the Mortgage
Loans (and will remain fixed at the applicable percentage of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Due Date immediately
prior to the Trigger Event) until the next Distribution Date on which the
Trigger Event is not in effect.

         Fannie Mae: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.

         Federal Funds Rate: The interest rate at which depository institutions
lend balances at the Federal Reserve to other depository institutions overnight.

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

         Final Servicing Transfer Date: The date on which the servicing rights
with respect to all of the Mortgage Loans have been transferred to the Servicer,
which is expected to be on or about December 1, 2003.

         Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.

         Floating Rate Certificate Carryover: For each of the Class A-1, Class
A-2, Class A-3, Class M-1, Class M-2, Class B and Class R Certificates, as of
any Distribution Date, the sum of (1) if on such Distribution Date the
Pass-Through Rate for the such Class is based upon the Available Funds Cap, the
excess of (x) the amount of interest such Class would otherwise be entitled to
receive on such Distribution Date had such rate been calculated as (I) in the
case of the Class A-1, Class A-2, Class A-3, Class M-1 and Class M-2
Certificates, the sum of One-Month LIBOR and the applicable Margin for such
Distribution Date, up to the Weighted Maximum Rate Cap and (II) in the case of
the Class B Certificates, the lesser or 6.50% or the Weighted Maximum Rate Cap,
over (y) the amount of interest payable on the Class at the Available Funds Cap,
up to but not exceeding the Weighted Maximum Rate Cap for such Distribution Date
and (2) the Floating Rate Certificate Carryover for all previous Distribution
Dates not previously paid pursuant to Section 4.04(f)(v), together with (X)
interest thereon at a rate equal to (I) in the case of the Class A-1, Class A-2,
Class A-3, Class M-1 and Class M-2 Certificates, One-Month LIBOR and the
applicable Margin for such Distribution Date, and (II) in the case of the Class
B Certificates, 6.50% and (Y) any amount previously distributed with respect to
Floating Rate Certificate Carryover for such Class that is recovered as a
voidable preference by a trustee in bankruptcy which has not previously been
reversed by a distribution pursuant to Section 4.04(f)(v).

                                      -18-
<PAGE>

         Freddie Mac: A corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.

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

         Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.

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

         Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.

         Initial Certificate Notional Balance: With respect to the Class N
Certificates, the Certificate Notional Balance of such Certificates on the
Closing Date as set forth in Section 5.01 hereof.

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

         Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.

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

         Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.

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

         Interest Carryforward Amount: Any of the Class A-1 Interest
Carryforward Amount, the Class A-2 Interest Carryforward Amount, the Class A-3
Interest Carryforward Amount, the Class R Interest Carryforward Amount, the
Class M-1 Interest Carryforward Amount, the Class M-2 Interest Carryforward
Amount, the Class B Interest Carryforward Amount, or the Class N Interest
Carryforward Amount, as the case may be.

         Interest Determination Date: With respect to the Certificates (other
than the Class B Certificates), (i) for any Accrual Period other than the first
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period and (ii) for the first Accrual Period, October 28, 2003.

         Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee and the Trustee

                                      -19-
<PAGE>

Fee, (2) all Advances relating to interest with respect to the Mortgage Loans,
(3) all Compensating Interest with respect to the Mortgage Loans, (4)
Liquidation Proceeds with respect to the Mortgage Loans (to the extent such
Liquidation Proceeds relate to interest) collected during the related Prepayment
Period and (5) proceeds of any purchase pursuant to Sections 2.02, 2.03 or 9.01
(to the extent such proceeds relate to interest) less (A) all Non-Recoverable
Advances relating to interest and (B) other amounts reimbursable to the Servicer
and the Trustee pursuant to this Agreement.

         Interim Servicers: Greenpoint Mortgage Funding, Inc. and Finance
America, LLC.

         Interim Servicing Agreements: The agreements pursuant to which the
Interim Servicers will service the Mortgage Loans prior to the transfer of
servicing to the Servicer on the related Servicing Transfer Date, a list of
which is included as Exhibit J.

         Interim Servicing Period: With respect to any Mortgage Loan, the period
beginning on the Closing Date and ending on the related Servicing Transfer Date.

         Latest Possible Maturity Date: The first Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.

         Lender: As defined in Section 10.14(a).

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

         Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.

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

         Litton: Litton Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.

         Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property and (Y) the sales
price of the related Mortgaged Property at the time of origination.

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

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

                                      -20-
<PAGE>

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

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

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

         LPMI: Lender Paid Mortgage Insurance.

         LPMI Loan: A Mortgage Loan covered by an LPMI Policy, as set forth in
the Mortgage Loan Schedule or otherwise identified to the Servicer in writing.

         LPMI Policy: A policy of primary mortgage insurance issued by a LPMI
insurer pursuant to which the related premium is to be paid from payments of
interest made by the Mortgagor.

         Margin: Any of the Class A-1 Margin, Class A-2 Margin, Class A-3
Margin, the Class M-1 Margin, the Class M-2 Margin and the Class R Margin.

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note and with respect to each Fixed Rate Mortgage Loan, the rate of interest set
forth in the related Mortgage Note.

         Maximum Net Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the maximum rate of interest set forth as such in the related
Mortgage Note and with respect to each Fixed Rate Mortgage Loan, the rate of
interest set forth in the related Mortgage Note, minus, in each case, (i) the
Servicing Fee Rate (determined as though the Servicing Transfer Date had
occurred for each Mortgage Loan), (ii) the Trustee Fee Rate and (iii) the
premium rate on any related LPMI Policy.

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

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

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

         MIN: The loan number for any MERS Loan.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.

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

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

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

                                      -21-
<PAGE>

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

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

         Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund; provided that the
Servicer shall have no obligation to service any Mortgage Loan unless it is
transferred to the Servicer on a Servicing Transfer Date.

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

         (i)      the loan number;

         (ii)     borrower name and/or address;

         (iii)    the unpaid principal balance of the Mortgage Loans;

         (iv)     the Initial Mortgage Rate;

         (v)      the maturity date and the months remaining before maturity
                  date;

         (vi)     the original principal balance;

         (vii)    the Cut-off Date Principal Balance;

         (viii)   the first payment date of the Mortgage Loan;

         (ix)     the Loan-to-Value Ratio at origination with respect to a first
                  lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
                  respect to a second lien Mortgage Loan;

         (x)      a code indicating whether the residential dwelling at the time
                  of origination was represented to be owner-occupied;

         (xi)     a code indicating the property type;

         (xii)    with respect to each Adjustable Rate Mortgage Loan;

                  (a)      the frequency of each Adjustment Date;

                  (b)      the next Adjustment Date;

                                      -22-
<PAGE>

                  (c)      the Maximum Mortgage Rate;

                  (d)      the Minimum Mortgage Rate;

                  (e)      the Mortgage Rate as of the Cut-off Date;

                  (f)      the related Periodic Rate Cap;

                  (g)      the Gross Margin;

         (xiii)   location of the related Mortgaged Property;

         (xiv)    a code indicating whether a prepayment penalty is applicable
                  and, if so, the term of such prepayment penalty;

         (xv)     a code indicating whether a Mortgage Loan is subject to a LPMI
                  Policy or a PMI Policy and the issuer of such policy; and

         (xvi)    the Credit Score and date obtained.

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

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

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

         Mortgaged Property: The underlying property securing a Mortgage Loan.

         Mortgagor: The obligor on a Mortgage Note.

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

         Net Rate: With respect to any Distribution Date, a per annum rate equal
to 12 times the weighted average Net Mortgage Rate on the Mortgage Loans (as
determined by treating the Servicing Fee Rate with respect to each Mortgage Loan
as to which the Servicing Transfer Date has not occurred as 0.500% per annum).
In the case of the Class UTA-1 Interest, the Class UTA-2 Interest, the Class
UTA-3 Interest, the Class UTM-1 Interest, the Class UTM-2 Interest, the Residual
Interest and the Class XN Interest (and the Related Certificates with respect to
each such interest), this rate is multiplied by 30 and divided by the actual
number of days in the related Accrual Period.

         NIM Notes:  Any notes issued under an Indenture.

         NIMs Insurer: Any insurer that is guaranteeing certain payments under a
series of guaranteed NIM Notes.

         NIMs Insurer Default: A default by a NIMs Insurer as such default is
defined in the Indenture.

         Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current

                                      -23-
<PAGE>

delinquency, would not, be ultimately recoverable by the Servicer from the
related Mortgagor, related Liquidation Proceeds or otherwise related to the
Mortgage Loans.

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

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

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

         Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.

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

                  (i)      If on such Interest Determination Date two or more
                           Reference Banks provide such offered quotations,
                           One-Month LIBOR for the related Accrual Period shall
                           be the arithmetic mean of such offered quotations
                           (rounded upwards if necessary to the nearest whole
                           multiple of 0.03125%).

                  (ii)     If on such Interest Determination Date fewer than two
                           Reference Banks provide such offered quotations,
                           One-Month LIBOR for the related Accrual Period shall
                           be the higher of (i) One-Month LIBOR as determined on
                           the previous Interest Determination Date and (ii) the
                           Reserve Interest Rate.

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

                                      -24-
<PAGE>

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

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

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

         Optional Termination Price: (1) in the case of an Optional Termination
effected by the Servicer, as of any Distribution Date on or after the Optional
Termination Date, an amount equal to the sum of (A) aggregate Outstanding
Principal Balance of the Certificates, plus accrued interest thereon and (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances and
Trustee Fees (including any costs and expenses incurred in connection with the
Optional Terminations), (2) in the case of an Optional Termination effected by
the NIMs Insurer, an amount equal to the greater of (A) aggregate Outstanding
Principal Balance of the Offered Certificates, plus accrued interest thereon,
any unreimbursed out-of-pocket costs and expenses owed to the Trustee (including
any costs and expenses incurred in connection with the Optional Termination) or
the Servicer and any unreimbursed Servicing Fees, Advances, Servicing Advances
and Trustee Fees and (B) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), accrued interest thereon at the
applicable Mortgage Rate, the appraised value of any REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Depositor and the NIMs
Insurer and any unreimbursed out-of-pocket costs and expenses owed to the
Servicer and the Trustee and any unreimbursed Servicing Fees, Advances,
Servicing Advances and Trustee Fees.

         OTS: The Office of Thrift Supervision.

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

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

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

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

         Pass-Through Rate: With respect to the Class A-1 Certificates, the
Class A-1 Pass-Through Rate; with respect to the Class A-2 Certificates, the
Class A-2 Pass-Through Rate, with respect to the Class A-3 Certificates, the
Class A-3 Pass-Through Rate with respect to the Class M-1 Certificates, the
Class M-1 Pass-Through Rate; with respect to the Class M-2 Certificates, the
Class M-2 Pass-Through Rate, with

                                      -25-
<PAGE>

respect to the Class B Certificates, the Class B Pass-Through Rate and with
respect to the Class R Certificate, the Class R Pass-Through Rate.

         Percentage Interest: With respect to:

                           (i)      any Class, the percentage interest in the
                                    undivided beneficial ownership interest
                                    evidenced by such Class which shall be equal
                                    to the Class Certificate Principal Balance
                                    of such Class divided by the Class Principal
                                    Balance of all Classes; and

                           (ii)     any Certificate, the Percentage Interest
                                    evidenced thereby of the related Class shall
                                    equal the percentage obtained by dividing
                                    the Denomination of such Certificate by the
                                    aggregate of the Denominations of all
                                    Certificates of such Class; except that in
                                    the case of any Class P Certificates, the
                                    Percentage Interest with respect to such
                                    Certificate shown on the face of such
                                    Certificate.

         Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.

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

                           (i)      holding Mortgage Loans transferred from the
                                    Depositor and other assets of the Trust
                                    Fund, including the Cap Contract and any
                                    credit enhancement and passive derivative
                                    financial instruments that pertain to
                                    beneficial interests issued or sold to
                                    parties other than the Depositor, its
                                    Affiliates, or its agents;

                           (ii)     issuing Certificates and other interests in
                                    the assets of the Trust Fund;

                           (iii)    receiving collections on the Mortgage Loans
                                    and the Cap Contract and making payments on
                                    such Certificates and interests in
                                    accordance with the terms of this Agreement;
                                    and

                           (iv)     engaging in other activities that are
                                    necessary or incidental to accomplish these
                                    limited purposes, which activities cannot be
                                    contrary to the status of the Trust Fund as
                                    a qualified special purpose entity under
                                    existing accounting literature.

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

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

                           (ii)     general obligations of or obligations
                                    guaranteed by any state of the United States
                                    or the District of Columbia receiving the
                                    highest long-term debt rating of each Rating
                                    Agency rating the Certificates;

                           (iii)    commercial or finance company paper, other
                                    than commercial or finance company paper
                                    issued by the Depositor, the Trustee or any
                                    of its

                                      -26-
<PAGE>

                                    Affiliates, which is then receiving the
                                    highest commercial or finance company paper
                                    rating of each such Rating Agency;

                           (iv)     certificates of deposit, demand or time
                                    deposits, or bankers' acceptances (other
                                    than banker's acceptances issued by the
                                    Trustee or any of its Affiliates) issued by
                                    any depository institution or trust company
                                    incorporated under the laws of the United
                                    States or of any state thereof and subject
                                    to supervision and examination by federal
                                    and/or state banking authorities, provided
                                    that the commercial paper and/or long term
                                    unsecured debt obligations of such
                                    depository institution or trust company are
                                    then rated one of the two highest long-term
                                    and the highest short-term ratings of each
                                    such Rating Agency for such securities;

                           (v)      demand or time deposits or certificates of
                                    deposit issued by any bank or trust company
                                    or savings institution to the extent that
                                    such deposits are fully insured by the FDIC;

                           (vi)     guaranteed reinvestment agreements issued by
                                    any bank, insurance company or other
                                    corporation rated in the two highest
                                    long-term or the highest short-term ratings
                                    of each Rating Agency containing, at the
                                    time of the issuance of such agreements,
                                    such terms and conditions as will not result
                                    in the downgrading or withdrawal of the
                                    rating then assigned to the Certificates by
                                    any such Rating Agency as evidenced by a
                                    letter from each Rating Agency;

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

                           (viii)   securities (other than stripped bonds,
                                    stripped coupons or instruments sold at a
                                    purchase price in excess of 115% of the face
                                    amount thereof) bearing interest or sold at
                                    a discount issued by any corporation, other
                                    than the Trustee or any of its Affiliates,
                                    incorporated under the laws of the United
                                    States or any state thereof which, at the
                                    time of such investment, have one of the two
                                    highest long term ratings of each Rating
                                    Agency;

                           (ix)     interests in any money market fund
                                    (including those managed or advised by the
                                    Trustee or its affiliates) which at the date
                                    of acquisition of the interests in such fund
                                    and throughout the time such interests are
                                    held in such fund has the highest applicable
                                    long term rating by each such Rating Agency;
                                    and

                           (x)      short term investment funds sponsored by any
                                    trust company or national banking
                                    association incorporated under the laws of
                                    the United States or any state thereof,
                                    other than the Trustee or any of its
                                    Affiliates, which on the date of acquisition
                                    has been rated by each such Rating Agency in
                                    their respective highest applicable rating
                                    category;

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is

                                      -27-
<PAGE>

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

         Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of
the United States, a corporation or partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States or any State
thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.

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

         PMI Policy: A policy of primary mortgage insurance pursuant to which
the related premium is to be paid by the Mortgagor.

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

         Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.

                                      -28-
<PAGE>

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

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

         Prepayment Period: As to any Distribution Date, the period beginning
with the opening of business on the first day of the calendar month preceding
the month in which such Distribution Date occurs and ending on the close of
business on the last day of such month.

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

         Principal Funds: With respect to the Mortgage Loans and any
Distribution Date, the sum, without duplication, of (1) the scheduled principal
due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date,
(2) prepayments collected in the related Prepayment Period, (3) the Stated
Principal Balance of each Mortgage Loan that was purchased by the Depositor or
the Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) and (6) all other collections and
recoveries in respect of principal during the related Prepayment Period less (A)
all Non-Recoverable Advances relating to principal with respect to the Mortgage
Loans and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and that was not included in the Interest Funds with
respect to the Distribution Date.

         Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.

         Proportionate Holder: A Person that beneficially owns pro rata shares
of the Class N and Class X Certificates.

         Prospectus Supplement: The Prospectus Supplement dated October 28, 2003
relating to the public offering of the Class A-1, Class A-2, Class A-3, Class R,
Class M-1, Class M-2 and Class B Certificates.

         PUD: A Planned Unit Development.

                                      -29-
<PAGE>

         Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or the applicable Transferor, pursuant to Section 2.02
or 2.03 hereof or purchased by the Servicer pursuant to Section 3.12(c) hereof,
an amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan as of the date of such purchase together with any unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be distributed
to Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to such
Mortgage Loan of any predatory or abusive lending law.

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

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

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

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

         Regular Certificate: Any one of the Class A-1, Class A-2, Class A-3,
Class M-1, Class M-2 and Class B Certificates.

         Related Certificates: With respect to the Class UTA-1 Interest, the
Class A-1 Certificates. With respect to the Class UTA-2 Interest, the Class A-2
Certificates. With respect to the Class UTA-3 Interest, the Class A-3
Certificates. With respect to the Class UTB Interest, the Class B Certificates.
With respect to the Class UTM-1 Interest, the Class M-1 Certificates. With
respect to the Class UTM-2 Interest, the Class M-2 Certificates.

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

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

                                      -30-
<PAGE>

         REMIC Regular Interests: (i) the rights under each of the Certificates
(other than the Class N Certificates, the Class X Certificates and the Class R
Certificate) other than the rights in interest rate cap contracts described in
Section 2.07, and (ii) the uncertificated Class XN Interest.

         REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.

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

         Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.

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

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

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

<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN              REQUIRED LOSS PERCENTAGE
------------------------------              ------------------------
<S>                                    <C>
November 2006 - October 2007           3.00% with respect to November
                                       2006, plus an additional 1/12th
                                       of 0.75% for each month thereafter
</TABLE>

                                      -31-

<PAGE>

<TABLE>
<S>                                    <C>
November 2007 -  October 2008          4.20% with respect to November
                                       2007, plus an additional 1/12th
                                       of 0.60% for each month thereafter

November 2008 - October 2009           4.80% with respect to November
                                       2008, plus an additional 1/12th
                                       of 0.90% for each month thereafter

November 2009 and thereafter           6.00%
</TABLE>

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

         Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.

         Residual Interest: An interest in the Upper Tier REMIC that is entitled
to all distributions on the Class R Certificate other than (i) distributions in
respect of the Class LTR Interest and (ii) all interest distributions on the
Class R Certificate to the extent attributable to an interest rate on the Class
R Certificate that exceeds the Net Rate.

         Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

         Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.

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

         Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated
as of October 1, 2003 between the Depositor and the Seller.

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.

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

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

                                      -32-

<PAGE>

         Seller: Terwin Advisors LLC, a Delaware limited liability company, or
its successor in interest.

         Servicer: Litton Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.

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

         Servicer's Assignee: As defined in Section 10.14(b).

         Servicer Remittance Date: With respect to any Distribution Date, the
second Business Day immediately preceding such Distribution Date.

         Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, N.A. as
the representative of certain lenders.

         Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property and (4) compliance with the
obligations under Section 3.10 and (5) to rebate any points or fees that are to
be reimbursed to a Mortgagor due to a Principal Prepayment; provided that the
Servicer shall not be required to make any such Servicing Advance with respect
to any Mortgage Loan secured by a second lien on real property.

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

         Servicing Fee Rate: As to any Mortgage Loan, 0.00% per annum prior to
the Servicing Transfer Date for such Mortgage Loan and 0.5000% per annum
following the Servicing Transfer Date for such Mortgage Loan.

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

         Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans properly
and effectively.

         Servicing Transfer Date: With respect to each Mortgage Loan, the date
on which the servicing rights are transferred to the Servicer.

                                      -33-

<PAGE>

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

         SPV: As defined in Section 10.14(a).

         Startup Date: As defined in Section 2.07 hereof.

         Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Advance Date prior to
such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

         Stepdown Date: The later to occur of (1) the Distribution Date in
November 2006 or (2) the first Distribution Date on which (A) the Class A
Certificate Principal Balance (reduced by the Principal Funds with respect to
such Distribution Date) is less than or equal to (B) 68.00% of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date.

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

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

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

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

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

         Transfer Agreement: Any document pursuant to which the Seller acquired
any Mortgage Loan from the originator of such Mortgage Loan.

         Transferor: Any originator of a Mortgage Loan.

         Trigger Event: With respect to the Certificates after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
(regardless of whether such Mortgage Loans are in bankruptcy or foreclosure or
are REO Properties) measured on a rolling three month basis and (B) the Stated
Principal Balance of the Mortgage Loans as of the last day of the preceding
calendar month, equals or exceeds the product of (i) 37.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.

                                      -34-

<PAGE>

         Trust Fund: The corpus of the trust (the "Terwin Mortgage Trust, Series
TMTS 2003-4HE") created hereunder consisting of (i) the Mortgage Loans and all
interest and principal received on or with respect thereto on and after the
Cut-off Date to the extent not applied in computing the Cut-off Date Principal
Balance thereof, exclusive of interest not required to be deposited in the
Collection Account; (ii) the Collection Account and the Certificate Account and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property; and (vi) the Cap Contract and Cap Contract
Account.

         Trustee: Wells Fargo Bank Minnesota, National Association, a national
banking association, not in its individual capacity, but solely in its capacity
as trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time be
serving as successor trustee hereunder.

         Trustee Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of one-twelfth of the Trustee Fee Rate and the
Stated Principal Balance of such Mortgage Loan.

         Trustee Fee Rate: 0.0125% per annum.

         United States Person: (i) A citizen or resident of the United States,
(ii) a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.

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

         Upper Tier Class B REMIC Interests: Each of the Class UTB-B Interest
and the Class UTBR Interest.

         Upper Tier Class B REMIC Regular Interest: The Class UTB-B Interest.

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

         Upper Tier Class XN REMIC Interests: Each of the Class XN Interest and
the Class UTXNR Interest.

         Upper Tier Class XN REMIC Regular Interest: The Class XN Interest.

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

         Upper Tier REMIC Interests: Each of the Class UTA-1 Interest, Class
UTA-2 Interest, Class UTA-3 Interest, the Class UTM-1 Interest, the Class UTM-2
Interest, the Class UTB Interest, the Class UTXN Interest and the Residual
Interest.

                                      -35-

<PAGE>

         Upper Tier REMIC Regular Interests: Each of the Upper Tier REMIC
Interests other than the Residual Interest.

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

         Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Offered Certificates, 5% to the Class N and Class
X Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.

         Weighted Maximum Rate Cap: As of any Distribution Date, a rate equal to
the weighted average of the Maximum Net Mortgage Rates on the Mortgage Loans
(calculated based upon the Stated Principal Balance of such Mortgage Loans as of
the preceding Distribution Date) on such Distribution Date.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.01 Conveyance of Mortgage Loans

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

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

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

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

                                      -36-

<PAGE>

                  (C)      In the case of each Mortgage Loan that is not a MERS
         Loan, the original Assignment of each Mortgage, to "Wells Fargo Bank
         Minnesota, National Association, as trustee."

                  (D)      The original policy of title insurance (or a
         preliminary title report, commitment or binder if the original title
         insurance policy has not been received from the title insurance
         company).

                  (E)      Originals of any intervening assignments of the
         Mortgage, with evidence of recording thereon or, if the original
         intervening assignment has not yet been returned from the recording
         office, a copy of such assignment certified to be a true copy of the
         original of the assignment which has been sent for recording in the
         appropriate jurisdiction in which the Mortgaged Property is located.

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

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

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

         The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans serviced
by the Servicer and not delivered to the Trustee are and shall be held in trust
by the Servicer for the benefit of the Trustee as the owner thereof and the
Servicer's possession of the contents of each Mortgage File so retained is for
the sole purpose of servicing the related Mortgage Loan, and such retention and
possession by the Servicer is in a custodial capacity only. Mortgage documents
relating to the Mortgage Loans serviced by an Interim Servicer and not delivered
to the Trustee are and shall be held in trust by the applicable Interim
Servicers prior to the related Servicing Transfer Date and thereafter by the
Servicer, for the benefit of the Trustee as the owner thereof, and the
applicable Intermin Servicer's or Servicer's, as applicable, possession of the
contents of each Mortgage File so retained is for the sole purpose of servicing
the related Mortgage Loan, and such retention and possession by the applicable
Interim Servicer or Servicer, as applicable, is in a custodial capacity only.
The Depositor agrees to take no action inconsistent with the Trustee's ownership
of the Mortgage Loans, to promptly

                                      -37-

<PAGE>

indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.

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

         In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and interests under
the Sale Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto.

         The parties hereto agree that the Custodian shall hold the Mortgage
Files on behalf of the Trustee.

         SECTION 2.02 Acceptance by Trustee of the Mortgage Loans.

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

         The Trustee agrees, for the benefit of Certificateholders and the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify based solely upon a certification
provided by the Custodian, within 70 days of the Closing Date, to the NIMs
Insurer, the Depositor and the Servicer that all documents required by Section
2.01 have been executed and

                                      -38-

<PAGE>

received, and that such documents relate to the Mortgage Loans identified in
Exhibit B-1 that have been conveyed to it. If the Trustee, based solely upon the
certification provided by the Custodian, finds any document or documents
constituting a part of a Mortgage File to be missing or defective (that is,
mutilated, damaged, defaced or unexecuted) in any material respect, the Trustee
shall promptly (and in any event within no more than five Business Days) after
such finding so notify the Servicer, the Seller, the Depositor and the NIMs
Insurer. In addition, the Trustee shall also notify the Servicer, the Seller,
the Depositor and the NIMs Insurer, if the original Mortgage with evidence of
recording thereon with respect to a Mortgage Loan is not received within 70 days
of the Closing Date; if it has not been received because of a delay caused by
the public recording office where such Mortgage has been delivered for
recordation, the Depositor shall deliver or cause to be delivered to the Trustee
written notice stating that such Mortgage has been delivered to the appropriate
public recording office for recordation and thereafter the Depositor shall
deliver or cause to be delivered such Mortgage with evidence of recording
thereon upon receipt thereof from the public recording office. The Trustee shall
request that the Seller correct or cure such omission, defect or other
irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 2.03(c), within 90 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Seller of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Trustee prior to the related Servicing
Transfer Date, and thereafter to the Servicer and deposited by the Trustee or
the Servicer, as applicable, in the Collection Account promptly upon receipt,
and, upon receipt by the Trustee of written notification of such deposit signed
by a Servicing Officer, the Trustee, upon receipt of a Request for Release,
shall promptly release to the Seller the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment, without
recourse, as shall be necessary to vest in the Seller or its designee, as the
case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such Mortgage Loan. It is
understood and agreed that the obligation of the Seller to purchase, cure or
substitute any Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to the Trustee on behalf of Certificateholders and
the NIMs Insurer. The preceding sentence shall not, however, limit any remedies
available to the Certificateholders, the Depositor, the Trustee or the NIMs
Insurer pursuant to the Sale Agreement and any Transfer Agreement. The Trustee
shall be under no duty or obligation to inspect, review and examine such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, recordable or appropriate to the represented purpose, or
that they have actually been recorded, or that they are other than what they
purport to be on their face. The Trustee shall keep confidential the name of
each Mortgagor and the Trustee shall not solicit any such Mortgagor for the
purpose of refinancing the related Mortgage Loan. It is understood and agreed
that all rights and benefits relating to the solicitation of any Mortgagors and
the attendant rights, title and interest in and to the list of Mortgagors and
data relating to their Mortgages shall be retained by the Servicer.

         Within 70 days of the Closing Date, the Trustee shall deliver. based
solely upon a certification delivered to the Trustee by the Custodian, to the
Depositor, the Servicer and the NIMs Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.

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

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

                                      -39-

<PAGE>

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

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

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

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

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

         (b) The representations and warranties of each Transferor with respect
to the related Mortgage Loans in the applicable Transfer Agreement, which have
been assigned to the Trustee hereunder, were made as of the date specified in
the applicable Transfer Agreement (or underlying agreement, if such Transfer
Agreement is in the form of an assignment of a prior agreement). To the extent
that any fact,

                                      -40-

<PAGE>

condition or event with respect to a Mortgage Loan constitutes a breach of both
(i) a representation or warranty of the applicable Transferor under the
applicable Transfer Agreement and (ii) a representation or warranty of the
Seller under the Sale Agreement, the Trustee shall enforce the obligations of
the Seller under the Sale Agreement and to the extent the Seller does not
fulfill its contracted obligations then the Trustee shall enforce the
obligations of the applicable Transferor under any applicable representation or
warranty made by it. The Trustee further acknowledges that the Depositor shall
have no obligation or liability with respect to any breach of any representation
or warranty with respect to the Mortgage Loans under any circumstances.

         (c) Upon discovery by any of the Depositor, the Servicer, the NIMs
Insurer, or the Trustee of a breach of any of such representations and
warranties that adversely and materially affects the value of the related
Mortgage Loan, prepayment charges or the interests of the Certificateholders,
the party discovering such breach shall give prompt written notice to the other
parties. Within 90 days of the discovery of a breach of any representation or
warranty given to the Trustee by the Depositor, any Transferor, the Seller and
assigned to the Trustee, the Depositor, such Transferor or the Seller, as
applicable, shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Trustee at the Purchase Price or (c) within the two year period following
the Closing Date, substitute a Replacement Mortgage Loan for the affected
Mortgage Loan. In the event of discovery of a breach of any representation and
warranty of any Transferor or the Depositor, the Trustee shall enforce its
rights under the applicable Transfer Agreement and the Sale Agreement for the
benefit of Certificateholders and the NIMs Insurer. If a breach of the
representations and warranties set forth in the Transfer Agreement hereof exists
solely due to the unenforceability of a prepayment charge, the Trustee shall
notify the NIMs Insurer and the Servicer thereof and not seek to enforce the
repurchase remedy provided for herein unless directed in writing to do so by the
NIMs Insurer or the Servicer. In the event of a breach of the representations
and warranties with respect to the Mortgage Loans set forth in a Transfer
Agreement, the Trustee shall at the request of the NIMs Insurer enforce the
right of the Trust Fund and the NIMs Insurer to be indemnified for such breach
of representation and warranty. In the event that such breach relates solely to
the unenforceability of a prepayment charge, amounts received in respect of such
indemnity up to the amount of such prepayment charge shall be distributed
pursuant to Section 4.04(g). As provided in the Sale Agreement, if the
Transferor substitutes for a Mortgage Loan for which there is a breach of any
representations and warranties in the related Transfer Agreement which adversely
and materially affects the value of such Mortgage Loan and such substitute
mortgage loan is not a Replacement Mortgage Loan, under the terms of the Sale
Agreement, the Seller will, in exchange for such substitute Mortgage Loan, (i)
provide the applicable Purchase Price for the affected Mortgage Loan or (ii)
within two years of the Closing Date, substitute such affected Mortgage Loan
with a Replacement Mortgage Loan. Any such substitution shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit I and shall not be effected unless it is
within two years of the Startup Date. The Seller indemnifies and holds the Trust
Fund, the Trustee, the Depositor, the Servicer, the NIMs Insurer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Depositor,
the Servicer, the NIMs Insurer and any Certificateholder may sustain in
connection with any actions of the Seller relating to a repurchase of a Mortgage
Loan other than in compliance with the terms of this Section 2.03 and the Sale
Agreement, to the extent that any such action causes (i) any federal or state
tax to be imposed on the Trust Fund or any REMIC provided for herein, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860(d)(1) of the Code, or (ii) any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificate is outstanding. In
furtherance of the foregoing, if the Transferor or the Seller, as applicable, is
not a member of MERS and repurchases a Mortgage Loan which is registered on the
MERS System, the Transferor or the Seller, as applicable, at its own expense and
without any right of reimbursement, shall cause MERS to

                                      -41-

<PAGE>

execute and deliver an assignment of the Mortgage in recordable form to transfer
the Mortgage from MERS to the Transferor or the Seller, as applicable, and shall
cause such Mortgage to be removed from registration on the MERS System in
accordance with MERS' rules and regulations.

         With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement, by the Seller pursuant to the Sale Agreement or by any
Transferor pursuant to the applicable Transfer Agreement, the principal portion
of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Collection Account pursuant to Section 3.05. The Trustee,
upon receipt of the full amount of the Purchase Price for a Deleted Mortgage
Loan, or upon receipt of the Mortgage File for a Replacement Mortgage Loan
substituted for a Deleted Mortgage Loan, shall release or cause to be released
and reassign to the Depositor, the Seller or the applicable Transferor, as
applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Trustee, and the Trustee shall not have any further
responsibility with respect to the Mortgage File relating to such Deleted
Mortgage Loan.

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

         For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Seller to the
Servicer for deposit into the Collection Account on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.

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

                                      -42-

<PAGE>

         The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMs Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMs Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.

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

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

         SECTION 2.04. Representations and Warranties of the Servicer.

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

         (a) The Servicer is a duly organized limited partnership and is validly
existing and in good standing under the laws of the state of its formation and
is duly authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Servicer in any state in which a
Mortgaged Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its ability
to enforce each Mortgage Loan, to service the Mortgage Loans in accordance with
the terms of this Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.

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

         (c) The execution and delivery of this Agreement by the Servicer, the
servicing of the Mortgage Loans under this Agreement, the consummation of any
other of the transactions contemplated by this Agreement, and the fulfillment of
or compliance with the terms hereof are in the ordinary course of business of
the Servicer and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Servicer or (B) materially conflict
with, result in a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or instrument
to which the Servicer is a party or by which it may be bound, or (C) constitute
a material

                                      -43-

<PAGE>

violation of any statute, order or regulation applicable to the Servicer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not in breach or violation
of any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it which
breach or violation may materially impair the Servicer's ability to perform or
meet any of its obligations under this Agreement.

         (d) The Servicer is an approved servicer of mortgage loans for Fannie
Mae and is an approved seller of seasoned mortgage loans and servicer of all
types of mortgage loans for Freddie Mac.

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

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

         (g) The Servicer has fully furnished and will fully furnish (for the
period it serviced the Mortgage Loans), in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company on a monthly basis.

         SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages".

         Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.

         SECTION 2.06. Authentication and Delivery of Certificates.

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

                                      -44-

<PAGE>

         SECTION 2.07. REMIC Elections.

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

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

         The Lower Tier REMIC shall consist of all of the assets of the Trust
Fund other than (i) the interests issued by the Lower Tier REMIC, the interests
issued by the Upper Tier Class B REMIC, the interests issued by the Upper Tier
Class XN REMIC and the interests issued by the Upper Tier REMIC, (ii) the Cap
Contract and Cap Contract Account and (iii) the grantor trusts described in
Section 2.07 hereof. The Lower Tier REMIC shall issue the Class LTA-1 Interest,
Class LTA-2 Interest, Class LTA-3 Interest, Class LTB Interest, Class LTM-1
Interest, Class LTM-2 Interest and Class LTX Interest which shall be designated
as regular interests of such REMIC and shall issue the Class LTR Interest that
shall be designated as the sole class of residual interest in the Lower Tier
REMIC. Each of the Lower Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.

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

         The assets of the Upper Tier Class B REMIC shall be the Class UTB
Interest. The Upper Tier Class B REMIC Regular Interest shall be designated as
the regular interest in the Upper Tier Class B REMIC and the Class UTBR Interest
shall be designated as the sole class of residual interest in the Upper Tier
Class B REMIC.

         The assets of the Upper Tier Class XN REMIC shall be the Class UTXN
Interest. The Upper Tier Class XN REMIC Regular Interest shall be designated as
the regular interest in the Upper Tier Class XN REMIC and the Class UTXNR
Interest shall be designated as the sole class of residual interest in the Upper
Tier Class XN REMIC.

         The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest. The beneficial ownership of
the Class UTBR Interest and the Class UTXNR Interest shall be represented by the
Class R-X Certificate. Neither the Class UTBR Interest nor the Class UTXNR
Interest shall have a principal balance or bear interest.

         (c) The "tax matters person" with respect to the Lower Tier REMIC and
the Upper Tier REMIC for purposes of the REMIC Provisions shall be the
beneficial owner of the Class R Certificate; provided, however, that the Holder
of a Class R Certificate, by its acceptance thereof, irrevocably appoints the
Trustee as its agent and attorney-in-fact to act as "tax matters person" with
respect to each such REMIC

                                      -45-

<PAGE>

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

         (d) It is intended that the rights of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates and Class B Certificates to receive
payments in respect of Excess Interest shall be treated as rights in interest
rate cap contracts written in favor of the holders of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class R
Certificate, Class M-1 Certificates, Class M-2 Certificates and Class B
Certificates by the grantor trust or partnership described below, and such shall
be accounted for as property held separate and apart from the regular interests
in the Upper Tier REMIC or the Upper Tier Class B REMIC, as the case may be,
held by the holders of the Class A-1 Certificates, Class A-2 Certificates, Class
A-3 Certificates, M-1 Certificates, Class M-2 Certificates and Class B
Certificates and the residual interest in the Upper Tier REMIC held by the
holder of the Class R Certificate. This provision is intended to satisfy the
requirements of Treasury Regulations Section 1.860G-2(i) for the treatment of
property rights coupled with REMIC interests to be separately respected and
shall be interpreted consistently with such regulation. On each Distribution
Date, to the extent that any of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class R Certificate, M-1 Certificates,
Class M-2 Certificates and Class B Certificates receive payments of Excess
Interest, such amounts, to the extent not derived from payments received on the
Cap Contract, will be treated as (x) distributed by the Upper-Tier REMIC on the
uncertificated Class UTXN Interest, (y) distributed by the Upper Tier Class XN
REMIC on the uncertificated Class XN Interest and then (z) paid to the relevant
Class of Certificates pursuant to the related interest rate cap contract.

         (e) For federal income tax purposes, the Class N and Class X
Certificates shall represent beneficial ownership of a grantor trust under
subpart E, Part I of subchapter J of the Code or, as described in this Section
2.07(e), a partnership that holds the uncertificated Class XN Interest, the Cap
Contract and the Cap Contract Account and is treated as obligated to make
payments in respect of the interest rate cap contracts described in this Section
2.07. If the Class N and Class X Certificates are beneficially owned by more
than one Person, and such Persons do not hold both the Class N and Class X
Certificates proportionately, then each such Person shall be treated as owning
an interest in a partnership that owns the Class XN Interest, the Cap Contract
and the Cap Contract Account and is treated as obligated to make payments in
respect of the interest rate cap agreements described in this Section 2.07. If
the Class X and Class N Certificates are not treated as interests in a
partnership for federal income tax purposes, then the Trustee shall treat the
portion of the Trust Fund that includes the uncertificated Class XN Interest,
the Cap Contract and the Cap Contract Account as a grantor trust under subpart
E, Part I of subchapter J of the Code that is beneficially owned by the holder
of the Class N and Class X Certificates. The Trustee shall (i) file all required
tax and information returns with respect to the ownership of the Class XN
Interest, the Cap Contract and the Cap Contract Account (including partnership
returns if the Class N and Class X Certificates are beneficially owned by more
than one Person and such Persons do not hold both the Class N and Class X
Certificates proportionately), (ii) furnish or cause to be furnished to the
holders of the

                                      -46-

<PAGE>

Class N and Class X Certificates information regarding their allocable share, if
any, of the income with respect to the Class XN Interest, the Cap Contract and
the Cap Contract Account, (iii) file or cause to be filed with the Internal
Revenue Service Form 1041 (together with any necessary attachments) and such
other forms as may be applicable with respect to the grantor trust described
herein and (iv) comply with such information reporting obligations as may apply
with respect to payments deemed to be in respect of the interest rate cap
contracts described in this Section 2.07.

         (f) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans received from the Mortgage Loans shall be paid to the
Lower Tier REMIC Regular Interests until the principal balance of all such
interests have been reduced to zero and any losses allocated to such interests
have been reimbursed. Any excess amounts shall be distributed to the Class LTR
Interest. On each Distribution Date, an amount equal to 50% of the increase in
the Overcollateralization Amount shall be payable as a reduction of the
principal amounts of the Lower Tier REMIC Marker Classes (with such amount
allocated among the Lower Tier REMIC Marker Classes so that each Lower Tier
REMIC Marker Class will have its principal reduced by an amount equal to 50% of
any increase in the Overcollateralization Amount that results in a reduction in
the principal balance of its Corresponding Upper Tier REMIC Interests) and will
be accrued and added to the principal balance of the Class LTX Interest. All
payments of scheduled principal and prepayments of principal on the Mortgage
Loans shall be allocated 50% to the Class LTX Interest and 50% to the Lower Tier
REMIC Marker Classes (with principal payments allocated to each of the Lower
Tier REMIC Marker Classes in an amount equal to 50% of the principal amounts
distributed to the Corresponding Upper Tier REMIC Interests in reduction of
their principal amounts). Notwithstanding the preceding sentence, an amount
equal to the principal payments that result in a reduction in the
Overcollateralization Amount shall be treated as payable entirely to the Class
LTX Interest. Realized Losses (other than Realized Losses that do not decrease
the Overcollateralization Amount and are not allocated to the Certificates)
shall be applied to the Lower Tier REMIC Marker Classes and the Class LTX
Interest so that after all distributions have been made on each Distribution
Date (i) the principal balance of each of the Lower Tier REMIC Marker Classes is
equal to 50% of the principal balance of the Corresponding Upper Tier REMIC
Interests and (ii) the principal balance of the Class LTX Interest is equal to
the sum of (x) 50% of the aggregate Stated Principal Balance of the Mortgage
Loans and (y) 50% of the Overcollateralization Amount. Each Lower Tier REMIC
Marker Class shall be entitled to receive an amount equal to 50% of all amounts
distributed to the Corresponding Upper Tier REMIC Interest in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.

         All payments of scheduled principal and prepayments on the Mortgage
Loans, and Realized Losses on the Mortgage Loans, shall be allocated among the
Upper Tier REMIC Regular Interests in the same manner as such payments or
Realized Losses are allocated to the Related Certificates (treating the Class N
Certificates and Class X Certificates as Related Certificates with respect to
the Class UTXN Interest). Each Upper Tier REMIC Regular Interest shall be
entitled to receive all amounts distributed to the Related Certificates in
respect of unreimbursed amounts of Realized Losses (treating the Class N
Certificates and the Class X Certificates as Related Certificates with respect
to the Class UTXN Interest).

         For all payments on and allocations of Realized Losses to the Class UTB
Interest by the Upper Tier REMIC, there shall be a corresponding payment on or
allocation of Realized Losses to the Class UTB-B Interest by the Upper Tier
Class B REMIC. For all payments on and allocations of Realized Losses to the
Class UTXN Interest by the Upper Tier REMIC (including deemed payments as
described in Section 2.07(d)), there shall be a corresponding payment on or
allocation of Realized Losses to the Class XN Interest by the Upper Tier Class
XN REMIC.

                                      -47-

<PAGE>

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the NIMs Insurer, the
Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of the Class R Certificate or the Class R-X Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Class R Certificate or Class R-X on which the Servicer has
relied. The foregoing shall not be deemed to limit or restrict the rights and
remedies of the Holder of such Class R Certificate or Class R-X Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Servicer have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than arising out of a negligent performance by the Servicer
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIMs Insurer and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of the Class R Certificate or the Class R-X Certificate, as applicable,
nor for any such Losses resulting from misinformation provided by the Holder of
such Class R Certificate or Class R-X Certificate on which the Trustee has
relied. The foregoing shall not be deemed to limit or restrict the rights and
remedies of the Holder of such Class R Certificate or Class R-X Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than arising out of a negligent performance by the Trustee
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).

         SECTION 2.08. Covenants of the Servicer.

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

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

         (b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Trustee
or the NIMs Insurer, any affiliate of the Depositor, the Trustee or the NIMs
Insurer and prepared by the Servicer pursuant to this Agreement will be
inaccurate in any material respect, provided, however, that the Servicer shall
not be responsible for inaccurate information provided to it by third parties.

         SECTION 2.09. Cap Contract. The Trustee acknowledges receipt of the Cap
Contract (a form of which is attached hereto), the Sale Agreement and each
Transfer Agreement.

         SECTION 2.10. Permitted Activities of the Trust. The Trust is created
for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby

                                      -48-

<PAGE>

authorized and directed to execute and deliver on behalf of the Trust, and to
perform the duties and obligations of the Trustee under, the Cap Contract, an
insurance and indemnity agreement with a NIMs Insurer and any other agreement or
instrument related thereto, in each case in such form as the Depositor shall
direct or shall approve, the execution and delivery of any such agreement by the
Depositor to be conclusive evidence of its approval thereof.

         SECTION 2.11. Qualifying Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Trust Fund shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.10 of
this Agreement shall be limited in accordance with paragraph 35 or SFAS 140.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         SECTION 3.01. Servicer to Service Mortgage Loans.

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

                                      -49-

<PAGE>

         In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. Except with respect to any second lien Mortgage Loan,
to the extent that a Mortgage does not provide for escrow payments (i) the
Servicer shall determine whether any such payments are made by the Mortgagor in
a manner and at a time that is necessary to avoid the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien and (ii)
ensure that all insurance required to be maintained on the Mortgaged Property
pursuant to this Agreement is maintained. Except with respect to any second lien
Mortgage Loan, if any such payment has not been made and the Servicer receives
notice of a tax lien with respect to the Mortgage Loan being imposed, the
Servicer will, to the extent required to avoid loss of the Mortgaged Property,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property. All costs incurred by the Servicer, if any, in effecting the
timely payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not, for the purposes of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.

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

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

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

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

         (a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
subservicing agreement. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the Servicer shall remain obligated
and liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such

                                      -50-

<PAGE>

subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. Every
subservicing agreement entered into by the Servicer shall contain a provision
giving any successor servicer the option to terminate such agreement with the
consent of the NIMs Insurer in the event a successor servicer is appointed. All
actions of the each subservicer performed pursuant to the related subservicing
agreement shall be performed as an agent of the Servicer with the same force and
effect as if performed directly by the Servicer. The Servicer shall deliver to
the NIMs Insurer and the Trustee copies of all subservicing agreements.

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

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

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

         SECTION 3.04. Trustee to Act as Servicer.

         Subject to Sections 6.04 and 7.02, in the event that the Servicer shall
for any reason no longer be the Servicer hereunder (including by reason of an
Event of Default), the Trustee or successor servicer, if applicable, shall,
within a period of time not to exceed ninety (90) days from the date of notice
of termination or resignation, thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Servicer pursuant to Section
3.10 hereof or any acts or omissions of such predecessor Servicer hereunder,
(ii) obligated to make Advances or Servicing Advance if it is prohibited from
doing so by applicable law, (iii) obligated to effectuate repurchases or
substitutions of Mortgage Loans hereunder, including pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for any expenses of the Servicer pursuant to
Section 2.03 or (v) deemed to have made any representations and warranties
hereunder, including pursuant to Section 2.04 or the first paragraph of Section
6.02 hereof; provided, however that the Trustee (subject to clause (ii) above)
or its designee, in its capacity as the successor servicer, shall immediately
assume the terminated or resigning Servicer's obligation to make Advances and
Servicing Advances. No such termination shall affect any obligation of the
Servicer to pay amounts owed under this Agreement and to perform its duties
under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any costs or expenses, including
without limitation Servicing Transfer Costs incurred by the Trustee in
connection with this Section 3.04, are not paid by the Servicer pursuant to this
Agreement within 30 days of the date of the Trustee's invoice thereof, such
amounts shall be payable out of the Certificate Account; provided that the
terminated Servicer shall reimburse the Trust Fund for any such expense incurred
by the Trust Fund upon receipt of a reasonably detailed invoice evidencing such
expenses. If the Trustee is unwilling or unable to act as servicer, or if the
NIMs Insurer so directs the Trustee, the Trustee shall seek to appoint a
successor servicer that is eligible in accordance with the criteria specified
this Agreement and reasonably acceptable to the NIMs Insurer.

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<PAGE>

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

In the event that the Servicer shall for any reason no longer be able to be the
Servicer hereunder, notwithstanding anything to the contrary above, the Trustee
and the Depositor hereby agree that within 10 Business Days of delivery to the
Trustee by the Servicing Rights Pledgee of a letter signed by the Servicer
whereby the Servicer shall resign as Servicer under this Agreement, the
Servicing Rights Pledgee or its designee shall be appointed as successor
Servicer (provided that at the time of such appointment the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer set
forth above) and the Servicing Rights Pledgee agrees to be subject to the terms
of this Agreement. Notwithstanding anything in this Agreement to the contrary,
the NIMs Insurer shall not have any right to approve the Servicing Rights Pledge
or its designee as successor Servicer or to consent to the appointment of the
Servicing Rights Pledgee or its designee as successor Servicer.

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

         (a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any penalty
interest, or (ii) subject to Section 3.01 hereof, extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the
NIMs Insurer's prior written consent shall be required for any modification,
waiver or amendment since the Cut-off Date if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans as of the Cut-Off Date. In the event of any
such arrangement pursuant to clause (ii) above, subject to Section 4.01, the
Servicer shall make any Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangements.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01. The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of Section 3.01 shall be reflected in writing in the Mortgage File.

         (b) The Servicer will not waive any Prepayment Penalty or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to

                                      -52-

<PAGE>

collect the Prepayment Penalty, or (iv) in the Servicer's reasonable judgment as
described in Section 3.01 hereof, (x) such waiver relates to a default or a
reasonably foreseeable default, (y) such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Penalty and related
Mortgage Loan and (z) doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a Prepayment Penalty in connection with
a refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default). Except as provided in the preceding sentence, in no event
will the Servicer waive a Prepayment Penalty in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If the Servicer waives or does not collect all or a portion of a
Prepayment Penalty relating to a Principal Prepayment in full due to any action
or omission of the Servicer, other than as provided above, the Servicer shall
deposit the amount of such Prepayment Penalty (or such portion thereof as had
been waived for deposit) into the Collection Account for distribution in
accordance with the terms of this Agreement.

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

         (d) The Servicer shall establish and initially maintain, on behalf of
the Certificateholders, the Collection Account. The Servicer shall deposit into
the Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:

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

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

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

                  (iv)     all Compensating Interest;

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

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

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

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

                  (ix)     all Prepayment Penalties; and

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

                                      -53-

<PAGE>

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

         The Servicer shall give notice to the NIMs Insurer and the Trustee of
the location of the Collection Account maintained by it when established and
prior to any change thereof. Not later than twenty days after each Distribution
Date, the Servicer shall forward to the NIMs Insurer and, upon request, to the
Trustee and the Depositor the most current available bank statement for the
Collection Account. Copies of such statement shall be provided by the Trustee to
any Certificateholder and to any Person identified to the Trustee as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.

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

                  (i)      the aggregate amount withdrawn by the Servicer from
         the Collection Account and required to be deposited in the Certificate
         Account;

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

                  (iii)    the Optional Termination Amount paid by the Servicer
         or the NIMs Insurer pursuant to Section 9.01.

         Any amounts received by the Trustee prior to 3:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer shall be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and deposit by the Servicer into the Certificate
Account shall be exclusive. In the event that the Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
All funds deposited in the Certificate Account shall be held by the Trustee in
trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur liability for withdrawals from the Certificate Account at the
direction of the Servicer. The Trustee shall give notice to the NIMs Insurer and
the Servicer of the location of the Certificate Account maintained by it when
established and prior to any change thereof.

         (f) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the

                                      -54-

<PAGE>

Business Day preceding the related Servicer Remittance Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
Collection Account or is otherwise immediately available, then such Permitted
Investment shall mature not later than the Servicer Remittance Date) and (ii) in
the case of the Certificate Account, the Business Day immediately preceding the
first Distribution Date that follows the date of such investment (except that if
such Permitted Investment is an obligation of the institution that maintains
such Certificate Account or is otherwise immediately available, then such
Permitted Investment shall mature not later than such Distribution Date) and, in
each case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Servicer or the Trustee,
as applicable, for the benefit of the Certificateholders. All income and gain
net of any losses realized from amounts on deposit in the Collection Account
shall be for the benefit of the Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any losses incurred in
the Collection Account in respect of any such investments shall be deposited by
the Servicer in the Collection Account out of the Servicer's own funds
immediately as realized. All income and gain net of any losses realized from
amounts on deposit in the Certificate Account shall be for the benefit of the
Trustee and shall be remitted to or withdrawn by it monthly as provided herein.
The amount of any losses incurred in the Certificate Account in respect of any
such investments shall be deposited by the Trustee, in the Certificate Account
out of the Trustee's own funds immediately as realized.

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

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

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

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

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

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

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

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

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

                  (iii)    to reimburse the Servicer for (x) any Non-Recoverable
         Advance previously made and, (y) any Non-Recoverable Servicing Advances
         to the extent such Non-Recoverable Servicing Advances would constitute
         "unanticipated expenses" within the meaning of Treasury Regulation
         Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for
         herein;

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

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

                  (vi)     to pay the Servicer any unpaid Servicing Fees and to
         reimburse it for any unreimbursed Servicing Advances, the Servicer's
         right to reimbursement of Servicing Advances pursuant to this subclause
         (vi) with respect to any Mortgage Loan being limited to amounts
         received on particular Mortgage Loan(s)(including, for this purpose,
         Liquidation Proceeds and purchase and repurchase proceeds) that
         represent late recoveries of the payments for which such advances were
         made pursuant to Section 3.01 or Section 3.06;

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

                  (viii)   to reimburse the Servicer or the Depositor for
         expenses incurred by any of them in connection with the Mortgage Loans
         or Certificates and reimbursable pursuant to Section 3.25 or Section
         6.03 hereof;

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

                  (x)      to make payments with respect to premiums for LPMI
         Policies;

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

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<PAGE>

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

         In addition, no later than 2:00 p.m. New York City Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided,
however, if the Trustee does not receive such Interest Funds and Principal
Funds by 4:00 p.m. New York City Time, such Interest Funds and Principal Funds
shall be deposited in the Certificate Account by 1:00 p.m. New York City Time
on the next Business Day. The Servicer shall pay to the Trustee on funds
deposited by it after 2:00 p.m. New York City time at a rate equal to the
Federal Funds Rate for each day or part therof past such time of deposit.

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

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

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

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

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

                  (ii)     to clear and terminate the Certificate Account upon
         termination of the Agreement pursuant to Section 9.01 hereof;

                  (iii)    to reimburse the Trustee for fees pursuant to Section
         8.05 hereof, and expenses and indemnification reimbursable pursuant to
         Section 8.06 hereof; and

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

         SECTION 3.09. Servicing Transfer Dates.

         The Interim Servicers will service the Mortgage Loans pursuant to the
terms of the Interim Servicing Agreements during the related Interim Servicing
Period. The Servicer shall not be obligated to perform any duties or
responsibilities under this Agreement with respect to any Mortgage Loan until
the servicing rights to such Mortgage Loan have been transferred to the Servicer
on the related Servicing Transfer Date. The Servicer shall not be liable for any
actions or inactions of any prior servicer of a Mortgage Loan prior to the
related Servicing Transfer Date nor shall any action or inaction by a prior
servicer be deemed an Event of Default with respect to the Servicer. The
Servicer shall confirm that the Mortgage Loans on the Mortgage Loan Schedule
have been transferred for servicing to the Servicer and

                                      -57-

<PAGE>

shall notify the Depositor and the Trustee promptly following the completion of
such transfer on the Final Servicing Transfer Date.

         SECTION 3.10. Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained, for each Mortgage Loan,
hazard insurance with extended coverage in an amount that is at least equal to
the lesser of (i) the replacement value of the improvements that are part of
such Mortgaged Property and (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the related Mortgagor and/or mortgagee
from becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Servicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent and as otherwise permitted by Section
3.08 hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser of
(i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged Property,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.

         In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.

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

         When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer

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<PAGE>

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

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

         SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.

         (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii)

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that such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Collection Account pursuant to Section 3.08 hereof). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property, as
contemplated in Section 3.08 hereof. If the Servicer has knowledge that a
Mortgaged Property that the Servicer is contemplating acquiring in foreclosure
or by deed-in-lieu of foreclosure is located within a one-mile radius of any
site with environmental or hazardous waste risks known to the Servicer, the
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with Accepted Servicing Practices.

         With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee or its nominee. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or an affiliate may receive usual and customary real estate referral
fees for real estate brokers in connection with the listing and disposition of
REO Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Collection
Account no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

         In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, request, in accordance with
applicable procedures for obtaining an automatic extension of the grace period,
more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee and the NIMs Insurer shall have been supplied with an Opinion of Counsel
(such Opinion of Counsel not to be an expense of the Trustee or the NIMs
Insurer) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period or extension will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund or any of
the REMICs provided for herein as defined in section 860F of the Code or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding, in which case the Trust Fund may continue
to hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the Trust
Fund or any REMIC provided for herein to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged under section
860G(c) of the Code or otherwise, unless the Servicer or the Depositor has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.

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

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

         The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and then to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.

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

         (c) The Servicer, in its sole discretion, shall have the right to elect
(by written notice sent to the Trustee) to purchase for its own account from the
Trust Fund any Mortgage Loan that is 91 days or more Delinquent at a price equal
to the Purchase Price. The Purchase Price for any Mortgage Loan purchased
hereunder shall be delivered to the Trustee for deposit to the Certificate
Account and the Trustee, upon receipt of such confirmation of deposit and a
Request for Release from the Servicer in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, as shall be necessary to vest in
the Servicer any Mortgage Loan released pursuant hereto and the Servicer shall
succeed to all the Trustee's right, title and interest in and to such Mortgage
Loan and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The Servicer shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.

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

         Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its designee
shall promptly release the related Mortgage File to the Servicer, and the
Servicer is authorized to cause the removal from the

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registration on the MERS System of any such Mortgage if applicable, and the
Trustee or its designee shall at the Servicer's written direction execute and
deliver to the Servicer the request for reconveyance, deed of reconveyance or
release or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Servicer, together with the Mortgage Note
with written evidence of cancellation thereon. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account, the Certificate Account or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose,
collection under any policy of flood insurance, any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee or its designee shall, upon delivery
to the Trustee or its designee of a Request for Release in the form of Exhibit I
signed by a Servicing Officer, release the Mortgage File to the Servicer.
Subject to the further limitations set forth below, the Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee or its
designee when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account, in which case the Trustee or its designee shall deliver the
Request for Release to the Servicer.

         Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages respectively caused by
it.

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

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

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

         SECTION 3.15. Servicing Compensation.

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

         Additional servicing compensation in the form of any Excess Proceeds,
late payment fees, assumption fees (i.e. fees related to the assumption of a
Mortgage Loan upon the purchase of the related Mortgaged Property) and similar
fees payable by the Mortgagor, and all income and gain net of any losses
realized from Permitted Investments in the Collection Account shall be retained
by the Servicer to the extent not required to be deposited in the Collection
Account pursuant to Sections 3.05, or 3.12(a) hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.10 hereof and maintenance of the other forms of insurance
coverage required by Section 3.10 hereof) and shall not be entitled to
reimbursement therefor except as specifically provided in Sections 3.08 and 3.12
hereof.

         SECTION 3.16. Access to Certain Documentation.

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

         SECTION 3.17. Annual Statement as to Compliance.

         Pursuant to this Agreement, the Servicer shall deliver to the
Depositor, the Trustee and the NIMs Insurer on or before February 28 of each
year beginning in 2004, (or such other date that the Depositor gives the
Servicer at least 30 days prior notice of) in order to remain in compliance with
the Section 302 Requirements, an Officer's Certificate stating, as to each
signatory thereof, that (i) a review of the

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<PAGE>

activities of the Servicer during the preceding calendar year and of performance
under this Agreement or a similar agreement has been made under such officer's
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. The Trustee shall forward a copy of each such
statement received by it to each Rating Agency. Copies of such statement shall
be provided by the Trustee to any Certificateholder upon written request at the
Certificateholder's expense, provided such statement has been delivered by the
Servicer to the Trustee.

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

         On or before March 1 of each year, beginning in 2004 or such other date
in order to remain in compliance with the Section 302 Requirements, the Servicer
at its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee, the NIMs Insurer and the
Depositor. Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. In addition, at the
NIMs Insurer's written request, the Servicer shall deliver copies of evidence of
the Servicer's fidelity bond or errors and omissions insurance coverage to the
NIMs Insurer.

         SECTION 3.19. Rights of the NIMs Insurer. Each of the rights of the
NIMs Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIMs Insurer is owed amounts
in respect of its guarantee of payment on such notes.

         SECTION 3.20. Periodic Filings.

         (a) As part of the Form 10-K required to be filed pursuant to the terms
of this Agreement, the Trustee shall include the accountants report required
pursuant to Section 3.18 as well as the Officer's Certificate delivered by the
Servicer pursuant to Section 3.17 relating to the Servicer's performance of its
obligations under this Agreement.

         (b) The Trustee shall prepare for filing, and execute (other than the
Form 10-Ks and the Certification), on behalf of the Trust Fund, and file with
the Securities and Exchange Commission, (i) within 15 days after each
Distribution Date in each month, each Monthly Statement on Form 8-K under the
Exchange Act executed by the Trustee, (ii) on or before March 31 of each year
beginning in 2004 or such other date in order to remain in compliance with the
Section 302 Requirements, a Form 10-K under the Exchange Act executed by the
Depositor, including any certification (the "Certification") required by the
Section 302 Requirements, and (iii) any and all reports, statements and
information respecting the Trust Fund and/or the Certificates required to be
filed on behalf of the Trust Fund under the Exchange Act executed by the
Trustee. The Certification shall be executed by a senior officer of the
Depositor. Upon such filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information. Prior to making any such filings and
certifications, the Trustee shall comply with the provisions set forth in this
Section. If permitted by applicable law and unless the Depositor otherwise
directs, the Trustee shall file a Form 15 under the Exchange Act on or before
January 30, 2004 as soon as it is able to do so pursuant to applicable law. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
(other than the Form 10-Ks and the Certification) and file each such document on
behalf of the Depositor. Such power of attorney shall continue until either the
earlier of (i) receipt by the Trustee from the Depositor of written termination
of such power of attorney and (ii) the termination of the Trust Fund. The
Depositor agrees to promptly furnish to the Trustee, from time to time upon
request, such further information, reports, and

                                      -64-

<PAGE>

financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this section.

         (c) [RESERVED].

         (d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).

         SECTION 3.21. Annual Certificate by Trustee

         (a) Within 15 days prior to the date on which a Form 10-K is to be
filed with a Certification by the Depositor, an officer of the Trustee shall
execute and deliver an Officer's Certificate, signed by a Responsible Officer of
the Trustee or any officer to whom that officer reports, to the Depositor for
the benefit of such Depositor and its officers, directors and affiliates,
certifying as to the matters described in the Officer's Certificate attached
hereto as Exhibit K.

         (b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.

         SECTION 3.22. Annual Certificate by Servicer

         (a) Within 15 days prior to the date on which a Form 8-K is required to
be filed with a Certification by the Depositor, the Servicer shall execute and
deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee, the NIMs Insurer and
Depositor for the benefit of the Trustee and Depositor and their respective
officers, directors and affiliates, certifying as to the following matters:

                  (i)      I have reviewed the information required to be
         delivered to the Trustee pursuant to the Pooling and Servicing
         Agreement (the "Servicing Information").

                  (ii)     Based on my knowledge, the information in the Annual
         Statement of Compliance, and all servicing reports, officer's
         certificates and other information relating to the servicing of the
         Mortgage Loans submitted to the Trustee by the Servicer taken as a
         whole, does not contain any untrue statement of a material fact or omit
         to state a material fact necessary to make any such reports,
         certificates or other information, in light of the circumstances under
         which

                                      -65-

<PAGE>

         such statements were made, not misleading as of the last day of the
         period covered by the Annual Statement of Compliance;

                  (iii)    Based on my knowledge, the Servicing Information
         required to be provided to the Trustee by the Servicer under this
         Agreement has been provided to the Trustee; and

                  (iv)     I am responsible for reviewing the activities
         performed by the Servicer under this Agreement and based upon the
         review required hereunder, and except as disclosed in the Annual
         Statement of Compliance, the Annual Independent Certified Public
         Accountant's Servicing Report and all servicing reports, officer's
         certificates and other information relating to the servicing of the
         Mortgage Loans submitted to the Trustee by the Servicer, the Servicer
         has, as of the last day of the period covered by the Annual Statement
         of Compliance fulfilled its obligations under this Agreement.

         (b) The Servicer shall indemnify and hold harmless the NIMs Insurer,
the Trustee and the Depositor and their respective officers, directors, agents
and affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach by the Servicer or any of its
officers, directors, agents or affiliates of its obligations under this Section
3.22, any material misstatement or omission in the Officer's Certificate
required under this Section or the negligence, bad faith or willful misconduct
of the Servicer in connection therewith. If the indemnification provided for
herein is unavailable or insufficient to hold harmless the NIMs Insurer and the
Depositor, then the Servicer agrees that it shall contribute to the amount paid
or payable by the Trustee and the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.22, any material misstatement or omission in the Officer's Certificate
required under this Section or the Servicer's negligence, bad faith or willful
misconduct in connection therewith.

         SECTION 3.23. Prepayment Penalty Reporting Requirements

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

                  (i)      loan number;

                  (ii)     current Mortgage Rate;

                  (iii)    current principal balance;

                  (iv)     original principal balance;

                  (v)      Prepayment Penalty amount due;

                  (vi)     Prepayment Penalty amount collected; and

                  (vii)    reason why full Prepayment Penalty amount was not
                           collected, if applicable.

         SECTION 3.24. Statements to Trustee

         Not later than the tenth calendar day of each month, the Servicer shall
furnish to the Trustee and the NIMs Insurer an electronic file providing loan
level accounting data for the period ending on the last

                                      -66-

<PAGE>

Business Day of the preceding month in the format mutually agreed upon between
the Servicer and the Trustee.

         SECTION 3.25. Indemnification

         The Servicer shall indemnify the Seller, the Trust Fund, the Trustee,
the Depositor and the NIMs Insurer and hold each of them harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgements, and any other costs, fees
and expenses that any of such parties may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Seller, the Trustee, the Depositor and the NIMs Insurer or any other
relevant party if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgement or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any written instructions received from the
Trustee and the NIMs Insurer in connection with such claim. The Servicer shall
provide the Trustee, the Depositor, and the NIMs Insurer with a written report
of all expenses and advances incurred by the Servicer pursuant to this Section
3.25, and the Servicer from the assets of the Trust Fund in the Collection
Account promptly shall reimburse itself for all amounts advanced by it pursuant
to the preceding sentence except when the claim in any way relates to the
failure of the Servicer to service and administer the Mortgage Loans in material
compliance with the terms of this Agreement or the gross negligence, bad faith
or willful misconduct of the Servicer. The provisions of this paragraph shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

         SECTION 3.26. Nonsolicitation.

         For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.

         SECTION 3.27. Maintenance of LPMI Policy.

         The Servicer shall take all such actions as are necessary to service,
maintain and administer the LPMI Loans in accordance with the LPMI Policy and to
perform and enforce the rights of the insured under such LPMI Policy. Except as
expressly set forth herein, the Servicer shall have full authority on behalf of
the Trust Fund to do anything it reasonably deems appropriate or desirable in
connection with the servicing, maintenance and administration of the LPMI
Policy. The Servicer shall not modify or assume a Mortgage Loan covered by the
LPMI Policy or take any other action with respect to such Mortgage Loan which
would result in non-coverage under the LPMI Policy of any loss which, but for
the actions of the Servicer, would have been covered thereunder. If the LPMI
insurer fails to pay a claim under the LPMI Policy as a result of breach by the
Servicer of its obligations hereunder or under the LPMI Policy, the Servicer
shall be required to deposit in the Collection Account on or prior to the net
succeeding Remittance Date an amount equal to such unpaid claim from its own
funds without any right to reimbursement from the Trust Fund. The Servicer shall
cooperate with the LPMI insurer and shall use its best efforts to furnish all
reasonable aid, evidence and information in the possession of the Servicer to
which the Servicer has access with respect to any LPMI Loan.

                                      -67-

<PAGE>

                                   ARTICLE IV

                                  DISTRIBUTIONS

         SECTION 4.01. Advances.

         Subject to the conditions of this Article IV, beginning on the related
Servicing Transfer Date, the Servicer, as required below, shall make an Advance
and deposit such Advance in the Collection Account. Each such Advance shall be
remitted to the Collection Account no later than 1:00 p.m. New York City time on
the Servicer Advance Date in immediately available funds. The Servicer shall be
obligated to make any such Advance only to the extent that such advance would
not be a Non-Recoverable Advance. If the Servicer shall have determined that it
has made a Non-Recoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Non-Recoverable Advance, the Servicer
shall deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable, and (ii) to
the Depositor, the NIMs Insurer, each Rating Agency and the Trustee an Officer's
Certificate setting forth the basis for such determination. The Servicer may, in
its sole discretion, make an Advance with respect to the principal portion of
the final Scheduled Payment on a Balloon Loan, but the Servicer is under no
obligation to do so; provided, however, that nothing in this sentence shall
affect the Servicer's obligation under this Section 4.01 to Advance the interest
portion of the final Scheduled Payment with respect to a Balloon Loan as if such
Balloon Loan were a fully amortizing Mortgage Loan. If a Mortgagor does not pay
its final Scheduled Payment on a Balloon Loan when due, the Servicer shall
Advance (unless it determines in its good faith judgment that such amounts would
constitute a Non-Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.

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

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

         In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, beginning on the related Servicing Transfer Date, the
Servicer shall, from amounts in respect of the Servicing Fee for such
Distribution Date, deposit into the Collection Account, as a reduction of the
Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest Shortfall; provided that any such deposit in reduction of
the Servicing Fee shall be limited to the product of (x) one-twelfth of 0.25%
and (y) the aggregate Stated

                                      -68-

<PAGE>

Principal Balance of the Mortgage Loans with respect to the related Distribution
Date. In case of such deposit, the Servicer shall not be entitled to any
recovery or reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders. With respect to any Distribution Date, to the extent that
the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a
"Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall
reduce the Current Interest with respect to each Class of Certificates, pro rata
based upon the amount of interest each such Class would otherwise be entitled to
receive on such Distribution Date.

         SECTION 4.03. Distributions on the REMIC Interests.

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

         SECTION 4.04. Distributions.

         (a) [Reserved].

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

                  (i)      [Reserved]

                  (ii)     to the Class R Certificate, Class A-1, Class A-2 and
         Class A-3 Certificates, the Current Interest and any Interest
         Carryforward Amount with respect to each such Class; provided, however,
         that if Interest Funds are insufficient to make a full distribution of
         the aggregate Current Interest and the aggregate Interest Carryforward
         Amount to the Class R and Class A-1, Class A-2 and Class A-3
         Certificates, Interest Funds will be distributed pro rata among the
         Class R, Class A-1, Class A-2 and Class A-3 Certificates based upon the
         ratio of (x) the Current Interest and Interest Carryforward Amount for
         the Class R, Class A-1, Class A-2 and Class A-3 Certificates to (y) the
         total amount of Current Interest and any Interest Carryforward Amount
         for the Class R, Class A-1, Class A-2 and Class A-3 Certificates;

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

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

                  (v)      to the Class B Certificates, the Class B Current
         Interest and any Class B Interest Carryforward Amount; and

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

         (c) [Reserved]

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

                                      -69-

<PAGE>

above shall have been made until such amount shall have been fully distributed
for such Distribution Date:

                  (i)      the Class A Principal Distribution Amount first, to
         the Class R Certificates and second, pro rata, based upon Outstanding
         Certificate Principal Balance, to the Class A-1, Class A-2 and Class
         A-3 Certificates; provided that so long as the Class A-2 Certificates
         are outstanding, any portion of the Class A Principal Distribution
         Amount distributable to the Class A-3 Certificates will be distributed
         to the Class A-2 Certificates in reduction of the Class A-2 Outstanding
         Certificate Balance, until the Certificate Principal Balances thereof
         have been reduced to zero;

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

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

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

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

         (e) [Reserved].

         (f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(vi) and (d)(v) hereof and, to the extent
required to make the distributions set forth below in clauses (i) through (iv)
of this Section 4.04(f), and each such distribution shall be made only after all
distributions pursuant to Sections 4.04(b) and (d) above shall have been made
until such remainders shall have been fully distributed for such Distribution
Date:

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

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

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

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

                  (v)      to the extent required to make the allocations set
         forth below, in the following order of priority:

                           (A)      pro rata based upon outstanding Floating
                                    Rate Certificate Carryover, to the Class
                                    A-1, Class A-2, Class A-3 and Class R
                                    Certificates;

                           (B)      to the Class M-1 Certificates, the Class M-1
                                    Floating Rate Certificate Carryover;

                           (C)      to the Class M-2 Certificates, the Class M-2
                                    Floating Rate Certificate Carryover; and

                           (D)      to the Class B Certificates, the Class B
                                    Floating Rate Certificate Carryover;

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

                                      -70-

<PAGE>

         (g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(vi) and all amounts representing
Prepayment Penalties and amounts payable by the Servicer in respect of
Prepayment Penalties pursuant to this Agreement as follows:

                  (i)      to the Class N Certificates in the following order of
         priority, (I) the Class N Current Interest, (II) the Class N Interest
         Carryforward Amount, and (III) any other amounts remaining after
         application pursuant to clauses (I) and (II) , to reduce the Class N
         Certificate Notional Balance until the Class N Certificate Notional
         Balance has been reduced to zero.

                  (ii)     to the Holders of the Class X Certificates, the Class
         X Distributable Amount, and

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

         (h) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(g)(iii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.06 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.

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

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

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

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

         (j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.

         In accordance with Section 3.24 of this Agreement, not later than the
tenth calendar day of each month the Servicer, shall prepare and deliver a
report (the "Remittance Report") to the Trustee and the NIMs Insurer in the form
of a computer readable magnetic tape (or by such other means as the the
Servicer, the Trustee and the NIMs Insurer may agree from time to time)
containing such data and information such as to permit the Trustee to prepare
the Monthly Statement to Certificateholders and make the required distributions
for the related Distribution Date provided that the Servicer shall not be
responsible for delivery of any information to be provided by an Interim
Servicer.

                                      -71-

<PAGE>

         The Trustee shall promptly notify the NIMs Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class N Certificates. Each
Holder of the Class N Certificates, by its purchase of such Certificates and the
Trustee hereby agree that the NIMs Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMs Insurer
shall be subrogated to the rights of the Trustee and each Holder of the Class N
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class N Certificates or the NIM Notes,
as applicable, and the NIMs Insurer made a payment in respect of such
relinquished amount.

         (k) Any payments received under the terms of the Cap Contract will be
available to pay the holders of the Offered Certificates up to the amount of any
Floating Rate Certificate Carryover remaining after the application of Section
4.04(f)(v) on such Distribution Date; provided, however, that payments received
on the Cap Contract will not be used to pay any Floating Rate Certificate
Carryover that results from a failure to allocate to the Class A or Class R
Certificates Realized Losses that do not decrease the Overcollateralization
Amount and are not allocated to the Class M-1 Certificates, Class M-2
Certificates or Class B Certificates. Any amounts in the Cap Contract Account on
any Distribution Date in excess of amounts required, subject to the restrictions
set forth in the preceding sentence, to pay outstanding Floating Rate
Certificate Carryovers on such Distribution Date will be distributed to the
holders of the Class N and Class X Certificates in accordance with the
provisions of Section 4.04(g) hereof (after all other distributions have been
made thereunder on such Distribution Date). Payments from the Cap Contract
Account in respect of the Floating Rate Certificate Carryovers shall, subject to
the limitations set forth in the first sentence of this Section 4.04(k), be paid
to the Offered Certificates in accordance with the provisions of Section
4.04(f)(v) hereof.

                  (i)      On or prior to the Cap Contract Termination Date,
         amounts, if any, received by the Trustee for the benefit of the Trust
         Fund in respect of the Cap Contract shall be deposited by the Trustee
         into the Cap Contract Account. With respect to any Distribution Date on
         or prior to the Cap Contract Termination Date, the amount, if any,
         payable by the Cap Contract Counterparty under the Cap Contract will
         equal the product of (i) the excess of (x) One-Month LIBOR (as
         determined by the Cap Contract Counterparty and subject to a cap equal
         to the rate with respect to such Distribution Date as shown under the
         heading "1ML Upper Collar" in the Cap Table), over (y) the rate with
         respect to such Distribution Date as shown under the heading "1ML Lower
         Collar" in the Cap Table, (ii) an amount equal to the Cap Contract
         Notional Balances and (iii) the number of days in such Accrual Period,
         divided by 360. If a payment is made to the Trust Fund under the Cap
         Contract and the Trustee intends to distribute excess amounts to the
         holders of the Class N and Class X Certificates as described above, the
         Trustee shall send a notice on the Business Day prior to the related
         Distribution Date stating the amount received on the Cap Contract, the
         amount paid with respect to Floating Rate Certificate Carryovers under
         Section 4.04(k) hereof and the amount due to the holders of the Class N
         and Class X Certificates. Such notice shall be sent by the Trustee via
         facsimile to the holders of the Class N and Class X Certificates.

                                      -72-

<PAGE>

                  (ii)     Amounts on deposit in the Cap Contract Account will
         remain uninvested pending distribution to Certificateholders.

                  (iii)    The Cap Contract is scheduled to remain in effect
         until the Cap Contract Termination Date and will be subject to early
         termination only in limited circumstances. Such circumstances include
         certain insolvency or bankruptcy events in relation to the Cap Contract
         Counterparty (after a grace period of three Local Business Days, as
         defined in the Cap Contract, after notice of such failure is received
         by the Cap Contract Counterparty) to make a payment due under the Cap
         Contract, the failure by the Cap Contract Counterparty or the Trustee
         (after a cure period of 20 days after notice of such failure is
         received) to perform any other agreement made by it under the Cap
         Contract, the termination of the Trust Fund and the Cap Contract
         becoming illegal or subject to certain kinds of taxation.

         SECTION 4.05. Monthly Statements to Certificateholders.

         (a) Not later than each Distribution Date based solely on information
provided by the Servicer or Interim Servicers, as applicable, the Trustee shall
prepare a statement setting forth for each $1,000 principal amount of
Certificates:

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

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

                  (iii)    any Interest Carryforward Amount for each Class of
         the Offered Certificates;

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

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

                  (vi)     the related amount of the Servicing Fee paid to or
         retained by the Servicer;

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

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

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

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

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

                                      -73-

<PAGE>

                  (xii)    with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number and
         Stated Principal Balance of such Mortgage Loan as of the close of
         business on the last day of the calendar month preceding such
         Distribution Date and the date of acquisition thereof;

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

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

                  (xv)     whether a Trigger Event has occurred;

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

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

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

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

                  (xx)     [Reserved];

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

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

                  (xxiii)  as of each Distribution Date, the amount, if any, to
         be deposited in the Cap Contract Account as described in Section
         4.04(k) and the amount thereof to be paid to the Offered Certificates
         as described in Section 4.04(k) hereof.

         (b) The Trustee will make the statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month via the Trustee's internet website, initially located at
"www.ctslink.com." The Servicer shall deliver to the NIMs Insurer a copy of any
report delivered by the Servicer to the Trustee.

         (c) Within a reasonable period of time after the end of each calendar
year upon written request, the Trustee shall make available on its website or
cause to be furnished to the NIMs Insurer and each

                                      -74-

<PAGE>

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

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

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

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

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

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

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

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

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

         The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.11.

                                   ARTICLE V

                                THE CERTIFICATES

         SECTION 5.01. The Certificates.

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

                                      -75-

<PAGE>

<TABLE>
<CAPTION>
                                                                                Original Certificate
                               Minimum             Integral Multiples in        Principal Balance or
Class                       Denomination             Excess of Minimum            Notional Balance
-----                       ------------             -----------------            ----------------
<S>                         <C>                    <C>                          <C>
 A-1                        $ 25,000.00                  $    1.00                 $160,316,000.00
 A-2                        $ 25,000.00                  $    1.00                 $ 23,600,000.00
 A-3                        $ 25,000.00                  $    1.00                 $ 15,000,000.00
 M-1                        $ 25,000.00                  $    1.00                 $ 13,617,000.00
 M-2                        $ 25,000.00                  $    1.00                 $ 11,248,000.00
 B                          $ 25,000.00                  $    1.00                 $  8,407,000.00
 N                          $250,000.00                  $1,000.00                 $ 12,900,000.00
 R                          $    100.00                      N/A                   $        100.00
 X                                   10%                     N/A                          N/A
 R-X                        $      0.00                      N/A                          N/A
</TABLE>

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.

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

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

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

         No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All

                                      -76-

<PAGE>

Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.

         (b) No Transfer of a Class N or Class X Certificate shall be made
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or is exempt
from the registration requirements under the Securities Act and such state
securities laws. In the event that a Transfer is to be made in reliance upon an
exemption from the Securities Act and such laws, in order to assure compliance
with the Securities Act and such laws, the Certificateholder desiring to effect
such Transfer and such Certificateholder's prospective transferee shall (except
with respect to the initial transfer of a Class N or Class X Certificate by
Merrill Lynch & Co.) each certify to each Trustee in writing the facts
surrounding the Transfer in substantially the forms set forth in Exhibit F (the
"Transferor Certificate") and (i) deliver a letter in substantially the form of
either Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter")
or (ii) there shall be delivered to the Trustee an Opinion of Counsel that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class N or Class X Certificate and
any prospective transferee designated by any such Holder, information regarding
the related Certificates and the Mortgage Loans and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class N or Class X Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and the Trustee against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.

         The beneficial ownership (as determined for federal income tax
purposes) of a Class N Certificate or Class X Certificate shall not be
transferred to a non-United States Person unless (i) such beneficial ownership
is transferred to a non-United States Person who will at all times be a
Proportionate Holder and provides the Trustee with a representation and covenant
to such effect and (ii) the Trustee has received, in the manner required by
applicable Treasury regulations (and with all required attachments, including,
where the non-United States Person is providing a Form W-8IMY, Forms W-8BEN or
W-9 from all persons treated as beneficially owning an interest in the Class X
or Class N Certificate through such non-U.S. Person either directly, through an
intermediary or through another entity that is treated as a partnership for U.S.
federal income tax purposes), a properly completed Internal Revenue Service Form
W-8IMY, Form W-8BEN or Form W-8ECI from such non-United States Person. No Class
N or Class X Certificate may be pledged or used as collateral for any obligation
if it would cause any portion of the Trust Fund to be treated as a taxable
mortgage pool under Section 7701(i) of the Code.

         No Transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee and the NIMs Insurer, to the effect that such transferee is not an
employee benefit plan subject to Title I of ERISA or a plan subject to Section
4975 of the Code or a plan subject to any applicable Federal, state or local law
materially similar to the foregoing provisions of ERISA and the Code ("Similar
Law"), or a Person acting on behalf of any such plan or using the assets of any
such plan, (ii) except in the case of a Class R Certificate or Class R-X
Certificate which may not be transferred to a transferee that does not provide
the representation described in clause (i), a representation that the transferee
is an insurance company that is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined in
Section V(e) of Prohibited Transaction

                                      -77-

<PAGE>

Class Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995) ("PTCE 95-60")) and
that the purchase and holding of such Certificates is covered under Sections I
and III of PTCE 95-60, or (iii) in the case of any such ERISA Restricted
Certificate, other than a Class R Certificate or Class R-X Certificate,
presented for registration in the name of an employee benefit plan subject to
ERISA, a plan subject to Section 4975 of the Code, or a plan subject to Similar
Law (or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the NIMs Insurer to the effect that the
purchase and holding of such ERISA Restricted Certificate will not result in a
prohibited transaction under ERISA or the Code or Similar Law and will not
subject the NIMs Insurer or the Trustee to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the NIMs Insurer or the Trustee. For purposes of clause (i) of the
preceding sentence, such representation shall be deemed to have been made to the
Trustee by the transferee's acceptance of an ERISA Restricted Certificate (or
the acceptance by a Certificate Owner of the beneficial interest in any Class of
ERISA Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to the
Trustee. Notwithstanding anything else to the contrary herein, any purported
transfer of an ERISA Restricted Certificate to or on behalf of an employee
benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, or a plan subject to Similar Law without the delivery to the Trustee and
the NIMs Insurer of an Opinion of Counsel satisfactory to the Trustee and the
NIMs Insurer as described above shall be void and of no effect. The Trustee
shall be under no liability to any Person for any registration of transfer of
any ERISA Restricted Certificate that is in fact not permitted by this Section
5.02(b) or for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the provisions of
this Agreement so long as the transfer was registered by the Trustee in
accordance with the foregoing requirements. The Trustee shall be entitled, but
not obligated, to recover from any Holder of any ERISA Restricted Certificate
that was in fact an employee benefit plan subject to Title I of ERISA, a plan
subject to Section 4975 of the Code, or a plan subject to Similar Law or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan, all payments made on such ERISA Restricted Certificate at and after
either such time. Any such payments so recovered by the Trustee shall be paid
and delivered by the Trustee to the last preceding Holder of such Certificate
that is not such a plan or Person acting on behalf of a plan.

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

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

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

                                      -78-

<PAGE>

         the proposed transfer that one of the two other forms of declaration
         (11) in Appendix A of the Transfer Affidavit be used, then the
         requirements of this Section 5.02(c)(ii) shall not have been satisfied
         unless the Transfer Affidavit includes such other form of declaration.

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

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

                  (v)      At the option of the Holder of the Class R
         Certificate, the Class LTR Interest and the Residual Interest in the
         Upper Tier REMIC may be severed and represented by separate
         certificates (with the separate certificate that represents the
         Residual Interest also representing all rights of the Class R
         Certificate to distributions attributable to a Pass-Through Rate on the
         Class R Certificate in excess of the Net Rate); provided, however, that
         such separate certification may not occur until the NIMs Insurer and
         the Trustee receive an Opinion of Counsel to the effect that separate
         certification in the form and manner proposed would not result in the
         imposition of federal tax upon the Trust Fund or any of the REMICs
         provided for herein or cause any of the REMICs provided for herein to
         fail to qualify as a REMIC; and provided further, that the provisions
         of Sections 5.02(b) and (c) will apply to each such separate
         certificate as if the separate certificate were a Class R Certificate.
         At the option of the Holder of the Class R-X Certificate, the Class
         UTBR Interest and the Class UTXNR Interest may be severed and
         represented by separate certificates; provided, however, that such
         separate certification may not occur until the NIMs Insurer and the
         Trustee receive an Opinion of Counsel to the effect that separate
         certification in the form and manner proposed would not result in the
         imposition of

                                      -79-

<PAGE>

         federal tax upon the Trust Fund or any of the REMICs provided for
         herein or cause any of the REMICs provided for herein to fail to
         qualify as a REMIC; and provided further, that the provisions of
         Sections 5.02(b) and (c) will apply to each such separate certificate
         as if the separate certificate were a Class R-X Certificate. If, as
         evidenced by an Opinion of Counsel, it is necessary to preserve the
         REMIC status of any of the REMICs provided for herein, (I) the Class
         LTR Interest and the Residual Interest in the Upper Tier REMIC shall be
         severed and represented by separate certificates (with the separate
         certificate that represents the Residual Interest also representing all
         rights of the Class R Certificate to distributions attributable to a
         Pass-Through Rate on the Class R Certificate in excess of the Net Rate)
         or (II) the Class UTBR Interest and the Class UTXNR Interest shall be
         severed and represented by separate certificates.

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

         (d) The transferor of the Class R Certificate or Class R-X Certificate
shall notify the Trustee in writing upon the transfer of the Class R Certificate
or Class R-X Certificate.

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

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

         If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.

                                      -80-

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         SECTION 5.04. Persons Deemed Owners.

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

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

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

         SECTION 5.06. Book-Entry Certificates.

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

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

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

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

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

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

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

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

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

         SECTION 5.07. Notices to Depository.

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

         SECTION 5.08. Definitive Certificates.

         If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Book-Entry Certificates and
the NIMs Insurer, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners of such
Class requesting the same. The Depositor shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trustee of any such Certificates
by the Depository, accompanied by registration instructions from the Depository
for registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

         SECTION 5.09. Maintenance of Office or Agency.

The Trustee will maintain or cause to be maintained at its expense an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange. The Trustee initially designates its
offices at Sixth & Marquette, Minneapolis, Minnesota, 55479 - Attention: Series
TMTS 2003-4HE as offices for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.

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                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.

         The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.

         SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.

         Except as provided in the next paragraph, the Depositor and the
Servicer will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Fannie Mae or Freddie Mac.

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

         None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor or the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either the
Depositor or the Servicer may, in its discretion undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder. In such event, the legal

                                      -83-

<PAGE>

expenses and costs of such action and any liability resulting therefrom shall
be, expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Servicer shall be entitled to be reimbursed therefor out of the Collection
Account as provided by Section 3.08 hereof.

         SECTION 6.04. Limitation on Resignation of Servicer.

         The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.

         The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders, and (ii) agree that upon delivery to the Trustee
by the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Trustee shall
appoint the Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer as set forth herein
and agrees to be subject to the terms of this Agreement. If, pursuant to any
provision hereof, the duties of the Servicer are transferred to a successor
Servicer, the entire amount of the Servicing Fee and other compensation payable
to the Servicer pursuant hereto shall thereafter be payable to such successor
Servicer. Notwithstanding anything in this Agreement to the contrary, the NIMs
Insurer shall not have any right to approve the Servicing Rights Pledge or its
designee as successor Servicer or to consent to the appointment of the Servicing
Rights Pledgee or its designee as successor Servicer.

         SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.

         The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for Persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request, with
copies of such policies and fidelity bond or a certification from the insurance
provider evidencing such policies and fidelity bond. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
best efforts to obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIMs
Insurer.

                                  ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

         SECTION 7.01. Events of Default.

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

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                  (i)      any failure by the Servicer to make any Advance to
         deposit in the Collection Account or the Certificate Account or remit
         to the Trustee any payment (excluding a payment required to be made
         under Section 4.01 hereof) required to be made under the terms of this
         Agreement, which failure shall continue unremedied for three calendar
         days and, with respect to a payment required to be made under Section
         4.01 hereof, for one calendar day, after the date on which written
         notice of such failure shall have been given to the Servicer by the
         Trustee or the Depositor, or to the Trustee and the Servicer by the
         NIMs Insurer or the Holders of Certificates evidencing not less than
         25% of the Voting Rights evidenced by the Certificates; or

                  (ii)     any failure by the Servicer to observe or perform in
         any material respect any other of the covenants or agreements on the
         part of the Servicer contained in this Agreement or any representation
         or warranty shall prove to be untrue, which failure or breach shall
         continue unremedied for a period of 60 days after the date on which
         written notice of such failure shall have been given to the Servicer by
         the Trustee or the Depositor, or to the Trustee by the NIMs Insurer or
         the Holders of Certificates evidencing not less than 25% of the Voting
         Rights evidenced by the Certificates; or

                  (iii)    a decree or order of a court or agency or supervisory
         authority having jurisdiction for the appointment of a receiver or
         liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings, or for the winding-up or
         liquidation of its affairs, shall have been entered against the
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 60 consecutive days; or

                  (iv)     consent by the Servicer to the appointment of a
         receiver or liquidator in any insolvency, readjustment of debt,
         marshaling of assets and liabilities or similar proceedings of or
         relating to the Servicer or all or substantially all of the property of
         the Servicer; or

                  (v)      admission by a Servicer in writing of its inability
         to pay its debts generally as they become due, file a petition to take
         advantage of, or commence a voluntary case under, any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors, or voluntarily suspend payment of its
         obligations.

         If an Event of Default shall occur with respect to the Servicer, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. To the extent the Event of Default resulted
from the failure of the Servicer to make a required Advance, the Trustee shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee

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<PAGE>

in effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Collection Account, or
thereafter be received with respect to the Mortgage Loans. The Servicer and the
Trustee shall promptly notify the Rating Agencies of the occurrence of an Event
of Default or an event that, with notice, passage of time, other action or any
combination of the foregoing would be an Event of Default, such notice to be
provided in any event within two Business Days of such occurrence.

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.

         SECTION 7.02. Trustee to Act; Appointment of Successor.

         On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, compensation and reimbursement for costs
and expenses that the Servicer would have been entitled to hereunder if the
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the successor to the Servicer in accordance with Section 7.01
hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to Section 4.01
hereof or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which successor shall be approved by the NIMs
Insurer and which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Any successor Servicer shall be an institution that
is acceptable to the NIMs Insurer and is a Fannie Mae and Freddie Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee and the
NIMs Insurer shall have consented thereto, prior written consent of the NIMs
Insurer is obtained and written notice of such proposed appointment shall have
been provided by the Trustee to each Certificateholder. The Trustee shall not
resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted

                                      -86-

<PAGE>

the Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.

         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

         In the event of an Event of Default, notwithstanding anything to the
contrary above, the Trustee and the Depositor hereby agree that upon delivery to
the Trustee by the Servicing Rights Pledgee of a letter signed by the Servicer
within ten Business Days of when notification of such event shall have been
provided to the Trustee, whereunder the Servicer shall resign as Servicer under
this Agreement, the Servicing Rights Pledgee or its designee shall be appointed
as successor Servicer (provided that at the time of such appointment the
Servicing Rights Pledgee or such designee meets the requirements of a successor
Servicer set forth above) and the Servicing Rights Pledgee agrees to be subject
to the terms of this Agreement. Notwithstanding anything in this Agreement to
the contrary, the NIMs Insurer shall not have any right to approve the Servicing
Rights Pledge or its designee as successor Servicer or to consent to the
appointment of the Servicing Rights Pledgee or its designee as successor
Servicer.

         SECTION 7.03. Notification to Certificateholders.

         (a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the NIMs Insurer and to each Rating Agency.

         (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         SECTION 8.01. Duties of Trustee.

         The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIMs
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMs Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMs Insurer and the
Certificateholders.

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<PAGE>

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform on their
face to the requirements of this Agreement. If any such instrument is found not
to conform on its face to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance instrument corrected, and if the instrument is not corrected to
the Trustee's satisfaction, the Trustee will provide notice thereof to the NIMs
Insurer and the Certificateholders and take such further action as directed by
the NIMs Insurer and the Certificateholders.

         No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:

                  (i)      prior to the occurrence of an Event of Default, and
         after the curing of all such Events of Default that may have occurred,
         the duties and obligations of the Trustee shall be determined solely by
         the express provisions of this Agreement, the Trustee shall not be
         liable, individually or as Trustee, except for the performance of such
         duties and obligations as are specifically set forth in this Agreement,
         no implied covenants or obligations shall be read into this Agreement
         against the Trustee and the Trustee may conclusively rely, as to the
         truth of the statements and the correctness of the opinions expressed
         therein, upon any certificates or opinions furnished to the Trustee and
         conforming to the requirements of this Agreement that it reasonably
         believed in good faith to be genuine and to have been duly executed by
         the proper authorities respecting any matters arising hereunder;

                  (ii)     the Trustee shall not be liable, individually or as
         Trustee, for an error of judgment made in good faith by a Responsible
         Officer or Responsible Officers of the Trustee, unless the Trustee was
         negligent or acted in bad faith or with willful misfeasance;

                  (iii)    the Trustee shall not be liable, individually or as
         Trustee, with respect to any action taken, suffered or omitted to be
         taken by it in good faith in accordance with the direction of the NIMs
         Insurer or the Holders of each Class of Certificates evidencing not
         less than 25% of the Voting Rights of such Class relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Trustee, or exercising any trust or power conferred upon the
         Trustee under this Agreement; and

                  (iv)     except as otherwise expressly provided in this
         Agreement, if any default occurs in the making of a payment due under
         any Permitted Investment, or if a default occurs in any other
         performance required under any Permitted Investment, the Trustee may
         and, subject to Section 8.01 and Section 8.02, upon the request of the
         NIMs Insurer or the Holders of the Certificates representing more than
         50% of the Voting Rights allocated to any Class of Certificates, shall
         take such action as may be appropriate to enforce such payment or
         performance, including the institution and prosecution of appropriate
         proceedings.

         SECTION 8.02. Certain Matters Affecting the Trustee.

         (a) Except as otherwise provided in Section 8.01:

                  (i)      the Trustee may request and rely upon and shall be
         protected in acting or refraining from acting upon any resolution,
         Officer's Certificate, certificate of auditors or any other
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, appraisal,

                                      -88-

<PAGE>

         bond or other paper or document believed by it to be genuine and to
         have been signed or presented by the proper party or parties;

                  (ii)     the Trustee may consult with counsel of its choice
         and any Opinion of Counsel shall be full and complete authorization and
         protection in respect of any action taken or suffered or omitted by it
         hereunder in good faith and in accordance with such Opinion of Counsel;

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

                  (iv)     prior to the occurrence of an Event of Default
         hereunder and after the curing of all Events of Default that may have
         occurred, the Trustee shall not be bound to make any investigation into
         the facts or matters stated in any resolution, certificate, statement,
         instrument, opinion, report, notice, request, consent, order, approval,
         bond or other paper or document, unless requested in writing so to do
         by the NIMs Insurer or the Holders of each Class of Certificates
         evidencing not less than 25% of the Voting Rights of such Class;

                  (v)      the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents, custodians, accountants or attorneys or independent
         contractors and the Trustee will not be responsible for any misconduct
         or negligence on the part of any agent, custodian, accountant, attorney
         or independent contractor appointed with due care by it hereunder;

                  (vi)     with respect to expenses that would be treated as
         "unanticipated expenses" within the meaning of Treasury Regulations
         Section 1.860G-1(b)(3)(ii) if paid by the Trust Fund or any of the
         REMICs provided for herein, the Trustee shall not be required to expend
         its own funds or otherwise incur any financial liability in the
         performance of any of its duties hereunder if it shall have reasonable
         grounds for believing that repayment of such funds or adequate
         indemnity against such liability is not assured to it;

                  (vii)    the Trustee shall not be liable, individually or as
         Trustee, for any loss on any investment of funds pursuant to this
         Agreement (other than as issuer of the investment security);

                  (viii)   the Trustee shall not be deemed to have knowledge of
         an Event of Default until a Responsible Officer of the Trustee shall
         have received written notice thereof;

                  (ix)     the Trustee shall be under no obligation to exercise
         any of the trusts or powers vested in it by this Agreement or to make
         any investigation of matters arising hereunder or to institute, conduct
         or defend any litigation hereunder or in relation hereto at the
         request, order or direction of any of the NIMs Insurer or the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless the NIMs Insurer or such Certificateholders shall have offered
         to the Trustee reasonable security or indemnity against the costs,
         expenses and liabilities that may be incurred therein or thereby;

                  (x)      if requested by the Servicer, the Trustee may appoint
         the Servicer as the trustee's attorney-in-fact in order to carry out
         and perform certain activities that are necessary or appropriate for
         the servicing and administration of the Mortgage Loans pursuant to this
         Agreement. Such appointment shall be evidenced by a power of attorney
         in such form as may be agreed to by the Trustee and the Servicer. The
         Trustee shall have no liability for any action or inaction of the
         Servicer in connection with such power of attorney and the Trustee
         shall be

                                      -89-

<PAGE>

         indemnified by the Servicer for all liabilities, costs and expenses
         incurred by the Trustee in connection with the Servicer's use or misuse
         of such powers of attorney; and

                  (xi)     the Depositor and the Servicer hereby approve of the
         appointment of Deutsche Bank National Trust Company to act as custodian
         pursuant to the Custody Agreement attached hereto as Exhibit M and each
         further agree that the Trustee appointed Deutsche Bank to act as
         custodian with due care.

         (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.

         SECTION 8.03. Trustee Not Liable for Mortgage Loans.

         The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates . The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.

         SECTION 8.04. Trustee May Own Certificates.

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

         SECTION 8.05. Trustee's Fees.

         The Trustee shall be entitled to the Trustee Fee and earnings on or
investment income with respect to funds in or credited to the Certificate
Account.

         SECTION 8.06. Indemnification of Trustee.

         (a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:

                  (i)      with respect to any such claim, the Trustee shall
         have given the Depositor and the Holders written notice thereof
         promptly after the Trustee shall have knowledge thereof; provided that
         failure to so notify shall not relieve the Trust Fund of the obligation
         to indemnify the Trustee; however, any reasonable delay by the Trustee
         to provide written notice to the Depositor and the

                                      -90-
<PAGE>

         Holders promptly after the Trustee shall have obtained knowledge of a
         claim shall not relieve the Trust Fund of the obligation to indemnify
         the Trustee under this Section 8.06;

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

                  (iii)    notwithstanding anything to the contrary in this
         Section 8.06, the Trust Fund shall not be liable for settlement of any
         such claim by the Trustee entered into without the prior consent of the
         Depositor, which consent shall not be unreasonably withheld; and

                  (iv)     any such loss, liability or expense to be indemnified
         by the Trust Fund must constitute an "unanticipated expense" of the
         Trust Fund within the meaning of Treasury Regulations Section
         1.860G-1(b)(3)(ii).

         The provisions of this Section 8.06 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense under
any environmental law.

         (b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).

         (c) Any amounts for indemnification and reimbursement under this
Agreement may be withdrawn by the Trustee from the Certificate Account at any
time.

         (d) In connection with its appointment as Custodian, to the same extent
and for the matters covered herein and subject to the limitations set forth in
this Section 8.06, the Custodian may seek indemnification out of the Trust Fund.

         SECTION 8.07. Eligibility Requirements for Trustee.

         The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust powers
having a combined capital and surplus of at least $50,000,000, subject to
supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction) and reasonably acceptable to the NIMs
Insurer. If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.07
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 8.07, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.08 hereof. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Depositor and the NIMs
Insurer and their respective Affiliates; provided, however, that such
corporation cannot be an Affiliate of the Servicer other than the Trustee in its
role as successor to the Servicer.

                                      -91-

<PAGE>

         SECTION 8.08. Resignation and Removal of Trustee.

         The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the NIMs Insurer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIMs Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

         If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMs
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.

         The Holders evidencing at least 51% of the Voting Rights of all Classes
of Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIMs Insurer), one complete
set of which instruments shall be delivered by the successor Trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIMs Insurer and each Rating Agency by the Successor Trustee.

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.09 hereof.

         SECTION 8.09. Successor Trustee.

         Any successor trustee appointed as provided in Section 8.08 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.

         No successor trustee shall accept appointment as provided in this
Section 8.09 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.07 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.

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<PAGE>

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.09, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.

         SECTION 8.10. Merger or Consolidation of Trustee.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).

         SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee and the NIMs Insurer to act as co-trustee or
co-trustees jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.11, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or desirable.
Any such co-trustee or separate trustee shall be subject to the written approval
of the Servicer and the NIMs Insurer. The Trustee shall not be liable for the
actions of any co-trustee appointed with due care; provided that the appointment
of a co-trustee shall not relieve the Trustee of its obligations hereunder. If
the Servicer and the NIMs Insurer shall not have joined in such appointment
within 15 days after the receipt by it of a request to do so, or in the case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.07 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.09.

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

                  (i)      All rights, powers, duties and obligations conferred
         or imposed upon the Trustee, except for the obligation of the Trustee
         under this Agreement to advance funds on behalf of the Servicer, shall
         be conferred or imposed upon and exercised or performed by the Trustee
         and such separate trustee or co-trustee jointly (it being understood
         that such separate trustee or co-trustee is not authorized to act
         separately without the Trustee joining in such act), except to the
         extent that under any law of any jurisdiction in which any particular
         act or acts are to be performed (whether as Trustee hereunder or as
         successor to the Servicer hereunder), the Trustee shall be incompetent
         or unqualified to perform such act or acts, in which event such rights,
         powers, duties and obligations (including the holding of title to the
         Trust Fund or any portion thereof in any such jurisdiction) shall be
         exercised and performed singly by such separate trustee or co-trustee,
         but solely at the direction of the Trustee;

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<PAGE>

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

                  (iii)    The Trustee with the consent of the NIMs Insurer may
         at any time accept the resignation of or remove any separate trustee or
         co-trustee.

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

          Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

         SECTION 8.12. Tax Matters.

         (a)      It is intended that each of the REMICs provided for herein
REMIC shall constitute, and that the affairs of the Trust Fund shall be
conducted so as to allow each such REMIC to qualify as, a "real estate mortgage
investment conduit" as defined in and in accordance with the REMIC Provisions.
It is also intended that each of the grantor trusts provided for in Section 2.07
hereof shall constitute, and that the affairs of the Trust Fund shall be
conducted so as to allow each such grantor trust to qualify as, a grantor trust
under the provisions of Subpart E, Part I of Subchapter J of the Code. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) on behalf of
each of the REMICs and grantor trusts provided for herein and that in such
capacity it shall: (a) prepare and file, or cause to be prepared and filed, in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return
(Form 1066 or any successor form adopted by the Internal Revenue Service) and
prepare and file or cause to be prepared and filed with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to each of the REMICs and grantor
trusts provided for herein, containing such information and at the times and in
the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the REMICs provided for
herein; (c) make or cause to be made elections, on behalf of each of the REMICs
provided for herein to be treated as a REMIC on the federal tax return of such
REMICs for their first taxable years (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions or other applicable tax

                                      -94-

<PAGE>

law or with respect to the grantor trusts provided for herein, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Class R Certificate or Class R-X Certificate to a Person
that is not a Permitted Transferee, or an agent (including a broker, nominee or
other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
and grantor trusts provided for herein at all times that any Certificates are
outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions and the status of each of the
grantor trusts provided for herein as a grantor trust under Subpart E, Part I of
subchapter J of the Code; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
any of the REMICs provided for herein or result in the imposition of tax upon
any such REMIC; (h) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the grantor trust status
under Subpart E, Part I of Subchapter J of the Code of any of the grantor trusts
provided to herein or result in the imposition of tax upon any such grantor
trusts; (i) pay, from the sources specified in the last paragraph of this
Section 8.12, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on each of the REMICs
or grantor trusts provided for herein prior to the termination of the Trust Fund
when and as the same shall be due and payable (but such obligation shall not
prevent the Trustee or any other appropriate Person from contesting any such tax
in appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (j) sign or cause to be signed federal, state or local income tax
or information returns; (k) maintain records relating to each of the REMICs and
grantor trusts provided for herein, including but not limited to the income,
expenses, assets and liabilities of each of the REMICs and grantor trusts
provided for herein, and the fair market value and adjusted basis of the Trust
Fund property determined at such intervals as may be required by the Code, as
may be necessary to prepare the foregoing returns, schedules, statements or
information; and (l) as and when necessary and appropriate, represent each of
the REMICs and grantor trusts provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs and grantor trusts provided for herein in relation to any
tax matter involving any of such REMICs or any controversy involving the Trust
Fund.

         In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby agrees to indemnify the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.

         In the event that any tax is imposed on "prohibited transactions" of
any of the REMICs provided for herein as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as

                                      -95-

<PAGE>

otherwise provided for herein, such tax shall be paid by (i) the Trustee, if any
such other tax arises out of or results from a breach by the Trustee of any of
its obligations under this Agreement or as a result of the location of the
Trustee, (ii) any party hereto (other than the Trustee) to the extent any such
other tax arises out of or results from a breach by such other party of any of
its obligations under this Agreement or as a result of the location of such
other party or (iii) in all other cases, or in the event that any liable party
here fails to honor its obligations under the preceding clauses (i) or (ii), any
such tax will, provided that the REMIC subject to tax is the Lower Tier REMIC or
the Upper Tier REMIC, be paid first, with amounts otherwise to be distributed to
the Class R Certificateholders (pro rata) pursuant to Section 4.04, and second
with amounts (other than amounts derived by the Trust Fund from a payment on the
Cap Contract) otherwise to be distributed to all other Certificateholders in the
following order of priority: first, to the Class N Certificates (pro rata),
second to the Class B Certificates (pro rata), third, to the Class M-2
Certificates (pro rata), fourth, to the Class M-1 Certificates (pro rata) and
fifth to the Class A Certificates (pro rata) and, if the REMIC subject to tax is
the Upper Tier Class B REMIC or the Upper Tier Class XN REMIC, be paid from
amounts otherwise to be distributed to the Class B or to the Class X and Class N
Certificateholders, respectively. Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificate, the Trustee is hereby authorized pursuant to such instruction to
retain on any Distribution Date, from the Holders of the Class R Certificate
(and, if necessary, from the Holders of all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. The Trustee agrees to promptly
notify in writing the party liable for any such tax of the amount thereof and
the due date for the payment thereof.

         (b)      Each of the Depositor and the Trustee agrees not to knowingly
or intentionally take any action or omit to take any action that would (i) cause
the termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein or
(ii) cause the termination of the grantor trust status of any of the grantor
trusts provided for herein or result in the imposition of a tax upon any of the
grantor trusts provided for herein.

         (c)      In the event that the beneficial ownership of the Class N and
Class X Certificates is held by a single Person for federal income tax purposes
or by multiple Persons who beneficially own the Class N and Class X Certificates
proportionately, such Person or Persons shall be treated for federal income tax
purposes as the direct or indirect beneficial owner of the Class XN Interest,
the Cap Contract and the Cap Contract Account. In the event that beneficial
ownership of the Class N and the Class X Certificates is held by two or more
Persons for federal income tax purposes that do not beneficially own the Class N
and Class X Certificates proportionately, the Trustee shall treat the Class N
Certificateholders and the Class X Certificateholders as partners in a
partnership that owns the Class XN Interest, the Cap Contract and the Cap
Contract Account and shall not treat the Class N and Class X Certificates as a
direct interest in any REMIC hereunder. By acquiring the Class N and the Class X
Certificates, the respective Holders will agree to treat the Class N and Class X
Certificates in the manner described in the preceding sentences for federal
income tax purposes in the event that the beneficial ownership of the Class N
Certificates and the Class X Certificates is separated. In such event, (i) a
separate capital account shall be established and maintained for each Holder of
a Class N or Class X Certificate in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv), which shall be credited with income or gain and debited by
any expenses (including any payments deemed made to the Holders of any of the
Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B or Class R
Certificates on interest rate cap agreements for federal income tax purposes) or
losses or distributions allocable to the assets deemed held by such partnership,
(ii) the Class N Certificates shall be allocated income in an amount equal to
interest at the Class N Distributable Interest Rate and any original issue
discount that would be reportable thereon if the Class N Certificate were a debt
instrument issued on the date ownership of the Class N and Class X Certificates
is separated, with a principal balance equal to the Class N Notional Balance,
(iii) the Class X and Class N Certificates shall be allocated income with
respect to all prepayment penalties (including amounts in connection with

                                      -96-

<PAGE>

the full or partial waiver of prepayment penalties) in accordance with the
allocation of such amounts pursuant to Section 4.04(g), to the extent not
allocated under Section 8.12(c)(ii) above, (iv) the Class X and Class N
Certificates shall be allocated accruals (under any reasonable method) of any
"cap premiums" deemed received on the date ownership of the Class X and Class N
Certificates is separated in respect of the obligation to pay amounts of Excess
Interest, and shall be allocated expense in respect of any actual payment of
such Excess Interest based on which one of such Classes economically bears such
expense, (v) the Class X Certificates shall be allocated all remaining income
and any expenses and Realized Losses with respect to the Class XN Interest,
until the capital account of the Class X Certificates is reduced to zero, and
any remaining expenses or losses shall be allocated to the Class N Certificates,
(vi) neither the Class N nor the Class X Certificates shall be responsible for
restoring any deficit to its capital account, (vii) upon termination of the
Trust Fund pursuant to Article IX, all amounts available for distribution to
Holders of the Class N and Class X Certificates shall be distributed in
accordance with their positive capital account balances, first to the Class N
Certificates until their Notional Amount and any accrued but unpaid interest
thereon are reduced to zero, and then to the Class X Certificates, and (viii)
the Trustee shall maintain books and records with respect to the partnership on
a calendar year basis (unless a different taxable year is required by the Code)
and shall prepare or cause to be prepared, and shall cause the Holder of the
largest Percentage Interest of the Class X Certificates to sign and file or
cause to be filed all federal and state tax and information returns for the
partnership and shall furnish or cause to be furnished Schedule K-1's to the
Holders of the Class N and Class X Certificates at the time required by the
Code. Unless otherwise directed by a majority of the Percentage Interests of the
Class N and Class X Certificates, the Trustee shall not make an election under
Section 754 of the Code. The Holder of the largest Percentage Interest of the
Class X Certificates, by acceptance of its Class X Certificate(s), agrees to act
as "tax matters partner" (within the meaning of Section 6231(a)(7) of the Code)
and to sign and timely file all federal and state partnership tax and
information returns prepared by the Trustee pursuant to this Section 8.12(c).

                                   ARTICLE IX

                                   TERMINATION

         SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.

         Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the exercise by the Servicer or the
NIMs Insurer of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.

         Any termination pursuant to clause (a) above shall be effected by the
Servicer purchasing all Mortgage Loans and REO Properties at a price equal to
the amount described in clause (i) of the definition of Optional Termination
Price. If the Servicer elects not to exercise its right to effect an Optional
Termination, the NIMs Insurer may, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at the price equal to
the amount described in clause (ii) of the definition of "Optional Termination
Price." Notwithstanding anything to the contrary herein, the Optional
Termination Amount paid by either the Servicer or the NIMs Insurer shall be
deposited by the Trustee directly into the Certificate Account immediately upon
Optional Termination. Any Optional

                                      -97-

<PAGE>

Termination Amount to be paid by the NIMs Insurer may be paid by the NIMs
Insurer to the Trustee for deposit into the Certificate Account.

         The right of the Servicer or the NIMs Insurer to effect an Optional
Termination pursuant to clause (a) above shall be conditioned upon the aggregate
Stated Principal Balance of the Mortgage Loans, at the time of any such
repurchase, aggregating ten (10) percent or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date.

         SECTION 9.02. Final Distribution on the Certificates.

         If on any Determination Date, (i) the Trustee determines that there are
no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee specified in such notice. If the Servicer or the NIMs Insurer elects to
terminate the Trust Fund pursuant to clause (a) of Section 9.01, at least 10
days prior to the date notice is to be mailed to the affected
Certificateholders, the Trustee shall notify the Depositor, the NIMs Insurer and
the Servicer of the date such electing party intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.

         Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and no later than the 15th day of the month immediately preceding the month
of such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to the NIMs Insurer and each Rating Agency at
the time such notice is given to Certificateholders.

         In the event such notice is given, the Servicer shall cause all funds
in the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

         In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the

                                      -98-

<PAGE>

applicable Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within one year after the second
notice all Certificates shall not have been surrendered for cancellation, the
Class R Certificateholders shall be entitled to all unclaimed funds and other
assets of the Trust Fund that remain subject hereto. Upon payment to the Class R
Certificateholders of such funds and assets, the Trustee shall have no further
duties or obligations with respect thereto.

         SECTION 9.03. Additional Termination Requirements.

         (a) In the event the Servicer or the NIMs Insurer exercises its option
to effect an Optional Termination as provided in Section 9.01, the Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been supplied with an Opinion of Counsel, at the expense
of the Servicer or the NIMs Insurer, as applicable, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.03
will not (i) result in the imposition of taxes on "prohibited transactions" of
any of the REMICs provided for herein as defined in section 860F of the Code, or
(ii) cause any of the REMICs provided for herein to fail to qualify as a REMIC
at any time that any Certificates are outstanding:

                  (i)      The Depositor shall establish a 90-day liquidation
         period and notify the Trustee thereof, which shall in turn specify the
         first day of such period in a statement attached to the final tax
         returns of each of the remaining REMICs provided for herein pursuant to
         Treasury Regulation Section 1.860F-1. The Depositor shall satisfy all
         the requirements of a qualified liquidation under Section 860F of the
         Code and any regulations thereunder, as evidenced by an Opinion of
         Counsel obtained at the expense of the Servicer or the NIMs Insurer, as
         applicable;

                  (ii)     During such 90-day liquidation period, and at or
         prior to the time of making the final payment on the Certificates, the
         Depositor as agent of the Trustee shall sell all of the assets of the
         Trust Fund for cash; and

                  (iii)    At the time of the making of the final payment on the
         Certificates, the Trustee shall distribute or credit, or cause to be
         distributed or credited, to the Class R Certificateholders all cash on
         hand (other than cash retained to meet outstanding claims known to the
         Trustee), and the Trust Fund shall terminate at that time, whereupon
         the Trustee shall have no further duties or obligations with respect to
         sums distributed or credited to the Class R Certificateholders.

         (b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.

         (c) The Trustee as agent for each REMIC hereby agrees to adopt and sign
such a plan of complete liquidation prepared and delivered to it by Depositor
upon the written request of the Depositor, and the receipt of the Opinion of
Counsel referred to in Section 9.03(a)(i) and to take such other action in
connection therewith as may be reasonably requested by the Depositor.

                                      -99-

<PAGE>

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

         SECTION 10.01. Amendment.

         This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders to,

                  (i)      to cure any ambiguity or correct any mistake,

                  (ii)     to correct, modify or supplement any provision
         therein which may be inconsistent with any other provision herein,

                  (iii)    to add any other provisions with respect to matters
         or questions arising under this Agreement, or

                  (iv)     to modify, alter, amend, add to or rescind any of the
         terms or provisions contained in this Agreement, provided, however,
         that, in the case of clauses (iii) and (iv), such amendment will not,
         as evidenced by an Opinion of Counsel addressed to the Trustee to such
         effect, adversely effect in any material respect the interests of any
         Holder; provided, further, however, that such amendment will be deemed
         to not adversely affect in any material respect the interest of any
         Holder if the Person requesting such amendment obtains a letter from
         each Rating Agency stating that such amendment will not result in a
         reduction or withdrawal of its rating of any Class of the Certificates,
         it being understood and agreed that any such letter in and of itself
         will not represent a determination as to the materiality of any such
         amendment and will represent a determination only as to the credit
         issues affecting any such rating.

         Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIMs Insurer have been provided
an Opinion of Counsel, which opinion shall be an expense of the party requesting
such amendment but in any case shall not be an expense of the Trustee, to the
effect that such action is necessary or appropriate to maintain such
qualification or to avoid or minimize the risk of the imposition of such a tax.

         This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIMs Insurer, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.

                                     -100-

<PAGE>

         Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding. A copy of
such Opinion of Counsel shall be provided to the NIMs Insurer.

         Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee or upon the written
request of the Trustee to the Servicer, the Servicer shall furnish written
notification of the substance of such amendment to each Certificateholder, the
NIMs Insurer and each Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.

         The Trustee may, but shall not be obligated to, enter into any
supplement, modification or waiver which affects its rights, duties or
obligations hereunder.

         SECTION 10.02. Counterparts.

         This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.

         SECTION 10.03. Governing Law.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

         SECTION 10.04. Intention of Parties.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee. However,
in the event that, notwithstanding the intent of the parties, such assets are
held to be

                                     -101-

<PAGE>

the property of the Depositor, or if for any other reason this Agreement is held
or deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.

         The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.

         SECTION 10.05. Notices.

         (a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency and the NIMs Insurer with respect to each of the following
of which it has actual knowledge:

                  (i)      Any material change or amendment to this Agreement;

                  (ii)     The occurrence of any Event of Default that has not
         been cured;

                  (iii)    The resignation or termination of the Trustee or the
         Servicer and the appointment of any successor;

                  (iv)     The repurchase or substitution of Mortgage Loans
         pursuant to Sections 2.02, 2.03 and 3.12;

                  (v)      The final payment to Certificateholders; and

                  (vi)     Any change in the location of the Certificate Account
         or the Certificate Account.

         The Trustee shall promptly furnish or make available to each Rating
Agency copies of the following:

                  (i)      Each report to Certificateholders described in
         Section 4.05;

                  (ii)     Each annual statement as to compliance described in
         Section 3.17; and

                  (iii)    Each annual independent public accountants' servicing
         report described in Section 3.18.

All directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered to (a) in the case of the
Depositor, Merrill Lynch Mortgage Investors, Inc. 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, Wells Fargo Bank Minnesota, National
Association, 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:
Corporate Trust Services - Terwin Mortgage Trust, Series TMTS 2003-4HE; (c) in
the case of the Rating Agencies, (i) Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York
10041; and (ii) Moody's, 99 Church Street, New York, New York 10007; (d) in the
case of the Servicer, Litton Loan Servicing LP, 4282 Loop Central Drive,
Houston, Texas 77081-2226, and in the

                                     -102-

<PAGE>

case of any of the foregoing persons, such other addresses as may hereafter be
furnished by any such persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.

         SECTION 10.06. Severability of Provisions.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

         SECTION 10.07. Assignment.

         Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.

         SECTION 10.08. Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.

         No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.

         No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as hereinbefore provided,
the Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

                                     -103-

<PAGE>

         SECTION 10.09. Inspection and Audit Rights.

         The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the NIMs Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIMs Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIMs
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.

         SECTION 10.10. Certificates Nonassessable and Fully Paid.

         It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.

         SECTION 10.11. Third Party Rights.

         The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.

         SECTION 10.12. Additional Rights of the NIMs Insurer.

         (a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement.

         (b) Wherever in this Agreement there shall be a requirement that there
be no downgrade, reduction, withdrawal or qualification of or other effect on
the rating of any Class of Certificates by any Rating Agency as of any date,
there also shall be deemed to be a requirement that there be no such effect on
any class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.

                                     -104-

<PAGE>

         SECTION 10.13. [Reserved]

         SECTION 10.14. Assignment; Sales; Advance Facilities.

                  (a)      The Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility"), the
documentation for which complies with Section 10.14(e) below, under which (1)
the Servicer assigns or pledges its rights under this Agreement to be reimbursed
for any or all Advances and/or Servicing Advances to (i) a Person, which may be
a special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all of the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility, nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.

                  (b)      If the Servicer enters into an Advance Facility, the
Servicer and the related Advance Financing Person shall deliver to the Trustee
at the address set forth in Section 10.05 hereof a written notice (an "Advance
Facility Notice"), stating (a) the identity of the Advance Financing Person, (b)
the identity of the Person (the "Servicer's Assignee") that will, subject to
Section 10.14(c) hereof, have the right to make withdrawals from the Collection
Account pursuant to Section 3.08(a) hereof to reimburse previously unreimbursed
Advances and/or Servicing Advances ("Advance Reimbursement Amounts") and (c)
that the Servicer's Assignee shall agree to be bound by the provisions of this
Section 10.14. The Advance Facility Notice shall be executed by the Advance
Facility Person and the Servicer's Assignee. Advance Reimbursement Amounts (i)
shall consist solely of amounts in respect of Advances and/or Servicing Advances
for which the Servicer would be permitted to reimburse itself in accordance with
Section 3.08 hereof, assuming the Servicer had made the related Advance(s)
and/or Servicing Advance(s) and (ii) shall not consist of amounts payable to a
successor Servicer in accordance with Section 3.08 hereof to the extent
permitted under Section 10.14(e) below.

                  (c)      Notwithstanding the existence of an Advance Facility,
the Servicer, on behalf of the Advance Financing Person, shall be entitled to
receive reimbursements of Advances and/or Servicing Advances in accordance with
Section 3.08 hereof, which entitlement may be terminated by the Advance
Financing Person pursuant to a written notice to the Trustee in the manner set
forth in Section 10.05 hereof. Upon receipt of such written notice, the Servicer
shall no longer be entitled to receive reimbursement for any Advance
Reimbursement Amounts, and the Servicer's Assignee shall immediately have the
right to receive from the Collection Account all Advance Reimbursement Amounts.
Notwithstanding the foregoing, and for the avoidance of doubt, (i) the Servicer
and/or the Servicer's Assignee shall only be entitled to reimbursement of
Advance Reimbursement Amounts hereunder pursuant to Section 3.08 of this
Agreement and shall not otherwise be entitled to make withdrawals of, or
receive, Advance Reimbursement Amounts that shall be deposited in the
Certificate Account pursuant to

                                     -105-

<PAGE>

Section 3.05(e) hereof, and (ii) none of the Trustee or the Certificateholders
shall have any right to, or otherwise be entitled to, receive any Advance
Reimbursement Amounts to which the Servicer or Servicer's Assignee, as
applicable, shall be entitled pursuant to Section 3.08 hereof. An Advance
Facility may be terminated by the joint written direction of the Servicer and
the related Advance Financing Person. Written notice of such termination shall
be delivered to the Trustee in the manner set forth in Section 10.05 hereof.
None of the Depositor or the Trustee shall, as a result of the existence of any
Advance Facility, have any additional duty or liability with respect to the
calculation or payment of any Advance Reimbursement Amount, nor, as a result of
the existence of any Advance Facility, shall the Depositor or the Trustee have
any additional responsibility to track or monitor the administration of the
Advance Facility or the payment of Advance Reimbursement Amounts to the
Servicer's Assignee. The Servicer shall indemnify the Depositor, the Trustee,
any successor Servicer and the Trust Fund for any claim, loss, liability or
damage resulting from any claim by the related Advancing Financing Person,
except to the extent that such claim, loss, liability or damage resulted from or
arose out of negligence, recklessness or willful misconduct on the part of the
Depositor, the Trustee or any successor Servicer, as the case may be, or failure
by the successor Servicer or the Trustee, as the case may be, to remit funds as
required by this Agreement or the commission of an act or omission to act by the
successor Servicer or the Trustee, as the case may be, and the passage of any
applicable cure or grace period, such that an Event of Default under this
Agreement occurs or such entity is subject to termination for cause under this
Agreement. The Servicer shall maintain and provide to any successor Servicer
and, upon request, the Trustee a detailed accounting on a loan-by-loan basis as
to amounts advanced by, pledged or assigned to, and reimbursed to any Advancing
Financing Person. The successor Servicer shall be entitled to rely on any such
information provided by the predecessor Servicer, and the successor Servicer
shall not be liable for any errors in such information.

                  (d)      An Advance Financing Person who receives an
assignment or pledge of rights to receive Advance Reimbursement Amounts and/or
whose obligations are limited to the funding of Advances and/or Servicing
Advances pursuant to an Advance Facility shall not be required to meet the
criteria for qualification as a sub-servicer.

                  (e)      As between a predecessor Servicer and its Advance
Financing Person, on the one hand, and a successor Servicer and its Advance
Financing Person, if any, on the other hand, Advance Reimbursement Amounts on a
loan-by-loan basis with respect to each Mortgage Loan as to which an Advance
and/or Servicing Advance shall have been made and be outstanding shall be
allocated on a "first-in, first out" basis. In the event the Servicer's Assignee
shall have received some or all of an Advance Reimbursement Amount related to
Advances and/or Servicing Advances that were made by a Person other than such
predecessor Servicer or its related Advance Financing Person in error, then such
Servicer's Assignee shall be required to remit any portion of such Advance
Reimbursement Amount to each Person entitled to such portion of such Advance
Reimbursement Amount. Without limiting the generality of the foregoing, the
Servicer shall remain entitled to be reimbursed by the Advance Financing Person
for all Advances and/or Servicing Advances funded by the Servicer to the extent
the related Advance Reimbursement Amounts have not been assigned or pledged to
such Advance Financing Person or Servicer's Assignee.

                  (f)      For purposes of any certification of an Officer's
Certificate of the Servicer made pursuant to Section 4.01, any Non-Recoverable
Advance or Non-recoverable Servicing Advance referred to therein may have been
made by such Servicer or any predecessor Servicer. In making its determination
that any Advance or Servicing Advance theretofore made has become a
Non-Recoverable Advance or Non-recoverable Servicing Advance, the Servicer shall
apply the same criteria in making such determination regardless of whether such
Advance or Servicing Advance shall have been made by the Servicer or any
predecessor Servicer.

                                     -106-

<PAGE>

                  (g)      Any amendment to this Section 10.14 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 10.14,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor and the Servicer without the consent
of any Certificateholder, provided such amendment complies with Section 10.01
hereof. All reasonable costs and expenses (including attorneys' fees) of each
party hereto of any such amendment shall be borne solely by the Servicer. The
parties hereto hereby acknowledge and agree that: (a) the Advances and/or
Servicing Advances financed by and/or pledged to an Advance Financing Person
under any Advance Facility are obligations owed to the Servicer payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing Advances only to the extent provided herein, and
the Trustee and the Trust are not, as a result of the existence of any Advance
Facility, obligated or liable to repay any Advances and/or Servicing Advances
financed by the Advance Financing Person; (b) the Servicer will be responsible
for remitting to the Advance Financing Person the applicable amounts collected
by it as reimbursement for Advances and/or Servicing Advances funded by the
Advance Financing Person, subject to the provisions of this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.

                                     -107-

<PAGE>

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

                                    MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                      as Depositor

                                    By: ________________________________________
                                    Name: Matthew Whalen
                                    Title: President

                                    LITTON LOAN SERVICING LP,
                                      as Servicer

                                    By: ________________________________________
                                    Name: Janice McClure
                                    Title: Senior Vice President

                                    WELLS FARGO BANK MINNESOTA, NATIONAL
                                    ASSOCIATION
                                       not in its individual capacity,
                                       but solely as Trustee

                                    By: ________________________________________
                                    Name: Sandra Whalen
                                    Title: Vice President

<PAGE>

                                    EXHIBIT A

                          FORMS OF OFFERED CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                      A-1

<PAGE>

                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                     B-1-1

<PAGE>

                                    EXHIBIT C

            SCHEDULE OF MORTGAGE LOANS WITH NO PREPAYMENT ENFORCEMENT

                             [INTENTIONALLY OMITTED]

                                      C-1

<PAGE>

                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Litton Loan Servicing LP
4828 Loop Central Drive
Houston, Texas 77081-2226

Re:      Pooling and Servicing Agreement dated as of October 1, 2003 among
         Merrill Lynch Mortgage Investors, Inc., as depositor, Litton Loan
         Servicing LP, as servicer and Wells Fargo Bank Minnesota, National
         Association, as trustee, Terwin Mortgage Trust, Asset-Backed
         Certificates, Series TMTS 2003-4HE

Ladies and Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:

         (i)      All documents in the Mortgage File required to be delivered to
the Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are
in its possession;

         (ii)     In connection with each Mortgage Loan or Assignment thereof as
to which documentary evidence of recording was not received on the Closing Date,
it has received evidence of such recording; and

         (iii)    Such documents have been reviewed by it and such documents do
not contain any material omissions or defects within the meaning of Section 2.01
or 2.02.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number and the name of the Mortgagor in each Mortgage File conform to the
respective Mortgage Loan number and name listed on the Mortgage Loan Schedule
and (ii) the existence in each Mortgage File of each of the documents listed in
subparagraphs (i)(A) through (G), inclusive, of Section 2.01 in the Agreement.
The Trustee makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.

                                      D-1

<PAGE>

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                    WELLS FARGO BANK MINNESOTA, NATIONAL
                                    ASSOCIATION,
                                    as Trustee

                                    By: ________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________

                                      D-2

<PAGE>

                                   EXHIBIT E-1

                           FORM OF TRANSFEREE'S LETTER
                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                 ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-4HE

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series TMTS
2003-4HE

Ladies and Gentlemen:

         We propose to purchase Terwin Mortgage Trust, Asset-Backed
Certificates, Series TMTS 2003-4HE, Class [R] [R-X], described in the Prospectus
Supplement, dated October 28, 2003, and Prospectus, dated July 3, 2003.

         1.       We certify that (a) we are not a disqualified organization and
(b) we are not purchasing such Class [R] [R-X] Certificate on behalf of a
disqualified organization; for this purpose the term "disqualified organization"
means the United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

         2.       We certify that (a) we have historically paid our debts as
they became due, (b) we intend, and believe that we will be able, to continue to
pay our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class [R] [R-X] Certificate, we may incur tax
liabilities in excess of any cash flows generated by the Class [R] [R-X]
Certificate, and (d) we intend to pay any taxes associated with holding the
Class [R] [R-X] Certificate as they become due and (e) we will not cause income
from the Class [R] [R-X] Certificate to be attributable to a foreign permanent
establishment or fixed base (within the meaning of an applicable income tax
treaty) of ours or another U.S. taxpayer.

         3.       We acknowledge that we will be the beneficial owner of the
Class [R] [R-X] Certificate and:*

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

* Check appropriate box and if necessary fill in the name of the Transferee's
nominee.

<PAGE>

                  ______   The Class [R] [R-X] Certificate will be registered in
                           our name.

                  ______   The Class [R] [R-X] Certificate will be held in the
                           name of our nominee, _________________, which is not
                           a disqualified organization.

         4.       We certify that we are not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan within the meaning of Section 4975 of the Code or a plan
subject to federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code (each, a "Plan"), and are not directly or
indirectly purchasing the Class [R] [R-X] Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of or with the assets
of a Plan or directly or indirectly purchasing the Class [R] [R-X] Certificate
with the assets of any insurance company separate account or general account
containing any "plan assets" or of any Plan.

         5.       We certify that (i) we are a U.S. person or (ii) we will hold
the Class [R] [R-X] Certificate in connection with the conduct of a trade or
business within the United States and have furnished the transferor, the Trustee
and the Trustee with a duly completed and effective Internal Revenue Service
Form W-8ECI or successor form at the time and in the manner required by the
Code; for this purpose the term "U.S. person" means a citizen or resident of the
United States, a corporation, or partnership (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise) created or
organized in or under the laws of the United States, any State thereof or the
District of Columbia, including an entity treated as a corporation or
partnership for federal income tax purposes, an estate whose income is subject
to United States federal income tax regardless of the source of its income, or a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more such U.S.
persons have the authority to control all substantial decisions of the trust
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons. We agree that any breach by us of this certification shall render
the transfer of any interest in the Class [R] [R-X] Certificate to us absolutely
null and void and shall cause no rights in the Class [R] [R-X] Certificate to
vest in us.

         6.       We agree that in the event that at some future time we wish to
transfer any interest in the Class [R] [R-X] Certificate, we will transfer such
interest in the Class [R] [R-X]Certificate only (a) to a transferee that (i) is
not a disqualified organization and is not purchasing such interest in the Class
[R] [R-X] Certificate on behalf of a disqualified organization, (ii) is a U.S.
person or will hold the Class [R] [R-X] Certificate in connection with the
conduct of a trade or business within the United States and will furnish us, the
Trustee and the Trustee with a duly completed and effective Internal Revenue
Service Form W-8ECI or successor form at the time and in the manner required by
the Code and (iii) has delivered to the Trustee and the Trustee a letter in the
form of this letter (including the affidavit appended hereto) and, we will
provide the Trustee and the Trustee a written statement substantially in the
form of Exhibit E-2 to the Agreement.

         7.       We hereby designate _______________________ as our fiduciary
to act as the tax matters person for each of the REMICs provided for in the
Agreement as to which the Class [R] [R-X] Certificate represents the residual
interest for federal income tax purposes.

                                     E-1-2

<PAGE>

                                    Very truly yours,

                                    [PURCHASER]

                                    By:___________________________________
                                       Name:
                                       Title:

Accepted as of __________ __, 200__

MERRILL LYNCH MORTGAGE INVESTORS, INC.

By:_____________________________
    Name:
    Title:

                                     E-1-3

<PAGE>

                                   APPENDIX A

                                    Affidavit pursuant to (i) Section 860E(e)(4)
                                    of the Internal Revenue Code of 1986, as
                                    amended, and (ii) certain provisions of the
                                    Pooling and Servicing Agreement

Under penalties of perjury, the undersigned declares that the following is true:

(1)      He or she is an officer of _________________________ (the
         "Transferee"),

(2)      the Transferee's Employer Identification number is __________,

(3)      the Transferee is not a "disqualified organization" (as defined below),
         has no plan or intention of becoming a disqualified organization, and
         is not acquiring any of its interest in the Terwin Mortgage Trust,
         Asset-Backed Certificates, Series TMTS 2003-4HE, Class [R] [R-X] on
         behalf of a disqualified organization or any other entity,

(4)      unless Merrill Lynch Mortgage Investors, Inc.("MLMI") has consented to
         the transfer to the Transferee by executing the form of Consent affixed
         as Appendix B to the Transferee's Letter to which this Certificate is
         affixed as Appendix A, the Transferee is a "U.S. person" (as defined
         below),

(5)      that no purpose of the transfer is to avoid or impede the assessment or
         collection of tax,

(6)      the Transferee has historically paid its debts as they became due,

(7)      the Transferee intends, and believes that it will be able, to continue
         to pay its debts as they become due in the future,

(8)      the Transferee understands that, as beneficial owner of the Class [R]
         [R-X] Certificate, it may incur tax liabilities in excess of any cash
         flows generated by the Class [R] [R-X] Certificate,

(9)      the Transferee intends to pay any taxes associated with holding the
         Class [R] [R-X] Certificate as they become due,

(10)     the Transferee consents to any amendment of the Pooling and Servicing
         Agreement that shall be deemed necessary by MLMI (upon advice of
         counsel) to constitute a reasonable arrangement to ensure that the
         Class [R] [R-X] Certificate will not be owned directly or indirectly by
         a disqualified organization, and

(11)     IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
         transfer is not a direct or indirect transfer of the Class [R] [R-X]
         Certificate to a foreign permanent establishment or fixed base (within
         the meaning of an applicable income tax treaty) of the Transferee, and
         as to each of the residual interests represented by the Class [R] [R-X]
         Certificate, the present value of the anticipated tax liabilities
         associated with holding such residual interest does not exceed the sum
         of:

                                     E-1-4

<PAGE>

         (A)      the present value of any consideration given to the Transferee
                  to acquire such residual interest;

         (B)      the present value of the expected future distributions on such
                  residual interest; and

         (C)      the present value of the anticipated tax savings associated
                  with holding such residual interest as the related REMIC
                  generates losses.

         For purposes of this declaration, (i) the Transferee is assumed to pay
         tax at a rate equal to the highest rate of tax specified in Section
         11(b)(1) of the Code, but the tax rate specified in Section 55(b)(1)(B)
         of the Code may be used in lieu of the highest rate specified in
         Section 11(b)(1) of the Code if the Transferee has been subject to the
         alternative minimum tax under Section 55 of the Code in the preceding
         two years and will compute its taxable income in the current taxable
         year using the alternative minimum tax rate, and (ii) present values
         are computed using a discount rate equal to the Federal short-term rate
         prescribed by Section 1274(d) of the Code for the month of the transfer
         and the compounding period used by the Transferee;]

[(11)    (A)      at the time of the transfer, and at the close of each of the
                  Transferee's two fiscal years preceding the Transferee's
                  fiscal year of transfer, the Transferee's gross assets for
                  financial reporting purposes exceed $100 million and its net
                  assets for financial reporting purposes exceed $10 million;
                  and

         (B)      the Transferee is an eligible corporation as defined in
                  Treasury regulations Section 1.860E-1(c)(6)(i) and has agreed
                  in writing that any subsequent transfer of the Class [R][R-X]
                  Certificate will be to another eligible corporation in a
                  transaction that satisfies Treasury regulation Sections
                  1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii), 1.860E-1(c)(4)(iii) and
                  1.860E-1(c)(5) and such transfer will not be a direct or
                  indirect transfer to a foreign permanent establishment (within
                  the meaning of an applicable income tax treaty) of a domestic
                  corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12)     The Transferee will not cause income from the Class [R] [R-X]
Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer.

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary

                                     E-1-5

<PAGE>

supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).

__________________________________

By: ______________________________

__________________________________

         Address of Investor for receipt of distribution:

         Address of Investor for receipt of tax information:

         (Corporate Seal)

         Attest:

__________________________________

__________________________________, Secretary

                                     E-1-6

<PAGE>

         Personally appeared before me the above-named ______________, known or
         proved to me to be the same person who executed the foregoing
         instrument and to be the _______ of the Investor, and acknowledged to
         me that he executed the same as his free act and deed and the free act
         and deed of the Investor.

         Subscribed and sworn before me this         day of

                 , 200_ .

__________________________________
         Notary Public

         County of ___________________
         State of _____________________
         My commission expires the ________ day of ______________

                                       By:    __________________________
                                              Name: ____________________
                                              Title: ___________________

Dated: _____________

                                     E-1-7

<PAGE>

                                   EXHIBIT E-2

                         FORM OF TRANSFEROR'S AFFIDAVIT
                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                 ASSET-BACKED CERTIFICATES, SERIES TMTS 2003-4HE

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series TMTS
2003-4HE

Re:    Terwin Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-4HE

                  _______________________ (the "Transferor") has reviewed the
attached affidavit of _____________________________ (the "Transferee"), and has
no actual knowledge that such affidavit is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to the Class [R] [R-X] Certificate referred to in the attached
affidavit. In addition, the Transferor has conducted a reasonable investigation
at the time of the transfer and found that the Transferee had historically paid
its debts as they came due and found no significant evidence to indicate that
the Transferee will not continue to pay its debts as they become due.

                                                 Very truly yours,

                                                 ___________________________

                                                 Name:
                                                 Title:

                                     E-2-1

<PAGE>

                                    EXHIBIT F

                       FORM OF TRANSFEROR CERTIFICATE FOR
                        CLASS N AND CLASS X CERTIFICATES

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series TMTS
2003-4HE

RE:      Terwin Mortgage Trust, Asset-Backed Certificates,
         Series TMTS 2003-4HE

Ladies and Gentlemen:

         In connection with our disposition of the Class [N or X] Certificate,
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of October 1,
2003, among Merrill Lynch Mortgage, Inc., as depositor, Litton Loan Servicing
LP, as servicer and Wells Fargo Bank Minnesota, National Association, as
trustee.

                                            Very truly yours,

                                            _______________________________
                                            Name of Transferor

                                            By: ___________________________
                                            Name:
                                            Title

                                      F-1

<PAGE>

                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER
                              (ACCREDITED INVESTOR)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series
TMTS 2003-4HE

Re:      Pooling and Servicing Agreement dated as of October 1, 2003 among
         Merrill Lynch Mortgage Investors, Inc., as depositor, Litton Loan
         Servicing LP, as servicer and Wells Fargo Bank Minnesota, National
         Association, as trustee, Terwin Mortgage Trust, Asset-Backed
         Certificates, Series TMTS 2003-4HE [Class N or X]

Ladies and Gentlemen:

         ______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Asset-Backed Certificates, Series TMTS 2003-4HE,
[Class N or X] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of October 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Litton Loan Servicing LP, as servicer (the "Servicer") and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR _________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

         For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:

         1.       The Purchaser understands that (a) the Certificates have not
been registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

         2.       The Certificates will bear a legend to the following effect:

         THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS
         AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS,
         AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE

                                      G-1

<PAGE>

         TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT
         TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
         SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
         PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
         TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
         HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A)
         AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
         REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF
         THE CERTIFICATES.

         NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
         HAVE RECEIVED EITHER (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
         THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT
         AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
         THE CODE OR ANY APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW")
         (EACH, A "PLAN") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF
         ERISA AND THE CODE, AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY
         CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY
         OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN
         INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS CONTAINING ANY
         "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR REGULATIONS SET FORTH
         IN 29 CFR SECTION 2510.3-101 TO EFFECT SUCH ACQUISITION OR (B) IF THE
         TRANSFEREE IS AN INSURANCE COMPANY, A REPRESENTATION LETTER THAT THE
         TRANSFEREE IS AN INSURANCE COMPANY THAT IS PURCHASING THE CERTIFICATE
         WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH
         TERM IS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
         EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12, 1995), AND
         THE PURCHASE AND HOLDING OF THE CERTIFICATE IS COVERED UNDER SECTIONS I
         AND III OF PTCE 95-60, OR (II) AN OPINION OF COUNSEL TO THE EFFECT THAT
         THE PURCHASE AND HOLDING OF THE CERTIFICATE WILL NOT RESULT IN A
         PROHIBITED TRANSACTION UNDER ERISA, THE CODE OR SIMILAR LAW AND WILL
         NOT SUBJECT THE NIMS INSURER OR THE TRUSTEE TO ANY OBLIGATION IN
         ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING AND SERVICING
         AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE NIMS
         INSURER OR THE TRUSTEE.

         3.       The Purchaser is acquiring the Transferred Certificates for
its own account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or
other transfer in connection with any distribution of the Transferred
Certificates in any manner that would violate the Securities Act or any
applicable state securities laws, subject, nevertheless, to the understanding
that disposition of the Purchaser's property shall at all times be and remain
within its control.

         4.       The Purchaser (a) is a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters, and in particular in such matters related to securities
similar to the Certificates, such that it is capable of evaluating the merits
and risks of investment in the Certificates, (b) is able to bear the economic
risks of such an investment and (c) is an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the Securities Act.

                                      G-2

<PAGE>

         5.       The Purchaser will not nor has it authorized nor will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicit any offer to buy or to accept
a pledge, disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.

--------------------
**/      Not required of a broker/dealer purchaser.

                                      G-3

<PAGE>

         6.       The Purchaser either (A) is not an employee benefit plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a plan within the meaning of Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") or a plan subject to federal state
or local law materially similar to the foregoing provisions of ERISA and the
Code ("Similar Law") (each, a "Plan"), and is not directly or indirectly
purchasing any Certificate on behalf of, as investment manager of, as named
fiduciary of, as trustee of or with assets of a Plan or directly or indirectly
purchasing any certificates with the assets of any insurance company separate
account containing any "plan assets" or of any Plan, (B) is an insurance company
that is purchasing the Certificate with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12,
1995), and the purchase and holding of the Certificate is covered under Sections
I and III of PTCE 95-60, or (C) herewith delivers to the Trustee an Opinion of
Counsel satisfactory to the Trustee, and upon which the Trustee shall be
entitled to rely, to the effect that the purchase and holding of the Certificate
by the Purchaser will not result in a prohibited transaction under ERISA, the
Code or Similar Law and will not subject the NIMs Insurer or the Trustee to any
obligation in addition to those expressly undertaken in the Pooling and
Servicing Agreement, which Opinion of Counsel shall not be an expense of the
NIMs Insurer or the Trustee.

         7.       Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.

         8.       The Purchaser agrees to indemnify the Trustee, the Servicer
and the Depositor against any liability that may result from any
misrepresentation made herein.

                                              Very truly yours,

                                              [PURCHASER]

                                              By:_______________________________
                                                 Name:
                                                 Title:

                                      G-4

<PAGE>

                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER
                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series TMTS
2003-4HE

Re:      Pooling and Servicing Agreement dated as of October 1, 2003 among
         Merrill Lynch Mortgage Investors, Inc., as depositor, Litton Loan
         Servicing LP, as servicer and Wells Fargo Bank Minnesota, National
         Association, as trustee, Terwin Mortgage Trust, Asset-Backed
         Certificates, Series TMTS 2003-4HE [Class N or X]

Ladies and Gentlemen:

         ______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Asset-Backed Certificates, Series 2003-4HE,
[Class N or X] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of October 1, 2003 (the "Pooling and Servicing Agreement"),
among Merrill Lynch Mortgage Investors, Inc., as depositor (the "Depositor"),
Litton Loan Servicing LP, as servicer (the "Servicer"), and Wells Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.

         For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:

         In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates, (d)
we either (i) are not an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a plan
within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") or a plan subject to federal, state or local law materially
similar to the foregoing provisions of ERISA and the Code ("Similar Law") (each,
a "Plan"), nor are we directly or indirectly purchasing any Certificate on
behalf of, as investment manager of, as named fiduciary of, as

                                      H-1

<PAGE>

trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan, (ii) are an insurance company that
is purchasing the Transferred Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12,
1995), and the purchase and holding of the Certificates is covered under
Sections I and III of PTCE 95-60, or (iii) herewith have delivered to the
Trustee an Opinion of Counsel satisfactory to the Trustee, and upon which the
Trustee shall be entitled to rely, to the effect that the purchase and holding
of the Transferred Certificates by the Purchaser will not result in a prohibited
transaction under ERISA, the Code or Similar Law and will not subject the NIMs
Insurer or the Trustee to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the NIMs Insurer or the Trustee, (e) we have not, nor
has anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed by us, based upon
certifications of such purchaser or information we have in our possession, to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

         We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.

                                           Very truly yours,

                                           [PURCHASER]

                                           By:______________________________
                                              Name:
                                              Title:

                                      H-2

<PAGE>

                                                                         ANNEX 1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1.       As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

         2.       In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.

                  ____     Corporation, etc. The Buyer is a corporation (other
                           than a bank, savings and loan association or similar
                           institution), Massachusetts or similar business
                           trust, partnership, or charitable organization
                           described in Section 501(c)(3) of the Internal
                           Revenue Code of 1986, as amended.

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

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

                  ____     Broker-dealer. The Buyer is a dealer registered
                           pursuant to Section 15 of the Securities Exchange Act
                           of 1934, as amended.

                  ____     Insurance Company. The Buyer is an insurance company
                           whose primary and predominant business activity is
                           the writing of insurance or the reinsuring of risks
                           underwritten by insurance companies and which is
                           subject to supervision by the

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

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

                                      H-3

<PAGE>

                           insurance commissioner or a similar official or
                           agency of the State, territory or the District of
                           Columbia.

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

                  ____     ERISA Plan. The Buyer is an employee benefit plan
                           subject to Title I of the Employee Retirement Income
                           Security Act of 1974, as amended.

                  ____     Investment Advisor. The Buyer is an investment
                           advisor registered under the Investment Advisors Act
                           of 1940, as amended.

                  ____     Small Business Investment Company. Buyer is a small
                           business investment company licensed by the U.S.
                           Small Business Administration under Section 301(c) or
                           (d) of the Small Business Investment Act of 1958, as
                           amended.

                  ____     Business Development Company. Buyer is a business
                           development company as defined in Section 202(a)(22)
                           of the Investment Advisors Act of 1940, as amended.

         3.       The term "securities" as used for purposes of the calculation
of the dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.

         4.       For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

         5.       The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

         6.       Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                      H-4

<PAGE>

                                               By:______________________________
                                                  Name:
                                                  Title:

                                               Date:____________________________

                                      H-5

<PAGE>

                                                                         ANNEX 2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1.       As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

         2.       In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in Rule 144A because (i) the Buyer is
an investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

                  ____     The Buyer owned $___________ in securities (other
                           than the excluded securities referred to below) as of
                           the end of the Buyer's most recent fiscal year (such
                           amount being calculated in accordance with Rule
                           144A).

                  ____     The Buyer is part of a Family of Investment Companies
                           which owned in the aggregate $__________ in
                           securities (other than the excluded securities
                           referred to below) as of the end of the Buyer's most
                           recent fiscal year (such amount being calculated in
                           accordance with Rule 144A).

         3.       The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

         4.       The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

         5.       The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

                                      H-6

<PAGE>

         6.       Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.

                                           By:__________________________________
                                               Name:
                                               Title:

                                           IF AN ADVISER:

                                           _____________________________________
                                           Print Name of Buyer

                                           Date:________________________________

                                      H-7

<PAGE>

                                    EXHIBIT I

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      Wells Fargo Bank Minnesota, National Association
         9062 Old Annapolis Road
         Columbia, Maryland 21045
         Attention: Corporate Trust Services - Terwin Mortgage Trust, Series
         TMTS 2003-4HE [and/or its designee]

Re:      Pooling and Servicing Agreement dated as of October 1, 2003 among
         Merrill Lynch Mortgage Investors, Inc., as depositor, Litton Loan
         Servicing LP, as servicer and Wells Fargo Bank Minnesota, National
         Association, as trustee, Terwin Mortgage Trust, Asset-Backed
         Certificates, Series TMTS 2003-4HE

         In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_______ 1.        Mortgage Paid in Full

_______ 2.        Foreclosure

_______ 3.        Substitution

_______ 4.        Other Liquidation (Repurchases, etc.)

_______ 5.        Nonliquidation             Reason:  __________________________

Address to which the Trustee should deliver the Mortgage File:

                                               By:______________________________
                                                        (authorized signer)

                                               Address:_________________________

                                               Date:____________________________

                                      I-1

<PAGE>

If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.

If box 3, 4 or 5 above is checked, upon our return of all of the above documents
to you as Trustee, please acknowledge your receipt by signing in the space
indicated below, and returning this form.

Trustee

Wells Fargo Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:

_________________________________   _________________________________
Signature                           Date

Documents returned to Trustee:

_________________________________   _________________________________
Trustee                             Date

                                      I-2

<PAGE>

                                    EXHIBIT J

                      LIST OF INTERIM SERVICING AGREEMENTS

PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT, dated as of May 1, 2003,
between TERWIN ADVISORS LLC, as Purchaser, and FINANCE AMERICA, LLC, as Seller
and Servicer

LETTER AGREEMENT, dated as of October 30, 2003, among WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee, and OCWEN FEDERAL BANK FSB

SELLER'S PURCHASE, WARRANTIES AND INTERIM SERVICING AGREEMENT dated April 1,
2003 between TERWIN ADVISORS LLC, as Purchaser and GREENPOINT MORTGAGE FUNDING
INC., as Seller and Servicer

LETTER AGREEMENT, dated as of October 30, 2003, among WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee, and GREENPOINT MORTGAGE FUNDING
INC.

                                      J-1

<PAGE>

                                    EXHIBIT K

                        OFFICER'S CERTIFICATE OF TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:      Pooling and Servicing Agreement (the "Agreement") dated as of October
         1, 2003 among Merrill Lynch Mortgage Investors, Inc., as depositor,
         Litton Loan Servicing LP, as servicer and Wells Fargo Bank Minnesota,
         National Association, as trustee, Terwin Mortgage Trust, Asset-Backed
         Certificates, Series TMTS 2003-4HE [Class N or X]

I, [identify the certifying individual], a [title] of the Trustee hereby certify
to the Depositor, and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:

1.       I have reviewed the Monthly Statements delivered pursuant to the
         Agreement since the last Officer's Certificate executed pursuant to
         Section 4.02 of the Agreement [or in the case of the first
         certification, since the Cut-off Date] (the "Trustee Information").

2.       Based on my knowledge, the information in the Monthly Statement, taken
         as a whole, does not contain any untrue statement of a material fact or
         omit to state a material fact necessary to make the statements made, in
         light of the circumstances under which such statements were made, not
         misleading as of the date hereof;

3.       Based on my knowledge, the Monthly Statements required to be prepared
         by the Trustee under the Agreement has been prepared and provided in
         accordance with the Agreement; and

4.       I am responsible for reviewing the activities performed by the Trustee
         under the Agreement and the Trustee has, as of the date hereof
         fulfilled its obligations under the Agreement and there are no
         significant deficiencies relating to the Trustee's compliance with this
         Agreement.

Date:
                                            Wells Fargo Bank Minnesota, National
                                            Association, as Trustee

                                            By:     ____________________________

                                            Name:   ____________________________

                                            Title:  ____________________________

                                      K-1

<PAGE>

                                    EXHIBIT L

                        OFFICER'S CERTIFICATE OF SERVICER

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank Minnesota, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Terwin Mortgage Trust, Series TMTS
2003-4HE

Re:      Terwin Mortgage Trust, Asset-Backed Certificates, Series TMTS 2003-4HE
         [Class N or X]

Reference is made to the Pooling and Servicing Agreement, dated as of October 1,
2003 (the "Agreement"), by and among Merrill Lynch Mortgage Investors, Inc., as
depositor, Litton Loan Servicing LP, as servicer (the "Servicer") and Wells
Fargo Bank Minnesota, National Association, as trustee. I, [identify the
certifying individual], an authorized representative of the Servicer hereby
certify to the Trustee and the Depositor, and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:

1.       I have reviewed the information required to be delivered to the Trustee
         pursuant to the Servicing Agreement (the "Servicing Information").

2.       Based on my knowledge, the information in the Annual Statement of
         Compliance, and all servicing reports, officer's certificates and other
         information relating to the servicing of the Mortgage Loans submitted
         to the Trustee by the Servicer taken as a whole, does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading as of the last
         day of the period covered by the Annual Statement of Compliance;

3.       Based on my knowledge, the Servicing Information required to be
         provided to the Trustee by the Servicer under this Agreement has been
         provided to the Trustee; and

                                      L-1

<PAGE>

4.       I am responsible for reviewing the activities performed by the Servicer
         under this Agreement and based upon the review required hereunder, and
         except as disclosed in the Annual Statement of Compliance, the Annual
         Independent Certified Public Accountant's Servicing Report and all
         servicing reports, officer's certificates and other information
         relating to the servicing of the Mortgage Loans submitted to the
         Trustee by the Servicer, the Servicer has, as of the last day of the
         period covered by the Annual Statement of Compliance fulfilled its
         obligations under this Agreement.

Date:

                                           Litton Loan Servicing LP, as Servicer

                                           By:      ____________________________

                                           Name:    ____________________________

                                           Title:   ____________________________

                                      L-2

<PAGE>

                                    EXHIBIT M

                               CUSTODIAL AGREEMENT

                             [INTENTIONALLY OMITTED]

                                      M-1

<PAGE>

                                    EXHIBIT N

                              FORM OF CAP CONTRACT

                             [INTENTIONALLY OMITTED]

                                      N-1SECOND SUPPLEMENTAL INDENTURE

 

Exhibit 4.2

W. R. BERKLEY CORPORATION

TO

THE BANK OF NEW YORK, as Trustee

SECOND SUPPLEMENTAL INDENTURE TO

INDENTURE DATED FEBRUARY 14, 2003

(SENIOR DEBT SECURITIES)

Dated as of September 12, 2003

5.125% Senior Notes due 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	 	 	
ARTICLE I	 	 
	 	 	 	 	 
	 	 	
Relation to Indenture; Definitions	 	 
	 	 	 	 	 
	Section 1.1.	 	
RELATION TO INDENTURE
	 	1
	Section 1.2.	 	
DEFINITIONS
	 	1
	 	 	 	 	 
	 	 	
ARTICLE II	 	 
	 	 	 	 	 
	 	 	
The Series of Securities	 	 
	 	 	 	 	 
	Section 2.1.	 	
TITLE OF THE SECURITIES
	 	2
	Section 2.2.	 	
LIMITATION ON AGGREGATE PRINCIPAL AMOUNT
	 	2
	Section 2.3.	 	
PRINCIPAL PAYMENT DATE
	 	2
	Section 2.4.	 	
INTEREST AND INTEREST RATES
	 	2
	Section 2.5.	 	
PLACE OF PAYMENT
	 	3
	Section 2.6.	 	
REDEMPTION
	 	3
	Section 2.7.	 	
DENOMINATION
	 	5
	Section 2.8.	 	
CURRENCY
	 	5
	Section 2.9.	 	
FORM OF NOTES
	 	5
	Section 2.10.	 	
REGISTRAR AND PAYING AGENT FOR THE NOTES
	 	5
	Section 2.11.	 	
SINKING FUND OBLIGATIONS
	 	5
	Section 2.12.	 	
DEFEASANCE AND COVENANT DEFEASANCE
	 	5
	Section 2.13.	 	
PAYMENT OF TAXES
	 	5
	Section 2.14.	 	
LIMITATION ON LIENS ON STOCK OF PRINCIPAL SUBSIDIARIES
	 	5
	Section 2.15.	 	
LIMITATIONS ON ISSUE OR DISPOSITION OF COMMON STOCK OF

PRINCIPAL SUBSIDIARIES
	 	6
	Section 2.16.	 	
IMMEDIATELY AVAILABLE FUNDS
	 	6
	 	 	 	 	 
	 	 	
ARTICLE III	 	 
	 	 	 	 	 
	 	 	
Miscellaneous Provisions	 	 
	 	 	 	 	 
	Section 3.1.	 	
TRUSTEE NOT RESPONSIBLE FOR RECITALS
	 	6
	Section 3.2.	 	
PAYMENT OF EXPENSES UPON RESIGNATION OR REMOVAL
	 	7
	Section 3.3.	 	
ADOPTION, RATIFICATION AND CONFIRMATION
	 	7
	Section 3.4.	 	
COUNTERPARTS
	 	7
	Section 3.5.	 	
GOVERNING LAW
	 	7

 

 

W. R. BERKLEY CORPORATION

SECOND SUPPLEMENTAL INDENTURE TO

INDENTURE DATED FEBRUARY 14, 2003

(SENIOR DEBT SECURITIES)

$150,000,000

5.125% Senior Notes due 2010

     SECOND SUPPLEMENTAL INDENTURE, dated as of September 12, 2003 between W.
R. BERKLEY CORPORATION, a Delaware corporation (the “Company”), and THE BANK OF
NEW YORK, a trust company organized under the laws of the State of New York, as
Trustee (the “Trustee”).

RECITALS

     The Company has heretofore executed and delivered to the Trustee an
indenture for senior debt securities, dated as of February 14, 2003 (the
“Indenture”), providing for the issuance from time to time of series of the
Company’s Securities.

     Section 3.1 of the Indenture provides for various matters with respect to
any series of Securities issued under the Indenture to be established in an
indenture supplemental to the Indenture.

     Section 9.1(4) of the Indenture provides for the Company and the Trustee
to enter into an indenture supplemental to the Indenture to establish the form
or terms of Securities of any series as provided by Sections 2.1 and 3.1 of the
Indenture.

     NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

     For and in consideration of the premises and the issuance of the series of
Securities provided for herein, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities of such series, as
follows:

ARTICLE I

RELATION TO INDENTURE; DEFINITIONS

     Section 1.1. RELATION TO INDENTURE. This Second Supplemental Indenture
constitutes an integral part of the Indenture.

     Section 1.2. DEFINITIONS. For all purposes of this Second Supplemental
Indenture:

1

 

     (a)  Capitalized terms used herein without definition shall have the
meanings specified in the Indenture;

     (b)  All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Second
Supplemental Indenture; and

     (c)  The terms “herein,” “hereof,” “hereunder” and other words of similar
import refer to this Second Supplemental Indenture.

     (d)  “Fair Value,” when used with respect to Common Stock, means the fair
value thereof as determined in good faith by the Board of Directors.

ARTICLE II

THE SERIES OF SECURITIES

     Section 2.1. TITLE OF THE SECURITIES. There shall be a series of
Securities designated the “5.125% Senior Notes due 2010” (the “Notes”).

     Section 2.2. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT. The aggregate
principal amount of the Notes shall initially be limited to $150,000,000. The
Company may, without the consent of the Holders of the Notes, issue additional
Securities having the same interest rate, maturity date and other terms as
described in the related prospectus supplement and prospectus. Any additional
Securities, together with the Notes offered by the related prospectus
supplement, will constitute a single series of Securities under the Indenture.
No additional Securities may be issued if an Event of Default under the
Indenture has occurred and is continuing with respect to the Securities.

     Section 2.3. PRINCIPAL PAYMENT DATE. The principal amount of the Notes
outstanding (together with any accrued and unpaid interest) shall be payable in
a single installment on September 30, 2010, which date shall be the Stated
Maturity of the Notes Outstanding.

     Section 2.4. INTEREST AND INTEREST RATES. The rate of interest on each
Note shall be 5.125% per annum, accruing from September 12, 2003, or from the
most recent interest payment date (each such date, an “Interest Payment Date”)
to which interest has been paid or duly provided for, payable semiannually in
arrears on March 30 and September 30 of each year commencing March 30, 2004
until the principal thereof shall have become due and payable, and until the
principal thereof is paid or duly provided for or made available for payment.
The amount of interest payable on any Interest Payment Date shall be computed
on the basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any partial period shall be computed on the basis of the actual
number of days elapsed in a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on any Note is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay). The interest installment so payable in
respect of any Note, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to

2

 

 the person in whose name such Note (or one or more Predecessor Securities)
is registered at the close of business on March 15 or September 15 prior to
such Interest Payment Date. Any such interest installment not punctually paid
or duly provided for in respect of any Note shall forthwith cease to be payable
to the registered Holder on such Regular Record Date and may either be paid to
the Person in whose name such Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date to be fixed by the
Trustee for the payment of such Defaulted Interest, notice whereof shall be
given to the Holders of the Notes not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.

     Section 2.5. PLACE OF PAYMENT. The Place of Payment where the Notes may
be presented or surrendered for payment, where the Notes may be surrendered for
registration of transfer or exchange and where notices and demand to or upon
the Company in respect of the Notes and the Indenture may be served shall be
the Corporate Trust Office of the Trustee.

     Section 2.6. REDEMPTION.

     (a)  The Company may redeem the Notes, in whole or in part, at any time at
a Redemption Price equal to the greater of (i) 100% of the principal amount of
such Securities to be redeemed or (ii) an amount, as determined by an
Independent Investment Banker, equal to the sum of the present values of the
remaining scheduled payments of principal of and interest on the securities to
be redeemed (not including any portion of such payments of interest accrued as
of the date of redemption) discounted to the Redemption Date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus 25 basis points, plus, in either of the above
cases, accrued and unpaid interest thereon to, but not including, the
Redemption Date.

     (b)  For the purposes of this Section 2.6,

     “Adjusted Treasury Rate” means, with respect to any Redemption Date:

	 	•	 	the yield, under the heading which represents the
average for the immediately preceding week, appearing in the
most recently published statistical release designated
“H.15(519)” published by the Board of Governors of the Federal
Reserve System (or any successor publication which is
published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant
maturity) under the caption “Treasury Constant Maturities,”
for the maturity corresponding to the Comparable Treasury
Issue. If no maturity is within three months before or after
the Remaining Life, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be
interpolated or

3

 

	 	 	 	extrapolated from such yields on a straight line basis,
rounding to the nearest month; or
	 
	 	•	 	if such release (or any successor release) is not
published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
Redemption Date.

     The Adjusted Treasury Rate shall be calculated on the third Business Day
preceding the Redemption Date.

     “Comparable Treasury Issue” means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities (“Remaining Life”).

     “Comparable Treasury Price” means (i) the average of three Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest Reference Treasury Dealer Quotations, or (ii) if the
Independent Investment Banker obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means one of the Reference Treasury
Dealers appointed by us.

     “Reference Treasury Dealer” means:

	 	•	 	each of Morgan Stanley & Co. Incorporated and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and their
respective successors; provided that, if any of the foregoing
ceases to be a primary U.S. Government securities dealer in
the United States (a “Primary Treasury Dealer”), the Company
shall substitute therefor another Primary Treasury Dealer; and
	 
	 	•	 	any other Primary Treasury Dealer selected by the
Company.

     “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at
5:00 p.m., New York City Time, on the third Business Day preceding such
Redemption Date.

     The Company will mail a notice of redemption at least 30 days but not more
than 60 days before the Redemption Date to each holder of the notes to be
redeemed. If less than all

4

 

 of the notes are to be redeemed, the trustee will select, by such method
as it will deem fair and appropriate, including pro rata or by lot, the notes
to be redeemed in whole or in part.

     Unless the Company defaults in payment of the Redemption Price, on and
after the Redemption Date, interest will cease to accrue on the notes or
portions thereof called for redemption.

     Section 2.7. DENOMINATION. The Notes shall be issuable only in registered
form without coupons and in denominations of $1,000 and integral multiples
thereof.

     Section 2.8. CURRENCY. Principal and interest on the Notes shall be
payable in such coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts.

     Section 2.9. FORM OF NOTES. The Notes shall be substantially in the form
attached as EXHIBIT A hereto.

     Section 2.10. REGISTRAR AND PAYING AGENT FOR THE NOTES. The Trustee shall
serve initially as Registrar and Paying Agent for the Notes.

     Section 2.11. SINKING FUND OBLIGATIONS. The Company has no obligation to
redeem or purchase any Notes pursuant to any sinking fund or analogous
requirement or upon the happening of a specified event or at the option of a
Holder thereof.

     Section 2.12. DEFEASANCE AND COVENANT DEFEASANCE. The Company has elected
to have both Section 4.2(2) of the Indenture (relating to defeasance) and
Section 4.2(3) (relating to covenant defeasance) applied to the Notes.

     Section 2.13. PAYMENT OF TAXES. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, all
taxes, assessments and governmental charges levied or imposed upon the Company
or any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and lawful claims for labor, materials and supplies, which, if
unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment or
governmental charge whose amount, applicability or validity is being contested
in good faith by appropriate proceedings or where the failure to effect such
payment is not adverse in any material respect to the Holders of the Notes.

     Section 2.14. LIMITATION ON LIENS ON STOCK OF PRINCIPAL SUBSIDIARIES. The
Company will not, and it will not permit any Subsidiary of the Company to, at
any time directly or indirectly create, assume, incur or permit to exist any
Indebtedness secured by a pledge, lien or other encumbrance (any pledge, lien
or other encumbrance being hereinafter in this Section referred to as a “lien”)
on the voting securities of Principal Subsidiaries, or the voting securities of
a Subsidiary that owns, directly or indirectly, the voting securities of any of
the Principal Subsidiaries without making effective provision whereby the Notes
then Outstanding (and, if the Company so elects, any other Indebtedness of the
Company

5

 

 that is not subordinate to the Notes and with respect to which the
governing instruments require, or pursuant to which the Company is otherwise
obligated or required, to provide such security) shall be equally and ratably
secured with such secured Indebtedness so long as such other Indebtedness shall
be secured. For purposes of this Section 2.14 only, “Indebtedness”, in
addition to those items specified in Section 1.1 of the Indenture, shall
include any obligation of, or any such obligation guaranteed by, any Person for
the payment of amounts due under a swap agreement or other similar instrument
or agreement or foreign currency hedge exchange or similar instrument or
agreement.

     If the Company shall hereafter be required to secure the Notes equally and
ratably with any other Indebtedness pursuant to this Section, (i) the Company
will promptly deliver to the Trustee an Officer’s Certificate stating that the
foregoing covenant has been complied with, and an Opinion of Counsel stating
that in the opinion of such counsel the foregoing covenant has been complied
with and that any instruments executed by the Company or any Subsidiary of the
Company in the performance of the foregoing covenant comply with the
requirements of the foregoing covenant and (ii) the Trustee is hereby
authorized to enter into an indenture or agreement supplemental hereto and to
take such action, if any, as it may deem advisable to enable it to enforce the
rights of the holders of the Notes so secured.

     Section 2.15. LIMITATIONS ON ISSUE OR DISPOSITION OF COMMON STOCK OF
PRINCIPAL SUBSIDIARIES. As long as any of the Notes remain outstanding, the
Company will not, and will not permit any Subsidiary to, issue, sell, assign,
transfer or otherwise dispose of, directly or indirectly, any of the Common
Stock of any Principal Subsidiary (except to the Company or to one or more
Subsidiaries or for the purpose of qualifying directors); provided, however,
that this covenant shall not apply if (i) the issuance, sale, assignment,
transfer or other disposition is required to comply with the order of a court
or regulatory authority of competent jurisdiction, other than an order issued
at the request of the Company or of one of its Subsidiaries; (ii) the entire
Common Stock of a Principal Subsidiary then owned by the Company or by its
Subsidiaries is disposed of in a single transaction or in a series of related
transactions, for consideration consisting of cash or other property which is
at least equal to the Fair Value of such Common Stock; or (iii) after giving
effect to the issuance, sale, assignment, transfer or other disposition, the
Company and its Subsidiaries would own directly or indirectly at least 80% of
the issued and outstanding Common Stock of such Principal Subsidiary and such
issuance, sale, assignment, transfer or other disposition is made for
consideration consisting of cash or other property which is at least equal to
the Fair Value of such Common Stock.

     Section 2.16. IMMEDIATELY AVAILABLE FUNDS. All payments of principal and
interest shall be made in immediately available funds.

ARTICLE III

MISCELLANEOUS PROVISIONS

     Section 3.1. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals herein
contained are made by the Company and not by the Trustee, and the Trustee
assumes no

6

 

 responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or sufficiency of this Second Supplemental
Indenture.

     Section 3.2. PAYMENT OF EXPENSES UPON RESIGNATION OR REMOVAL. Upon
termination of this Second Supplemental Indenture or the Indenture or the
removal or resignation of the Trustee, unless otherwise stated, the Company
shall pay to the Trustee all amounts accrued to the date of such termination,
removal or resignation.

     Section 3.3. ADOPTION, RATIFICATION AND CONFIRMATION. The Indenture, as
supplemented and amended by this Second Supplemental Indenture, is in all
respects hereby adopted, ratified and confirmed.

     Section 3.4. COUNTERPARTS. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

     Section 3.5. GOVERNING LAW. THIS SECOND SUPPLEMENTAL INDENTURE AND EACH
NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

7

 

     IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed on the day and year first above
written.

	 	 	 	 	 
	 	 	W. R. BERKLEY CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 /s/ Eugene G. Ballard
	 	 	 	 	

	 	 	 	 	Name: Eugene G. Ballard
	 	 	 	 	Title: Senior Vice President
	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, as Trustee
	 	 	 	 	 
	 	 	
By:	 	 /s/ Giovanni Barris
	 	 	 	 	

	 	 	 	 	Name: Giovanni
Barris
	 	 	 	 	Title: Vice
President

8

 

EXHIBIT A

(FORM OF FACE OF NOTE)

     This Note is a global Note within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depository or a nominee of a
Depository. This Note is exchangeable for Securities registered in the name of
a person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Note (other
than a transfer of this Note as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository) may be registered except in limited circumstances.

     Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.

	 	 	 
	Certificate No. 2

Dated: September 12, 2003	 	
$150,000,000

CUSIP No. 084423AK8

W. R. BERKLEY CORPORATION

5.125% Senior Notes due 2010

     W. R. BERKLEY CORPORATION, a Delaware corporation (the “Company,” which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of ONE HUNDRED FIFTY MILLION DOLLARS AND
NO CENTS ($150,000,000.00) on September 30, 2010. The Company further promises
to pay interest on said principal sum outstanding from September 12, 2003, or
from the most recent interest payment date (each such date, an “Interest
Payment Date”) to which interest has been paid or duly provided for,
semiannually (subject to deferral as set forth herein) in arrears on March 30
and September 30 of each year commencing March 30, 2004 at the rate of 5.125%
per annum, until the principal hereof shall have become due and payable and,
until the principal hereof is paid or duly provided for or made available for
payment. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any partial period shall be computed on the basis of the
number of actual days elapsed in a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Note is not a Business
Day, then payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay). A “Business Day,” with respect to any
Place of Payment or other location, shall mean any day other than a Saturday,
Sunday or other day on

A-1

 

 which banking institutions in such Place of Payment or other location are
authorized or obligated by law, regulation or executive order to close. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on March 15 or September 15 prior to such
Interest Payment Date. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the registered Holder
on such Regular Record Date and may either be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date to be fixed by the Trustee for the payment of
such Defaulted Interest, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which this Note may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.

     The principal of (and premium, if any) and the interest on this Note shall
be payable at the office or agency of the Company maintained for that purpose
in the United States in such coin or currency of the United States of America
that at the time of payment is legal tender for payment of public and private
debts; PROVIDED, HOWEVER, that payment of interest may be made at the option of
the Company by check mailed to the registered Holder at such address as shall
appear in the Security Register. Notwithstanding the foregoing, so long as the
Holder of this Note is Cede & Co., the payment of the principal of (and
premium, if any) and interest on this Note will be made at such place and to
such account as may be designated by Cede & Co. All payments of principal and
interest hereunder shall be made in immediately available funds.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid for any purpose.

A-2

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed.

	 	 	 	 	 
	 	 	W. R. BERKLEY CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

Dated: September 12, 2003

THE BANK OF NEW YORK,

as Trustee

	 	 	 	 	 
	By:	 	 	 	 
	 	 	

	 	 
	 	 	
Authorized Signatory	 	 

A-3

 

(FORM OF REVERSE OF NOTE)

     This Note is one of a duly authorized issue of securities of the Company,
designated as its 5.125% Senior Notes due 2010 (herein referred to as the
“Securities”), issued under and pursuant to an Indenture, dated as of February
14, 2003 between the Company and The Bank of New York, as Trustee (herein
called the “Trustee,” which term includes any successor trustee under the
Indenture), as supplemented by the Second Supplemental Indenture dated as of
September 12, 2003, between the Company and the Trustee (the Indenture as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered.

     All terms used in this Note that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.

     The Company may redeem the Securities, in whole or in part, at any
time at a Redemption Price equal to the greater of (i) 100% of the
principal amount of such Securities to be redeemed or (ii) an amount, as
determined by an Independent Investment Banker, the sum of the present
values of the remaining scheduled payments of principal of and interest
thereon on the securities to be redeemed (not including any portion of
such payments of interest accrued to the date of redemption) discounted
to the Redemption Date on a semiannual basis assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus
25 basis points, plus, in either of the above cases, accrued and unpaid
interest thereon to the Redemption Date.

     “Adjusted Treasury Rate” means, with respect to any Redemption Date:

	 	•	 	the yield, under the heading which represents the
average for the immediately preceding week, appearing in the
most recently published statistical release designated
“H.15(519)” published by the Board of Governors of the Federal
Reserve System (or any successor publication which is
published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant
maturity) under the caption “Treasury Constant Maturities,”
for the maturity corresponding to the Comparable Treasury
Issue. If no maturity is within three months before or after
the Remaining Life, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be
interpolated or extrapolated from such yields on a straight
line basis, rounding to the nearest month; or
	 
	 	•	 	if such release (or any successor release) is not
published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the
semiannual equivalent yield to maturity of the 

A-4

 

	 	 	 	Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
Redemption Date.

     The Adjusted Treasury Rate shall be calculated on the third Business Day
preceding the Redemption Date.

     “Comparable Treasury Issue” means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the securities to be redeemed that would be used, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities (“Remaining Life”).

     “Comparable Treasury Price” means (i) the average of three Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest Reference Treasury Dealer Quotations, or (ii) if the
Independent Investment Banker obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations.

     “Independent Investment Banker” means one of the Reference Treasury
Dealers appointed by us.

     “Reference Treasury Dealer” means:

	 	•	 	each of Morgan Stanley & Co. Incorporated and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their
respective successors; provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government
securities dealer in the United States (a “Primary Treasury
Dealer”), the Company shall substitute therefor another
Primary Treasury Dealer; and
	 
	 	•	 	any other Primary Treasury Dealer selected by the
Company.

     “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at
5:00 p.m., New York City Time, on the third Business Day preceding such
Redemption Date.

     The Company will mail a notice of redemption at least 30 days but not more
than 60 days before the Redemption Date to each holder of the securities to be
redeemed. If less than all of the securities are to be redeemed, the Trustee
will select, by such method as it will deem fair and appropriate, including pro
rata or by lot, the securities to be redeemed in whole or in part.

A-5

 

     Unless we default in payment of the Redemption Price, on and after the
Redemption Date, interest will cease to accrue on the securities or portions
thereof called for redemption.

     If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

     The Indenture contains provisions for satisfaction, discharge and
defeasance at any time of the entire indebtedness of this Note upon compliance
by the Company with certain conditions set forth in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of each series at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding,
on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note. No
reference herein to the Indenture and no provision of this Note or of the
Indenture (other than Section 4.2 of the Indenture) shall alter or impair the
obligation of the Company to pay the principal and interest on the Note at the
times, place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder hereof or his or her attorney duly authorized in writing, and thereupon
one or more new Securities of this series, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated
transferee or transferees. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

     Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

A-6

 

     This global Note is exchangeable for Securities in definitive form only
under certain limited circumstances set forth in the Indenture. Securities of
this series so issued are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations herein and
therein set forth, Securities of this series so issued are exchangeable
for a like aggregate principal amount of Securities of this series of a
different authorized denomination, as requested by the Holder surrendering the
same.

     The Company and, by its acceptance of this Note or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial interest in,
this Note agree that for United States federal, state and local tax purposes it
is intended that this Note constitute indebtedness.

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE SECURITIES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

A-7

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