Document:

THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT  AGREEMENT,  dated as of March 31, 2000 (the
"Amendment  Date"),  is made among AVADO BRANDS,  INC., as "Borrower";  WACHOVIA
BANK,  NATIONAL  ASSOCIATION;  FLEET  NATIONAL  BANK,  successor  in interest to
BANKBOSTON, N.A., and the other parties listed as a "Bank" or the "Banks" on the
signature page(s) hereof, as "Banks";  WACHOVIA BANK, NATIONAL  ASSOCIATION,  as
"Administrative  Agent" for the Banks, the "Syndication  Agent," and itself; and
FLEET NATIONAL BANK, successor in interest to BANKBOSTON,  N.A., as "Syndication
Agent" for the Banks. The Borrower,  the Banks, the Administrative Agent and the
Syndication  Agent,  are hereinafter  called,  collectively,  the "Parties." The
Parties are parties to a Credit Agreement,  dated as of June 22, 1999 (which, as
modified  and  amended  to  date,  as  more  particularly  described  below,  is
hereinafter called the "Credit Agreement"). Heretofore, the Parties modified and
amended the Credit  Agreement as follows:  (i) pursuant to a First  Amendment to
Credit  Agreement,   dated  as  of  September  15,  1999,  between  the  Parties
("Amendment  No. 1"); (ii) pursuant to a Second  Amendment to Credit  Agreement,
dated as of October 4, 1999,  between the Parties  ("Amendment No. 2"; Amendment
No. 2 and  Amendment  No. 1  hereinafter  sometimes  called,  collectively,  the
"Amendments");  (iii)  pursuant  to a  Consent  and  Waiver  No.  1 into  Credit
Agreement, dated as of November 17, 1999, between the Parties; ("Waiver No. 1");
(iv)  pursuant  to a Consent and Waiver No. 2 to Credit  Agreement,  dated as of
December 31, 1999,  between the Parties  ("Waiver No. 2"); and (v) pursuant to a
Consent and Waiver No. 3 to Credit  Agreement,  dated as of February  29,  2000,
between the Parties  (Waiver No. 3"; Waiver No. 3, Waiver No. 2 and Waiver No. 1
hereinafter  sometimes called,  collectively,  the "Waivers").  The Parties, are
entering  into this  Amendment  for the purpose of further  amending  the Credit
Agreement in the manner specified below.

Accordingly, for value received, the Parties agree as follows:

1. Definitions.

     Terms  Incorporated by Reference.  Capitalized  terms used herein,  but not
expressly  defined  herein,  shall have the meanings  given to such terms in the
Credit Agreement or, as appropriate, in the Amendments or the Waivers.

2. Amendments.

     2.1 Definition of Fixed Charge Coverage Ratio.  The existing  definition of
Fixed Charge Coverage Ratio,  set forth in Section 1.1 of the Credit  Agreement,
shall  be  amended  by  adding  to  existing  clause  (B)  thereof;   i.e.,  the
denominator,  a new subclause (iv),  immediately after existing  subclause (iii)
thereof, to read as follows:

     plus (iv) without  duplication,  all payments made (including payments made
in  settlement  of  existing  obligations  or claims)  under,  or in respect of,
interest rate "hedge," "swap," "collar" or similar arrangements,  whether now or
hereafter existing,  including, but not limited to, those expressly permitted to
exist under clause (ix) of Section 5.21.

     The  remainder of said  definition  shall  remain  unchanged,  however.  In
respect of the  foregoing  amendment,  Borrower  specifically  acknowledges  and
agrees that any payments to Morgan  under or in respect of the Morgan  Agreement
(as those terms  "Morgan" and "Morgan  Agreement,"  are defined and described in
Section  2.15  of  this  Amendment),   howsoever  denominated,   shall,  without
limitation,  be included within the payments described in the  above-referenced,
newly added, clause (iv).

     2.2 Interest  Rate.  Notwithstanding  any term of Section 2.5 of the Credit
Agreement  to the  contrary,  unless  and  until the  Total  Debt/EBITDA  Ratio,
determined as of the end of any Fiscal Quarter  subsequent to the Fiscal Quarter
ending  closest to March 31,  2000,  is less than  3.50:1,  (i) all Loans  shall
continue  to be made (or  continued)  as Base  Rate  Loans,  and (ii) all  Loans

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(including  all Swing  Loans) shall  continue to bear  interest at the Base Rate
plus two percent (2%) per annum,  subject,  however, to increase (A) as provided
in the Waivers,  to the extent the Borrower  fails to timely comply with certain
conditions  set forth  therein,  and (B) to the  Default  Rate  pursuant  to the
operation of Section 6.1 of the Credit Agreement subsequent to the occurrence of
an Event of Default. To the extent that, subsequent to the Fiscal Quarter ending
closest to March 31, 2000, the Total Debt/EBITDA Ratio, determined as of the end
of any Fiscal  Quarter,  is less than,  3.50:1,  then and for so long thereafter
such ratio shall be so maintained from Fiscal Quarter-to-Fiscal  Quarter (i) the
right of Borrower to select between Base Rate Loans and Euro-Dollar  Rate Loans,
as provided in Section 2.5, shall be re-established,  and (ii) the interest rate
payable on any Loans then  outstanding or made shall be determined in accordance
with said Section 2.5, as originally provided therein.

     2.3 Mandatory  Reductions in Line of Credit.  Existing Section 2.7.3 of the
Credit  Agreement  shall be deleted in its  entirety and the  following  revised
version of Section 2.7.3 shall be substituted in its place:

     2.7.3. Mandatory Ratable Reductions in Commitments.  The Commitments of the
Banks shall reduce ratably, beginning with the Fiscal Quarter of Borrower ending
closest to September  30, 2000,  and  continuing  thereafter  at the end of each
succeeding Fiscal Quarter,  by the amounts prescribed below as of each quarterly
reduction date prescribed below corresponding thereto:

--------------------------------------------------------------------------------
           Quarterly Reduction Date:              Quarterly Reduction Amount
--------------------------------------------------------------------------------
           October 1, 2000                                 $10,000,000
--------------------------------------------------------------------------------
           December 31, 2000                               $10,000,000
--------------------------------------------------------------------------------
           April 4, 2001                                    $7,500,000
--------------------------------------------------------------------------------
           July 1, 2001                                     $7,500,000
--------------------------------------------------------------------------------
           September 30, 2001                               $7,500,000
--------------------------------------------------------------------------------
           December 30, 2001                                $7,500,000
--------------------------------------------------------------------------------
           March 31, 2002                                   $7,500,000
--------------------------------------------------------------------------------

     Effective  with each  mandatory  reduction  in the  Commitments  prescribed
above,  the  Borrower  shall be  required  to  repay  the  Loans by that  amount
necessary to cause total Loans then  outstanding  not to exceed the total amount
of the Commitments,  as so reduced each quarter, in accordance with the terms of
Section 2.9.1.  If the Borrower  should fail at any time or from time to time to
repay its Borrowings by the amounts  required to be made in conjunction with any
reduction in Commitments prescribed  hereinabove,  as and when so required to be
made,  its failure to do so shall  constitute an Event of Default and permit the
Administrative  Agent,  on behalf of the  Banks,  to  exercise  the  rights  and
remedies provided herein and in the Loan Documents  attendant upon such Event of
Default occurring. Without limitation of such attendant rights and remedies, the
Borrower  acknowledges  and agrees  that the  Administrative  Agent may,  as the
Borrower's  attorney-in-fact,  cause the Capital Stock of Belgo, PLC, then being
held  by  it  as  collateral   hereunder,   or  such  portions  thereof  as  the
Administrative Agent determines,  in its sole discretion, to be sold by the most
expeditious  means  practicable,  after first giving Borrower three (3) Business
Days advance notice thereof (which notice period shall supersede and replace any
notice  period  otherwise  set forth in the Loan  Documents  in  respect of such
action),  and apply any cash  proceeds  (net of all  expenses  of sale)  derived
therefrom to the Borrowings,  without  necessity of further notice to, or demand
upon,  the Borrower to do so, and without any  liability to the Borrower for the
price  obtained in any such sale or any tax liability of the Borrower  resulting

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from any such sale.  The  Commitments  of the Banks shall also reduce ratably by
the amount of any mandatory  prepayments of Borrowings from Asset Sales or Asset
Recoveries  made  subsequent to the Amendment Date pursuant to Section 2.9.2; it
being understood and agreed in connection  therewith that any such reductions to
the Commitments made from Asset Sales or Asset Recoveries  occurring  subsequent
to the  Amendment  Date shall be  counted  against  the amount of the  quarterly
reductions  in the  Commitments  prescribed  in the table set forth  above.  For
example, and without limitation, if the total amount of Asset Recoveries and Net
Cash Proceeds  from Asset Sales made during the period from the  Amendment  Date
through  September 29, 2000 equals  $9,000,000,  and the  Commitments  have been
reduced accordingly by such amount as of such date, then, on September 30, 2000,
only an additional $1,000,000 of the Commitments shall be required to be reduced
in  order  that  total   reductions  in  Commitments  by  such  date  amount  to
$10,000,000.  The  Commitments,  once reduced  pursuant to the operation of this
Section 2.7.3, shall not be reinstated by the Banks.

     The unused  commitment fees,  payable to each Bank in respect of its Unused
Commitment  shall continue to be due and payable at the times and in the amounts
prescribed in Section  2.6.1,  notwithstanding  implementation  of the foregoing
reductions in Commitments  (however,  in accordance with the definition thereof,
the Unused  Commitments  shall  adjust  consistent  with each  reduction  in the
Commitments  and the  amounts of the unused  commitment  fees shall be  adjusted
accordingly).

     2.4 Asset Sales and Asset Recoveries.  Existing Section 2.9.2 of the Credit
Agreement shall be deleted in its entirety and the following  revised version of
said Section 2.9.2 shall be substituted in its place:

     2.9.2.  Asset  Sales  and Asset  Recoveries.  To th e extent  that,  (i) in
accordance  with the  provisions  of Section  5.11,  the  Borrower or any of its
Subsidiaries  consummates  any Asset Sale on or subsequent to March 31, 2000, or
(ii) the Borrower or any of its  Subsidiaries  collects any loan or advance made
pursuant to clause (xi) of Section 5.20 or  otherwise  makes any  recoveries  in
respect  of any  "investments"  (as that  term is  defined  in the  introductory
paragraph to Section 5.20, and including  particularly,  but without limitation,
the "Real  Receivable,"  as that term is defined in Section 2.2(f) of Waiver No.
3)  (the  foregoing  herein  called,   individually  and  collectively,   "Asset
Recoveries"), on or subsequent to March 31, 2000, then, as soon as received, the
Borrower  shall apply an amount equal to one hundred  percent  (100%) of the Net
Cash  Proceeds  from such Asset Sale,  in the case of clause (i) above,  and one
hundred  percent  (100%) of the  amount of such Asset  Recovery,  in the case of
clause (ii)  above,  to repay (or prepay)  outstanding  Revolving  Loans and, if
Revolving Loans are reduced to zero,  Swing Loans,  plus, in each case,  accrued
interest  thereon to the date of  prepayment  and any  compensation  required by
Section  8.6.  In each such case,  the  Commitments  of the Banks  shall also be
simultaneously reduced as provided in Section 2.7.3.

     2.5 Modifications to Existing Financial  Covenants.  Existing Sections 5.5,
5.6 and 5.7 of the Credit Agreement shall be deleted, each in its entirety,  and
the following revised versions of said Sections 5.5, 5.6 and 5.7,  respectively,
shall be substituted in their place:

     SECTION  5.5  Fixed  Charge  Coverage  Ratio.

Borrower's  Fixed Charge Coverage  Ratio,  measured on a rolling four (4) Fiscal
Quarters'  basis,  as of the end of each  Fiscal  Quarter,  commencing  with the
Fiscal Quarter  ending closest to December 31, 1999,  shall be not less than the
ratio  prescribed below for each Fiscal Quarter  prescribed below  corresponding
thereto:

<PAGE>
--------------------------------------------------------------------------------
            Fiscal Quarter Ending:                            Ratio
--------------------------------------------------------------------------------
              December 31, 1999                               1.25:1
--------------------------------------------------------------------------------
              March 31, 2000                                  1.25:1
--------------------------------------------------------------------------------
              June 30, 2000                                   1.25:1
--------------------------------------------------------------------------------
              October 1, 2000                                 1.25:1
--------------------------------------------------------------------------------
              December 31, 2000                               1.25:1
--------------------------------------------------------------------------------
              April 4, 2001                                   1.50:1
--------------------------------------------------------------------------------
              July 1, 2001                                    1.50:1
--------------------------------------------------------------------------------
              September 30, 2001                              1.50:1
--------------------------------------------------------------------------------
              December 30, 2001                               1.50:1
--------------------------------------------------------------------------------
              March 31, 2002                                  1.75:1
              and thereafter
--------------------------------------------------------------------------------

     SECTION 5.6 Total Debt/EBITDA Ratio.

     The ratio  which (i) the Total Debt of the  Borrower  and its  Consolidated
Subsidiaries  at the end of any  Fiscal  Quarter,  commencing  with  the  Fiscal
Quarter  ended  closest to December  31,  1999,  bears to (ii) the EBITDA of the
Borrower  and its  Consolidated  Subsidiaries,  measured  on a rolling  four (4)
Fiscal  Quarters'  basis  as of the  end of  such  Fiscal  Quarter  (the  "Total
Debt/EBITDA Ratio"), shall be not more than the ratio prescribed below as of the
end of each Fiscal Quarter corresponding thereto:

--------------------------------------------------------------------------------
             Fiscal Quarter Ending:                            Ratio
--------------------------------------------------------------------------------
              December 31, 1999                                5.50:1
--------------------------------------------------------------------------------
              March 31, 2000                                   5.50:1
--------------------------------------------------------------------------------
              June 30, 2000                                    5.50:1
--------------------------------------------------------------------------------
              October 1, 2000                                  5.00:1
--------------------------------------------------------------------------------
              December 31, 2000                                4.50:1
--------------------------------------------------------------------------------
              April 4, 2001                                    4.50:1
--------------------------------------------------------------------------------
              July 1, 2001                                     4.50:1
--------------------------------------------------------------------------------
              September 30, 2001                               4.00:1
--------------------------------------------------------------------------------
              December 30, 2001                                4.00:1
--------------------------------------------------------------------------------
              March 31, 2002                                   3.50:1
              and thereafter
--------------------------------------------------------------------------------

     In  computing  EBITDA in respect of the  foregoing  ratio and the ratio set
forth in Section 5.7 below, (a) any asset or stock  dispositions by the Borrower
consisting  of the sale of a business  line,  segment or other  group of related

<PAGE>
restaurants occurring within a Fiscal Quarter shall be accounted for by reducing
EBITDA by the individual EBITDA attributable to each store within such group for
such Fiscal Quarter and the three (3) preceding Fiscal Quarters or, in the event
that any such  restaurant had negative  individual  EBITDA for such periods,  by
increasing  EBITDA by the amount of such negative  EBITDA;  and (b) any asset or
stock  acquisitions by the Borrower,  to the extent  otherwise then permitted to
occur  hereunder  (and without  implying  such  permission),  consisting  of the
purchase of a  business,  line,  segment or other  group of related  restaurants
occurring within a Fiscal Quarter shall be accounted for by increasing EBITDA by
the  individual  EBITDA  attributable  to each store  within such group for such
Fiscal Quarter and for the three (3) preceding  Fiscal Quarters or, in the event
that any such  store  had  negative  individual  EBITDA  for  such  periods,  by
decreasing EBITDA by the amount of such negative EBITDA; in each instance, on an
historical basis, in a manner which the Borrower shall determine, but subject to
prior review with, and approval by, the Administrative Agent.

     In connection with the foregoing amendment to Section 5.6, the Banks hereby
waive the Covenant Default.

     SECTION 5.7. Total Senior Debt/EBITDA Ratio.

     The  ratio  which  (i)  the  Total  Senior  Debt  of the  Borrower  and its
Consolidated Subsidiaries at the end of any Fiscal Quarter,  commencing with the
Fiscal  Quarter ended closest to December 31, 1999,  bears to (ii) EBITDA of the
Borrower  and its  Consolidated  Subsidiaries,  measured  on a rolling  four (4)
Fiscal Quarters' basis as of the end of such Fiscal Quarter (adjusted,  however,
as  reflected  in Section  5.6),  shall be not more than the amounts  prescribed
below for each Fiscal Quarter prescribed below corresponding thereto:

--------------------------------------------------------------------------------
             Fiscal Quarter Ending:                            Ratio
--------------------------------------------------------------------------------
              December 31, 1999                                4.00:1
--------------------------------------------------------------------------------
              March 31, 2000                                   4.00:1
--------------------------------------------------------------------------------
              June 30, 2000                                    4.00:1
--------------------------------------------------------------------------------
              October 1, 2000                                  3.50:1
--------------------------------------------------------------------------------
              December 31, 2000                                3.25:1
--------------------------------------------------------------------------------
              April 4, 2001                                    3.00:1
--------------------------------------------------------------------------------
              July 1, 2001                                     3.00:1
--------------------------------------------------------------------------------
              September 30, 2001                               2.50:1
--------------------------------------------------------------------------------
              December 30, 2001                                2.50:1
--------------------------------------------------------------------------------
              March 31, 2002                                   2.50:1
              and thereafter
--------------------------------------------------------------------------------

     2.6 Asset Sales.  The entire existing second proviso to Section 5.11 of the
Credit Agreement, beginning with the words "provided, further, that the Borrower
may consummate  Asset Sales ..." and ending at the end of existing  Section 5.11
shall be deleted  in its  entirety  and the  following  revised  version of said
second proviso shall be substituted in its place:

     provided, further, that the Borrower may consummate Asset Sales so long as,
unless  otherwise  approved  in  writing  by the  Required  Banks,  each  of the
following  conditions  is met:  (i) the Asset  Sales are to  Persons  other than
Affiliates,  (ii) the Asset Sales are made for cash, (iii) the Net Cash Proceeds

<PAGE>
from all such Asset Sales are applied in the manner  provided in Section  2.9.2,
and for no other purpose,  (iv) no Default has occurred which is then continuing
or otherwise  would result from such sale  occurring,  and (v) if the Asset Sale
concerns  the sale of any  collateral  then held as security  for the  Revolving
Loans and Swing Loans,  the prior written  consent of the Required  Banks or, to
the extent  required  under clause  (vii) of Section  9.6,  all Banks,  shall be
required as a condition  to such sale.  The term "Asset  Sales," as used herein,
shall extend to and include,  without limitation,  sale-leaseback  transactions,
provided that the Administrative  Agent first shall have separately approved the
terms of the "leaseback"  portion of such transaction as a further  condition to
the Borrower or any  Subsidiary  entering into such  transaction.

     In  connection  with the  foregoing,  and with Section  2.9.2 of the Credit
Agreement  (as revised  pursuant to Section 2.3  above),  it is  understood  and
agreed by the Borrower that any provisions of the Waivers  governing Asset Sales
or Asset Recoveries (and applications of the proceeds derived therefrom), to the
extent in conflict  herewith (or with revised Section 2.9.2) shall be superseded
and replaced hereby (and thereby).

     2.7 New Limit on Capital  Expenditures.  Clause (ii) of Section 5.20 of the
Credit  Agreement  shall be deleted in its  entirety and the  following  revised
version of said clause (ii) of Section 5.20 shall be substituted in its place:

     (ii) Capital Expenditures. Make capital expenditures in the ordinary course
of business;  provided,  however, commencing with the Fiscal Year ending closest
to December 31, 2000, capital  expenditures shall be limited as follows: (i) for
the Fiscal Year ending closest to December 31, 2000, the sum of (A) $45,000,000,
plus  (B) an  additional  amount,  equal,  dollar-for-dollar,  to the  Net  Cash
Proceeds  received  by the  Borrower  within such  Fiscal  Year,  not to exceed,
however,  $20,000,000,  from  any  sale-leaseback  transaction  permitted  under
Section 5.11  occurring  during the period from the Fiscal  Quarter ending March
31, 2000 through the Fiscal  Quarter  ending  December 31, 2000,  effective upon
such permitted sale-leaseback  transaction occurring, and provided that Borrower
has complied with Section 2.7.2 in regard thereto, and (ii) $40,000,000, in each
Fiscal Year occurring after the Fiscal Year ending closest to December 31, 2000.
In  addition  to the  foregoing,  to the extent the  Borrower's  actual  capital
expenditures in any such Fiscal Year are less than the maximum amount prescribed
hereinabove  for such Fiscal Year,  the Borrower shall be entitled to carry over
the amount of such  shortfall to the next Fiscal Year,  provided that the amount
of such  shortfall that may be carried over from  year-to-year  shall not exceed
$10,000,000,  per year, and provided,  further, that the aggregate amount of all
such carryovers shall not exceed $15,000,000 during the term of this Agreement.

     2.8 Restaurant Concepts and Acquisitions. Carrying forward the restrictions
thereon imposed under Section 2.2(g) of Waiver No. 3,  concerning  "investments"
by Borrower  which are  described  and covered by existing  Section  5.20 of the
Credit Agreement, the exceptions to the prohibition contained therein,  relative
to "restaurant  concepts," described in and permitted by clause (x) thereof, and
"acquisitions,"  described in and permitted by clause (xii)  thereof,  have been
discontinued,  and no further such "investments" may be made. Without limitation
of the foregoing, neither Borrower nor any Consolidated Subsidiary shall acquire
any equity  interests in Belgo,  PLC,  subsequent  to the Amendment  Date;  but,
notwithstanding  the foregoing,  Borrower or its  Consolidated  Subsidiaries may
continue  to  make  investments  in  any  restaurants   under   construction  in
furtherance of any joint ventures under contract as of the date of Waiver No. 3;
i.e.,  February 29, 2000,  provided  that the total amount of these  investments
shall not exceed, in any event, $3,000,000;

     2.9 New Limits on Other Advances.  Clause (xi) to existing  Section 5.20 of
the Credit  Agreement,  which  clause was  amended  pursuant to Section 2 of the
Second  Amendment  (which  contained an inadvertent  reference to clause (xi) as
clause " (ix)" (by transposition of letters),  is hereby deleted in its entirety
such that, from and after the Amendment Date, no loans or advances to Affiliates
(excluding therefrom, however, Subsidiaries),  shareholders, directors, officers
or  employees  (in  addition  to those  described  in clause (i)  through (x) of

<PAGE>
Section 5.20; and, in connection with the foregoing, all such loans and advances
shall be repaid  as soon as  practicable  but in any  event  not  later  than as
follows:  (i) as to the $3,000,000  loan made to Tom E. Dupree,  Jr. pursuant to
Section 2 of the Second  Amendment,  by not later than March 31, 2001; as to all
other such loans and advances,  which the Borrower hereby certifies to the Banks
are presently  limited to those set forth on Schedule "2.8" annexed hereto,  not
later than the dates  prescribed on said Schedule  "2.8"  relative  thereto;  it
being  understood  and agreed  that the  foregoing  revision of said clause (xi)
shall  supersede and replace any provision of any Amendment or Waiver  governing
the  subject  matter  thereof  to the  extent  in  conflict  therewith.

     2.10 Further Restrictions on Dividends and Distributions. Clause (A) to the
proviso to Section  5.22 of the Credit  Agreement  is deleted and the  following
revised  version of said  clause  (A) shall be  substituted  in its  place:

     (A) provided  that no Default has occurred  and is  continuing  or would be
caused thereby, the Borrower may pay cash dividends on its Capital Stock in each
Fiscal Year in an aggregate  amount not to exceed (1)  $3,000,000  in the Fiscal
Year ending on or about  December 31, 1999 and (2) $400,000 per Fiscal Year,  in
each Fiscal Year  thereafter;  provided,  however,  that if the Borrower's Total
Debt/EBITDA  Ratio,  measured at the end of any such  subsequent  Fiscal Year is
less than or equal to 3.50:1,  then, the amount of such cash dividends permitted
to be paid by  Borrower  in the Fiscal  Year  following  shall be  increased  to
$3,000,000  subject to the  foregoing  proviso as to the absence of any Default.

     2.11 Further Restrictions on Debt. Clauses (vii), (viii) (limited, however,
to clauses (ix) and (x) Section 5.8) and (ix) of Section  5.21,  permitting  the
incurrence  of Debt  under  certain  conditions  described  therein,  are hereby
eliminated  prospectively as of the Amendment Date such that,  subsequent to the
Amendment Date, no additional Debt may be occurred in reliance upon said clauses
(vii),  (viii)  or (ix).  Furthermore,  henceforth,  no Debt  shall be repaid by
Borrower or any  Subsidiary  prior to its  scheduled  maturity  nor may any such
Person take (or acquiesce in) any action having  substantially  the same effect,
such as, but not limited to, by terminating early any Debt arrangement or making
any settlement or accord and  satisfaction  in regard thereto,  except,  in each
case,  with the prior  written  consent of the  Required  Banks  thereto.

     2.12 Stock  Purchases.  The exceptions set forth in clauses (i) and (ii) of
Section 5.25 of the Credit  Agreement,  relative to  purchases of Capital  Stock
(and  including  the  execution  of  Equity  Forward   Contracts),   are  hereby
eliminated,  effective as of the Amendment Date, such that the actions described
in such exceptions shall no longer be permitted,  on a prospective  basis.

     2.13 Other or Stepped Up Reports.  In  furtherance  of Section 5.1.9 of the
Credit Agreement,  concerning the delivery of additional  information  regarding
the financial position or business of the Borrower and its Subsidiaries,  and in
addition  to the  reports  required  under  Section  2.2(i) of Waiver No. 3, the
Borrower  agrees to  deliver  the  following  to each of the  Banks:

     (a) on the Amendment  Date, a draft copy of the  Borrower's SEC 10-K report
for its 1999  fiscal  year,  in  draft  form;

     (b) on the  Amendment  Date,  if then  available,  but otherwise as soon as
available  after the  Amendment  Date,  a listing  of all  Properties  which the
Borrower intends to be part of the currently proposed sale-leaseback transaction
mentioned in Section 2.6 hereof,  the projected  transaction date, the projected
amount thereof, and the projected Net Cash Proceeds to be derived therefrom;

     (c) on the  Amendment  Date,  a listing of all other  Properties  which the
Borrower intends to sell during the remaining term of the Credit Agreement,  the
projected date of sale thereof, the projected amounts thereof, and the projected
Net Cash Proceeds to be derived  therefrom;

<PAGE>
     (d) on the  Amendment  Date,  a listing of all Asset  Recoveries  which the
Borrower  anticipates   receiving  during  the  remaining  term  of  the  Credit
Agreement, and the projected date of their recovery;

     (e) monthly,  subsequent to the Amendment Date, an update in respect of all
actual and projected Asset Sales  (including  sale-leaseback  transactions)  and
Asset  Recoveries,  including  reconciliations  to  date.

     In  addition to the  foregoing,  beginning  with the  Amendment  Date,  the
interim financial statements and corresponding compliance certificates presently
required to be delivered  quarterly under Sections 5.12 and 5.13,  respectively,
of the Credit  Agreement,  henceforth  shall be  delivered  monthly by  Borrower
within  twenty-five  (25) days after the end of each Fiscal Month  (except that,
until further notice,  compliance with financial  covenants shall continue to be
certified  on  a  quarterly  basis  only).

     2.14  Collateral.  The  "Second  Mortgage  Condition"  and "Third  Mortgage
Condition,"  as each such term is defined in Waiver No. 3,  which,  pursuant  to
said Waiver No. 3, were required to be completed by not later than May 31, 2000,
henceforth,  shall be required to be completed by not later than April 28, 2000;
and all mortgages executed in furtherance of the "Interim Mortgages  Condition,"
as such term is likewise  defined in Waiver No. 3, shall be  perfected  on March
31, 2000 or as soon as practicable thereafter,  but not later than April 7, 2000
in any event. In addition  thereto,  Borrower hereby certifies to the Banks that
the  taking of such  collateral  by the Banks,  together  with the taking of all
other  collateral  by the Banks prior  hereto  pursuant to the Waiver,  does not
require  that,  and shall not result in any  requirement  that,  Borrower or any
Subsidiary  cause to be granted to the holders of  Borrower's  senior  notes due
2006 ($150,000,000), or any other Person, a Lien on such collateral or any other
property of Borrower.  To that end, henceforth,  and notwithstanding any term of
any Amendment or Waiver to the contrary (including, particularly, Section 2.2(b)
of Waiver  No.  1),  the Banks  shall be under no  obligation  to consent to any
other,  additional Lien on such collateral favoring the holders of the aforesaid
senior notes or any other such Person.

     2.15  Morgan  Guaranty  Default.  Heretofore,  the  Borrower  notified  the
Administrative  Agent and the Bank that, by letter dated March 27, 2000,  Morgan
Guaranty  Trust Company of New York  ("Morgan")  had declared a default to exist
(the "Morgan  Default")  under its Master  Agreement,  dated as of June 3, 1996,
with the Borrower  concerning certain interest rate "swap," "hedge," "collar" or
similar  arrangements  (as  modified  or  amended  to date or from  time to time
hereafter,  and  including  all  schedules,  supplements,  riders and  additions
thereto, the "Morgan Agreement"), based on the Borrower's failure to comply with
certain covenants incorporated by reference therein pursuant to Section 5(a)(ix)
thereof (the "Morgan  Covenants").  The existence and continuation of the Morgan
Default  constitutes an Event of Default under the Credit Agreement  pursuant to
Section  6.1.5  thereof  (the  "Cross-Default").  The Banks have  agreed,  as an
accommodation to Borrower,  to waive the Cross-Default,  and the Banks do hereby
waive  the  Cross-Default,   subject,   however,  to  the  following  terms  and
conditions:

     (a) so long as the Morgan Default is continuing,  then, notwithstanding any
term hereof or of the Credit  Agreement  to the  contrary,  the total  amount of
Revolving  Loans and Swing Loans  outstanding  at any one time cannot exceed One
Hundred Fifteen Million  Dollars  ($115,000,000)  or such lesser amount as shall
equal  the  outstanding  Commitments  from  time to  time;  and

     (b) if, at any time  hereafter,  whether  as a result of the  existence  or
continuation  of the Morgan Default or otherwise,  any of the following  (herein
called a "Reinstitution Event") shall occur: (i) Morgan designates any day as an
"Early  Termination  Date" (as that term is defined in the Morgan  Agreement) in
respect of all outstanding "Transactions" (as that term is defined in the Morgan
Agreement);  or (ii) any "Automatic Early  Termination" (as that term is defined
in the Morgan  Agreement)  occurs;  (iii) any  acceleration  of, or demand  for,
payment occurs with respect to any Debts arising under the Morgan Agreement;  or

<PAGE>
(iv)  Borrower  enters into any  settlement,  accord and  satisfaction  or other
arrangement with Morgan,  or Morgan otherwise  exercises any rights or remedies,
in each instance, having substantially the same effect as if either clauses (i),
(ii) or (iii)  above had  occurred;  then,  automatically,  upon any one of such
conditions  being met,  and without the  necessity of any further act or deed on
the part of the Banks,  the Morgan Default shall  constitute an Event of Default
under the Credit  Agreement;  i.e.,  the Cross Default  shall be  re-instituted,
effective  immediately;  and

     (c) the  waiver of the  Cross-Default  contained  herein  shall be  limited
solely to  Section  6.1.5 of the  Credit  Agreement  as it relates to the Morgan
Default and,  then,  only with respect to the Morgan  Covenants,  and not to any
other Event of Default,  and nothing  contained herein is intended,  or shall be
construed,  to suggest that the Banks have waived, or would be willing to waive,
any other  Event of Default,  whether  related or  unrelated,  or whether now or
hereafter  existing.

     In addition to the  foregoing,  Borrower  acknowledges  and agrees that any
waiver of the  Morgan  Default  or other  arrangement  substantially  similar in
effect thereto (herein, a "Morgan Waiver"), shall require the separate,  written
consent  of the  Required  Banks,  if and to the extent  any term,  covenant  or
condition of the Morgan Waiver  conflicts  with,  contravenes or contradicts any
term,  covenant or condition of the Credit  Agreement or any Loan  Document.  To
facilitate  the  foregoing,  Borrower  agrees to keep the  Administrative  Agent
informed as to the status of its ongoing  discussions with Morgan concerning the
Morgan Default;  to notify the  Administrative  Agent promptly in writing if any
Reinstitution  Event occurs;  and to provide  Administrative  Agent with a copy,
prior to its becoming effective,  of any Morgan Waiver proposed for execution or
acceptance by Borrower or Morgan. Further to facilitate the foregoing,  Borrower
hereby  certifies to the Banks that attached hereto as Schedule 2.15A is a true,
correct and complete copy of the Morgan  Agreement as in effect on the Amendment
Date, and Borrower agrees not to enter into any amendment or other  modification
to the Morgan Agreement  hereafter which has, or could reasonably be expected to
have,  the effect of increasing  the amount or frequency of payment of any Debts
thereunder  except with the prior  written  consent of the  Required  Banks.  At
Borrower  's  further  request,  and  without  in any  way  limiting  any of the
foregoing provisions,  the Banks are willing to consent to the granting of Liens
to Morgan in support of the Debts to Morgan  under the Morgan  Agreement  on the
four (4)  parcels  of real  property  owned or  operated  by  Borrower's  "Hops"
Subsidiary described on Schedule 2.15B attached hereto, provided,  however, that
such Liens are granted only in conjunction with, and as an integral part of, the
issuance of a Morgan Waiver which is otherwise  granted on terms and  conditions
acceptable  to the  Required  Banks.  If such Liens are granted to Morgan on the
foregoing conditions, then, to the extent in conflict therewith, the Banks shall
waive any requirement under Waiver No. 3 that Liens on those four (4) parcels be
granted,  instead,  to the Banks.

3. Miscellaneous.

     3.1 Effect and Effective  Date of  Amendments.  The  effective  date of the
amendments to the Credit Agreement set forth  hereinabove shall be the Amendment
Date.  Except as set forth expressly  herein,  all terms of the Credit Agreement
shall remain unchanged.  Without limitation of the foregoing,  the provisions of
each of the Waivers,  including,  particularly,  but without  limitation,  those
relating  to the  provision  of  collateral,  shall  continue  in full force and
effect.  It is not intended by the Parties that this Amendment  constitute,  and
this  Amendment,  shall not  constitute a novation.

     3.2 Georgia Law. This Amendment  shall be construed in accordance  with and
governed by the law of the State of Georgia.

     3.3   Counterparts.   This  Amendment  may  be  signed  in  any  number  of
counterparts, each of which shall be an original, with the same effect as if the
signatures  thereto and hereto were upon the same instrument.

<PAGE>
     3.4 Entire Agreement.  This Amendment shall constitute the entire agreement
among the parties with respect to the subject matter hereof, and shall supersede
and replace any  agreements or  commitments  to agree,  whether oral or written,
heretofore  existing  in regard  thereto.

     3.5  Restatement of  Representations  and  Warranties.  To induce all other
Parties to enter into this  Amendment  (A) Borrower  hereby  restates and renews
each and every  representation  and warranty  heretofore made by it under, or in
connection  with,  the  execution  and  delivery of, the Credit  Agreement;  (B)
Borrower  hereby  restates,  ratifies  and  reaffirms  each and  every  term and
condition set forth in the Credit Agreement,  as amended hereby, and in the Loan
Documents, as amended hereby,  effective as of the date hereof; and (C) Borrower
hereby  certifies that,  after giving effect to this  Amendment,  no Default has
occurred which is continuing,  other than the Morgan Default,  which, subject to
Section 2.15 hereof, the Banks have waived.

     3.6 Borrower as Agent. In executing this Amendment,  Borrower is acting for
itself  individually and as agent for each Subsidiary which is party to any Loan
Document,  and, in the latter regard,  binding each such Subsidiary to the terms
hereof  without  necessity of giving further notice to, or obtaining any further
consent from, any such  Subsidiary.

4. Conditions Precedent.

     The  following  shall  constitute  express  conditions   precedent  to  any
obligations  of the Banks  hereunder:  (i) the  Administrative  Agent shall have
received  from  the  Borrower  a duly  executed  counterpart  of this  Amendment
together with each other document, instrument, certificate or agreement required
to be  delivered  by  March  31,  2000  under  any  of  the  Waivers;  (ii)  the
Administrative  Agent  shall have  received  from the  Secretary  (or  Assistant
Secretary) of the Borrower,  an incumbency and authority  certificate in respect
of the officer(s)  executing  this Amendment on behalf of the Borrower,  in form
and substance satisfactory to the Administrative Agent, (iii) the Administrative
Agent  shall  have  received  from the  Borrower's  legal  counsel an opinion of
counsel as to the transactions  contemplated hereby, and (iv) the Administrative
Agent shall have  received  from the  Borrower (A) an  amendment  fee,  equal to
one-fourth of one percent  (1/4%) of the  Commitments  of those Banks  executing
this  Amendment by not later than noon  (Atlanta  time) on April 3, 2000,  to be
shared pro rata among them, and (B) the separate  structuring fee payable to the
Arranger in connection  herewith,  as provided in the fee letter executed by the
Borrower with the Arranger on or prior to the date hereof.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly executed,  under seal, by their respective  authorized officers,  as of the
day and year first above written.

"BORROWER"

AVADO BRANDS, INC.                          (SEAL)

By:_________________________________
     Name:
     Title:

Attest:
Name:
Title:

<PAGE>
                                            "BANKS"

WACHOVIA BANK, NATIONAL
ASSOCIATION, as the Administrative Agent and as
a Bank                                               (SEAL)

By:________________________________
     W. Tompkins Rison, Vice President

FLEET NATIONAL BANK, as successor
to BANKBOSTON, N.A., as Syndication Agent
and as a Bank                                        (SEAL)

By:________________________________
      Name:__________________________
      Title:___________________________

SUNTRUST BANK, as a Bank

By:________________________________
     Name:___________________________
     Title:____________________________

COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK INTERNATIONAL,"
NEW YORK BRANCH, as a Bank

By:________________________________
     Name:___________________________
     Title:____________________________

By:________________________________
     Name:___________________________
     Title:____________________________

COMERICA BANK, as a Bank            (SEAL)

By:________________________________
      Name:___________________________
      Title:____________________________

SOUTHTRUST BANK, NATIONAL
ASSOCIATION, as a Bank                      (SEAL)

By:________________________________
      Name:___________________________
      Title:____________________________Exhibit 4.1

<PAGE>

                      NEW CENTURY MORTGAGE SECURITIES, INC.

                                    Depositor

                        NEW CENTURY MORTGAGE CORPORATION

                                 Master Servicer

                               FIRSTAR BANK, N.A.

                                     Trustee

                                       and

                         U.S. BANK NATIONAL ASSOCIATION

                               Trust Administrator

                    -----------------------------------------
                         POOLING AND SERVICING AGREEMENT
                            Dated as of March 1, 2000
                    -----------------------------------------

               New Century Home Equity Loan Trust, Series 2000-NC1
                     Asset Backed Pass-Through Certificates

                                 Series 2000-NC1

<PAGE>

                                TABLE OF CONTENTS

SECTION                                                                     PAGE
-------                                                                     ----

                                            ARTICLE I

                                           DEFINITIONS

1.01. Defined Terms............................................................6
      Accepted Servicing Practices.............................................6
      Accrued Certificate Interest.............................................6
      Adjustment Date..........................................................6
      Administration Fee.......................................................6
      Administration Fee Rate..................................................7
      Advancing Person.........................................................7
      Affiliate................................................................7
      Aggregate Loss Severity Percentage.......................................7
      Agreement................................................................7
      Assignment...............................................................7
      Available Distribution Amount............................................7
      Bankruptcy Code..........................................................8
      Bankruptcy Loss..........................................................8
      Book-Entry Certificate...................................................8
      Book-Entry Custodian.....................................................8
      Business Day.............................................................8
      Cash-Out Refinancing.....................................................8
      Certificate..............................................................8
      Certificate Factor.......................................................8
      Certificateholder or Holder..............................................9
      Certificate Owner........................................................9
      Certificate Principal Balance............................................9
      Certificate Register.....................................................9
      Class ...................................................................9
      Class A Certificate.....................................................10
      Class A Principal Distribution Amount...................................10
      Class CE Certificate....................................................10
      Class IO Certificate....................................................10
      Class M-1 Certificate...................................................10
      Class M-1 Principal Distribution Amount.................................10
      Class M-2 Certificate...................................................10
      Class M-2 Principal Distribution Amount.................................10
      Class M-3 Certificate...................................................11
      Class M-3 Principal Distribution Amount.................................11
      Class P Certificate.....................................................11
      Class R-I Certificate...................................................11
      Class R-II Certificate..................................................11

                                      -ii-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

      Class R-III Certificate.................................................11
      Class R-IV Certificate..................................................11
      Class R-V Certificates..................................................11
      Closing Date............................................................12
      Code ...................................................................12
      Collection Account......................................................12
      Commission..............................................................12
      Corporate Trust Office..................................................12
      Corresponding Certificate...............................................12
      Credit Enhancement Percentage...........................................12
      Cumulative Loss Percentage..............................................12
      Cut-off Date............................................................13
      DCR ....................................................................13
      Debt Service Reduction..................................................13
      Deficient Valuation.....................................................13
      Definitive Certificates.................................................13
      Deleted Mortgage Loan...................................................13
      Delinquency Percentage..................................................13
      Depositor...............................................................13
      Depository..............................................................13
      Depository Institution..................................................14
      Depository Participant..................................................14
      Determination Date......................................................14
      Directly Operate........................................................14
      Disqualified Organization...............................................14
      Distribution Account....................................................15
      Distribution Date.......................................................15
      Due Date ...............................................................15
      Due Period..............................................................15
      Eligible Account........................................................15
      ERISA ..................................................................15
      Estate in Real Property.................................................15
      Excess Overcollateralized Amount........................................15
      Expense Adjusted Mortgage Rate..........................................15
      Extraordinary Trust Fund Expense........................................15
      Fannie Mae..............................................................15
      FDIC ...................................................................16
      Final Recovery Determination............................................16
      Fitch ..................................................................16
      Freddie Mac.............................................................16
      Gross Margin............................................................16
      Independent.............................................................16
      Independent Contractor..................................................16
      Index ..................................................................17

                                      -iii-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

      Initial Deposit.........................................................17
      Insurance Proceeds......................................................17
      Interest Accrual Period.................................................17
      Interest Carry Forward Amount...........................................17
      Interest Determination Date.............................................17
      Interest Distribution Amount............................................18
      Interest Remittance Amount..............................................18
      Late Collections........................................................18
      Liquidation Event.......................................................18
      Liquidation Proceeds....................................................18
      Loan-to-Value Ratio.....................................................18
      London Business Day.....................................................18
      Loss Severity Percentage................................................18
      Master Servicer.........................................................18
      Master Servicer Event of Default........................................19
      Master Servicer Prepayment Charge Payment Amount........................19
      Master Servicer Remittance Date.........................................19
      Master Servicer Termination Test........................................19
      Maximum III-LT6 Uncertificated Interest Deferral Amount.................19
      Maximum Mortgage Rate...................................................19
      Mezzanine Certificate...................................................19
      Minimum Mortgage Rate...................................................19
      Monthly Payment.........................................................19
      Moody's ................................................................19
      Mortgage ...............................................................19
      Mortgage File...........................................................20
      Mortgage Loan...........................................................20
      Mortgage Loan Purchase Agreement........................................20
      Mortgage Loan Schedule..................................................20
      Mortgage Note...........................................................22
      Mortgage Pool...........................................................22
      Mortgage Rate...........................................................22
      Mortgaged Property......................................................22
      Mortgagor...............................................................23
      Net Monthly Excess Cashflow.............................................23
      Net Mortgage Rate.......................................................23
      Net WAC 30/360 Pass-Through Rate........................................23
      Net WAC Actual/360 Pass-Through Rate....................................23
      New Lease...............................................................23
      Nonrecoverable P&I Advance..............................................23
      Nonrecoverable Servicing Advance........................................23
      Non-United States Person................................................23
      Notional Amount.........................................................24
      Officers' Certificate...................................................24

                                      -iv-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

      One-Month LIBOR.........................................................24
      One-Month LIBOR Pass-Through Rate.......................................24
      Opinion of Counsel......................................................25
      Mortgage Loan...........................................................25
      Overcollateralized Amount...............................................25
      Overcollateralization Deficiency Amount.................................25
      Overcollateralization Increase Amount...................................25
      Overcollateralization Reduction Amount..................................26
      Ownership Interest......................................................26
      Pass-Through Rate.......................................................26
      Percentage Interest.....................................................27
      Periodic Rate Cap.......................................................27
      Permitted Investments...................................................27
      Permitted Transferee....................................................28
      Person .................................................................28
      P&I Advance.............................................................28
      Plan ...................................................................29
      Prepayment Assumption...................................................29
      Prepayment Charge.......................................................29
      Prepayment Charge Schedule..............................................29
      Prepayment Interest Shortfall...........................................29
      Prepayment Period.......................................................30
      Principal Distribution Amount...........................................30
      Principal Prepayment....................................................30
      Purchase Price..........................................................31
      Qualified Substitute Mortgage Loan......................................31
      Rate/Term Refinancing...................................................32
      Rating Agency or Rating Agencies........................................32
      Realized Loss...........................................................32
      Record Date.............................................................33
      Reference Banks.........................................................33
      Refinanced Mortgage Loan................................................33
      Regular Certificate.....................................................33
      Regular Interest........................................................33
      Relief Act..............................................................34
      Relief Act Interest Shortfall...........................................34
      REMIC ..................................................................34
      REMIC I  ...............................................................34
      REMIC I Regular Interest................................................34
      REMIC I Regular Interest I-LT1..........................................34
      REMIC I Regular Interest I-LT2..........................................34
      REMIC I Regular Interest I-LTP1.........................................35
      REMIC I Regular Interest I-LTP2.........................................35
      REMIC I Remittance Rate.................................................35

                                       -v-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

      REMIC II ...............................................................35
      REMIC II Regular Interest...............................................35
      REMIC II Regular Interest II-LT1........................................35
      REMIC II Regular Interest II-LT2........................................36
      REMIC II Regular Interest II-LTIO.......................................36
      REMIC II Regular Interest II-LTP........................................36
      REMIC II Remittance Rate................................................36
      REMIC III...............................................................36
      REMIC III Interest Loss Allocation Amount...............................36
      REMIC III Overcollateralized Amount.....................................37
      REMIC III Principal Loss Allocation Amount..............................37
      REMIC III Regular Interest..............................................37
      REMIC III Regular Interest III-LT1......................................37
      REMIC III Regular Interest III-LT2......................................37
      REMIC III Regular Interest III-LT3......................................37
      REMIC III Regular Interest III-LT4......................................38
      REMIC III Regular Interest III-LT5......................................38
      REMIC III Regular Interest III-LT6......................................38
      REMIC III Regular Interest III-LTIO.....................................38
      REMIC III Regular Interest III-LTP......................................38
      REMIC III Remittance Rate...............................................38
      REMIC III Required Overcollateralized Amount............................38
      REMIC IV ...............................................................38
      REMIC IV Regular Interest...............................................39
      REMIC IV Regular Interest IV-LT1........................................39
      REMIC IV Regular Interest IV-LT3........................................39
      REMIC IV Regular Interest IV-LT4........................................39
      REMIC IV Regular Interest IV-LT5........................................39
      REMIC IV Regular Interest IV-LT6........................................40
      REMIC IV Regular Interest IV-LTIO.......................................40
      REMIC IV Regular Interest IV-LTP........................................40
      REMIC IV Regular Interest IV-LT2S.......................................40
      REMIC IV Regular Interest IV-LT3S.......................................40
      REMIC IV Regular Interest IV-LT4S.......................................40
      REMIC IV Regular Interest IV-LT5S.......................................40
      REMIC IV Remittance Rate................................................40
      REMIC V  ...............................................................41
      REMIC V Certificate.....................................................41
      REMIC V Certificateholder...............................................41
      Remittance Report.......................................................41
      Rents from Real Property................................................41
      REO Account.............................................................41
      REO Disposition.........................................................41
      REO Imputed Interest....................................................41

                                      -vi-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

      REO Principal Amortization..............................................41
      REO Property............................................................42
      Request for Release.....................................................42
      Required Overcollateralized Amount......................................42
      Reserve Interest Rate...................................................42
      Residential Dwelling....................................................42
      Residual Certificate....................................................42
      Residual Interest.......................................................42
      Responsible Officer.....................................................42
      Scheduled Principal Balance.............................................43
      Senior Interest Distribution Amount.....................................43
      Servicing Account.......................................................43
      Servicing Advances......................................................43
      Servicing Fee...........................................................44
      Servicing Fee Rate......................................................44
      Servicing Officer.......................................................44
      Single Certificate......................................................44
      Startup Day.............................................................44
      Stated Principal Balance................................................44
      Stayed Funds............................................................45
      Stepdown Date...........................................................45
      Sub-Servicer............................................................45
      Sub-Servicing Account...................................................45
      Sub-Servicing Agreement.................................................45
      Substitution Shortfall Amount...........................................45
      Tax Returns.............................................................45
      Telerate Page 3750......................................................46
      Termination Price.......................................................46
      Terminator..............................................................46
      Transfer ...............................................................46
      Transferee..............................................................46
      Transferor..............................................................46
      Trigger Event...........................................................46
      Trust Administrator.....................................................46
      Trust Fund..............................................................46
      Trustee  ...............................................................46
      Uncertificated Balance..................................................46
      Uncertificated Corresponding Component..................................47
      Uncertificated Interest.................................................47
      Uncertificated Notional Amount..........................................48
      Uninsured Cause.........................................................48
      United States Person....................................................48
      Value    ...............................................................48
      Voting Rights...........................................................49

                                      -vii-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

1.02. Allocation of Certain Interest Shortfalls...............................49

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

2.01. Conveyance of the Mortgage Loans........................................51
2.02. Acceptance of REMIC I by Trustee........................................53
2.03. Repurchase or Substitution of Mortgage Loans by the Originator,
      the Seller or the Depositor.............................................54
2.04. Representations and Warranties of the Depositor.........................57
2.05. Representations, Warranties and Covenants of the Master Servicer........59
2.06. Issuance of the Class R-I Certificates..................................62
2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II
      by the Trustee..........................................................62
2.08. Issuance of Class R-II Certificates.....................................63
2.09. Conveyance of the REMIC II Regular Interests; Acceptance of REMIC III
      by the Trustee..........................................................63
2.10. Issuance of Class R-III Certificates....................................63
2.11. Conveyance of the REMIC III Regular Interests; Acceptance of REMIC IV
      by the Trustee..........................................................63
2.12. Issuance of Class R-IV Certificates.....................................64
2.13. Conveyance of REMIC IV Regular Interests; Acceptance of REMIC V by
      the Trustee.............................................................64
2.14. Issuance of REMIC V Certificates........................................64

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

3.01. Master Servicer to Act as Master Servicer...............................65
3.02. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers......67
3.03. Successor Sub-Servicers.................................................68
3.04. Liability of the Master Servicer........................................68
3.05. No Contractual Relationship Between Sub-Servicers and the Trust
      Administrator, the Trustee or Certificateholders........................69
3.06. Assumption or Termination of Sub-Servicing Agreements by Trust
      Administrator...........................................................69
3.07. Collection of Certain Mortgage Loan Payments............................70
3.08. Sub-Servicing Accounts..................................................70
3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts..70

                                             -viii-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

3.10. Collection Account and Distribution Account.............................71
3.11. Withdrawals from the Collection Account and Distribution Account........74
3.12. Investment of Funds in the Collection Account and the Distribution
      Account76.................................................................
3.13. [Reserved]..............................................................77
3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
      Coverage................................................................77
3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements...............78
3.16. Realization Upon Defaulted Mortgage Loans...............................79
3.17. Trustee and Trust Administrator to Cooperate; Release of Mortgage
      Files...................................................................81
3.18. Servicing Compensation..................................................83
3.19. Reports to the Trust Administrator and the Trustee; Collection
      Account Statements......................................................83
3.20. Statement as to Compliance..............................................83
3.21. Independent Public Accountants' Servicing Report........................84
3.22. Access to Certain Documentation.........................................84
3.23. Title, Management and Disposition of REO Property.......................84
3.24. Obligations of the Master Servicer in Respect of Prepayment Interest
      Shortfall...............................................................88
3.25. Obligations of the Master Servicer in Respect of Mortgage Rates and
      Monthly Payments........................................................88
3.26. Advance Facility........................................................88

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

4.01. Distributions...........................................................90
4.02. Statements to Certificateholders........................................97
4.03. Remittance Reports; P&I Advances.......................................100
4.04. Allocation of Realized Losses..........................................101
4.05. Compliance with Withholding Requirements...............................103
4.06. Exchange Commission; Additional Information............................103

                                    ARTICLE V

                                THE CERTIFICATES

5.01. The Certificates.......................................................105
5.02. Registration of Transfer and Exchange of Certificates..................107
5.03. Mutilated, Destroyed, Lost or Stolen Certificates......................111
5.04. Persons Deemed Owners..................................................112
5.05. Certain Available Information..........................................112

                                      -ix-

<PAGE>

SECTION                                                                     PAGE
-------                                                                     ----

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

6.01. Liability of the Depositor and the Master Servicer.....................114
6.02. Merger or Consolidation of the Depositor or the Master Servicer........114
6.03. Limitation on Liability of the Depositor, the Master Servicer
      and Others.............................................................114
6.04. Limitation on Resignation of the Master Servicer.......................115
6.05. Rights of the Depositor in Respect of the Master Servicer..............116

                                   ARTICLE VII

                                     DEFAULT

7.01. Master Servicer Events of Default......................................117
7.02. Trust Administrator or Trustee to Act; Appointment of Successor........119
7.03. Notification to Certificateholders.....................................120
7.04. Waiver of Master Servicer Events of Default............................121

                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

8.01. Duties of Trustee and Trust Administrator..............................122
8.02. Certain Matters Affecting the Trustee and the Trust Administrator......123
8.03. Neither Trustee nor Trust Administrator Liable for Certificates
      or Mortgage Loans......................................................124
8.04. Trustee and Trust Administrator May Own Certificates...................125
8.05. Trustee's and Trust Administrator's Fees and Expenses..................125
8.06. Eligibility Requirements for Trustee and Trust Administrator...........125
8.07. Resignation and Removal of the Trustee and the Trust Administrator.....126
8.08. Successor Trustee or Trust Administrator...............................127
8.09. Merger or Consolidation of Trustee or Trust Administrator..............128
8.10. Appointment of Co-Trustee or Separate Trustee..........................128
8.11. Appointment of Office or Agency........................................129
8.12. Representations and Warranties.........................................129

                                   ARTICLE IX

                                   TERMINATION

9.01  Termination Upon Repurchase or Liquidation of All Mortgage Loans.......131
9.02  Additional Termination Requirements....................................133

                                       -x-

<PAGE>

                                    ARTICLE X

                                REMIC PROVISIONS

10.01. REMIC Administration..................................................134
10.02. Prohibited Transactions and Activities................................137
10.03. Master Servicer, Trustee and Trust Administrator Indemnification......137

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

11.01. Amendment.............................................................139
11.02. Recordation of Agreement; Counterparts................................140
11.03. Limitation on Rights of Certificateholders............................140
11.04. Governing Law.........................................................141
11.05. Notices...............................................................141
11.06. Severability of Provisions............................................142
11.07. Notice to Rating Agencies.............................................142
11.08. Article and Section References........................................143
11.09. Grant of Security Interest............................................143

                                      -xi-

<PAGE>

Exhibits

Exhibit A-1   Form of Class A Certificate
Exhibit A-2   Form of Class M-1 Certificate
Exhibit A-3   Form of Class M-2 Certificate
Exhibit A-4   Form of Class M-3 Certificate
Exhibit A-5   Form of Class CE Certificate
Exhibit A-6   Form of Class P Certificate
Exhibit A-7   Form of Class IO Certificate
Exhibit A-8   Form of Class R-I Certificate
Exhibit A-9   Form of Class R-II Certificate
Exhibit A-10  Form of Class R-III Certificate
Exhibit A-11  Form of Class R-IV Certificate
Exhibit A-12  Form of Class R-V Certificate
Exhibit B     [Reserved]
Exhibit C-1   Form of Trust Administrator's Initial Certification
Exhibit C-2   Form of Trust Administrator's Interim Certification
Exhibit C-3   Form of Trust Administrator's Final Certification
Exhibit D     Form of Mortgage Loan Purchase Agreement
Exhibit E-1   Request for Release
Exhibit E-2   Request for Release Mortgage Loans paid in full
Exhibit F-1   Form of Transferor Representation Letter and Form of Transferee
              Representation Letter in Connection with Transfer of the Class IO
              Certificates, Class CE Certificates, Class P Certificates or
              Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit F-2   Form of Transfer Affidavit and Agreement and Form of Transferor
              Affidavit in Connection with Transfer of Residual Certificates
Exhibit G     Form of Certification with respect to ERISA and the Code
              for Mezzanine Certificates
Exhibit H     Form of Report Pursuant to Section 4.06
Exhibit I     [Reserved]
Exhibit J     [Reserved]
Exhibit K     Form of Lost Note Affidavit
Schedule 1    Mortgage Loan Schedule
Schedule 2    Prepayment Charge Schedule

                                      -xii-

<PAGE>

          This Pooling and Servicing Agreement, is dated and effective as of
March 1, 2000, among NEW CENTURY MORTGAGE SECURITIES, INC. as Depositor, NEW
CENTURY MORTGAGE CORPORATION as Master Servicer, FIRSTAR BANK, N.A. as Trustee
and U.S. BANK NATIONAL ASSOCIATION as Trust Administrator.

                             PRELIMINARY STATEMENT:

          The Depositor intends to sell pass-through certificates to be issued
hereunder in multiple classes, which in the aggregate will evidence the entire
beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprising
of the Mortgage Loans and certain other related assets subject to this
Agreement.

                                     REMIC I
                                     -------

          As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the Mortgage Loans and certain other related assets
(other than the Master Servicer Prepayment Charge Payment Amount) subject to
this Agreement as a REMIC for federal income tax purposes, and such segregated
pool of assets will be designated as "REMIC I." The Class R-I Certificates will
be the sole class of "residual interests" in REMIC I for purposes of the REMIC
Provisions (as defined herein). The following table irrevocably sets forth the
designation, the REMIC I Remittance Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests (as defined herein). None of the REMIC I Regular Interests
will be certificated.

                     REMIC I                Initial             Latest Possible
Designation      Remittance Rate     Uncertificated Balance    Maturity Date(1)
-----------      ---------------     ----------------------    ----------------
  I-LT1            Variable(2)          $214,839,985.79         April 25, 2030
  I-LT2              12.00%             $214,839,985.80         April 25, 2030
  I-LTP1               (3)                       $50.00         April 25, 2030
  I-LTP2             12.00%                      $50.00         April 25, 2030

----------------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC I Remittance Rate"
     herein.
(3)  The REMIC I Regular Interest I-LTP1 will not accrue interest.

                                       -1-

<PAGE>

                                    REMIC II
                                    --------

          As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will be the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC II Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC II Regular Interests (as
defined herein). None of the REMIC II Regular Interests will be certificated.

                   REMIC II                Initial               Latest Possible
Designation     Remittance Rate     Uncertificated Balance      Maturity Date(1)
-----------     ---------------     ----------------------      ----------------
  II-LT1         Variable(2)           $214,839,985.79          April 25, 2030
  II-LT2         Variable(2)           $214,839,985.80          April 25, 2030
  II-LTIO        Variable(2)                     (4)            April 25, 2030
  II-LTP             (3)                       $100.00          April 25, 2030

-----------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC II Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC II Remittance Rate"
     herein.
(3)  The REMIC II Regular Interest II-LTP will not accrue interest.
(4)  The REMIC II Regular Interest II-LTIO has no Uncertificated Balance but
     will accrue interest at the related REMIC II Remittance Rate on the related
     Uncertificated Notional Amount, which is equal to the sum of the
     Uncertificated Balances of REMIC I Regular Interest I-LT2 and REMIC I
     Regular Interest I-LTP2.

                                       -2-

<PAGE>

                                    REMIC III
                                    ---------

          As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC II Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC III". The Class R-III Certificates will be the sole class
of "residual interests" in REMIC III for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC III Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC III Regular Interests (as
defined herein). None of the REMIC III Regular Interests will be certificated.

                    REMIC III             Initial                Latest Possible
Designation      Remittance Rate   Uncertificated Balance       Maturity Date(1)
-----------      ---------------   ----------------------       ----------------
  III-LT1          Variable(2)         $421,086,470.16           April 25, 2030
  III-LT2          Variable(2)           $3,351,500.00           April 25, 2030
  III-LT3          Variable(2)             $333,000.00           April 25, 2030
  III-LT4          Variable(2)             $279,290.00           April 25, 2030
  III-LT5          Variable(2)             $193,360.00           April 25, 2030
  III-LT6          Variable(2)           $4,436,451.44           April 25, 2030
  III-LTIO             (3)                       (3)             April 25, 2030
  III-LTP              (4)                     $100.00           April 25, 2030

-----------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC III Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC III Remittance Rate"
     herein.
(3)  The REMIC III Regular Interest III-LTIO has no Uncertificated Balance, but
     will receive all amounts distributed to REMIC II Regular Interest II-LTIO.
(4)  The REMIC III Regular Interest III-LTP will not accrue interest.

                                       -3-

<PAGE>

                                    REMIC IV
                                    --------

          As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC III Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC IV". The Class R-IV Certificates will evidence the sole
class of "residual interests" in REMIC IV for purposes of the REMIC Provisions.
The following table irrevocably sets forth the designation, the REMIC IV
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest
possible maturity date" for each of the REMIC IV Regular Interests. None of the
REMIC IV Regular Interests will be certificated.

                    REMIC IV              Initial              Latest Possible
Designation     Remittance Rate    Uncertificated Balance      Maturity Date(1)
-----------     ---------------    ----------------------      ----------------
  IV-LT1         Variable(2)          $421,086,470.16           April 25, 2030
  IV-LT2         Variable(2)            $3,351,500.00           April 25, 2030
  IV-LT3         Variable(2)              $333,000.00           April 25, 2030
  IV-LT4         Variable(2)              $279,290.00           April 25, 2030
  IV-LT5         Variable(2)              $193,360.00           April 25, 2030
  IV-LT6         Variable(2)            $4,436,451.44           April 25, 2030
  IV-LTIO            (3)                        (3)             April 25, 2030
  IV-LTP             (4)                      $100.00           April 25, 2030
  IV-LT2S        Variable(2)                  (5)               April 25, 2030
  IV-LT3S        Variable(2)                  (5)               April 25, 2030
  IV-LT4S        Variable(2)                  (5)               April 25, 2030
  IV-LT5S        Variable(2)                  (5)               April 25, 2030

-------------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC II Regular Interest.

(2)  Calculated in accordance with the definition of "REMIC IV Remittance Rate"
     herein.

(3)  The REMIC IV Regular Interest IV-LTIO has no Uncertificated Balance, but
     will receive all amounts distributed to REMIC III Regular Interest
     III-LTIO.

(4)  The REMIC IV Regular Interest IV-LTP will not accrue interest.

(5)  This REMIC IV Regular Interest has no Uncertificated Balance but will
     accrue interest at the related REMIC IV Remittance Rate on the related
     Uncertificated Notional Amount, which is equal to the Uncertificated
     Balance of the Uncertificated Corresponding Component.

                                       -4-

<PAGE>

                                     REMIC V
                                     -------

          As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC IV Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC V." The Class R-V Certificates will evidence the sole class
of "residual interests" in REMIC V for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the Pass- Through Rate, the initial aggregate Certificate Principal
Balance and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.

                                       Initial Aggregate         Latest Possible
Designation   Pass-Through Rate  Certificate Principal Balance  Maturity Date(1)
-----------   -----------------  -----------------------------  ----------------
 Class A        Variable(2)          $335,150,000.00             April 25, 2030
 Class M-1      Variable(2)           $33,300,000.00             April 25, 2030
 Class M-2      Variable(2)           $27,929,000.00             April 25, 2030
 Class M-3      Variable(2)           $19,336,000.00             April 25, 2030
 Class IO               (3)                    (3)               April 25, 2030
 Class CE       Variable(2)           $13,965,071.59(4)          April 25, 2030
 Class P           (5)                       $100.00             April 25, 2030

------------------
(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loans with the latest maturity date has been designated as
     the "latest possible maturity date" for each Class of Certificates.

(2)  Calculated in accordance with the definition of "Pass-Through Rate" herein.

(3)  The Class IO Certificates have no Certificate Principal Balance, but will
     receive all amounts distributed to REMIC IV Regular Interest IV-LTIO.

(4)  The Class CE Certificates will accrue interest at their variable
     Pass-Through Rate on the Notional Amount of the Class CE Certificates
     outstanding from time to time which shall equal the Uncertificated Balance
     of the REMIC IV Regular Interests (other than the Uncertificated Balance of
     REMIC IV Regular Interest IV-LTP). The Class CE Certificates will not
     accrue interest on their Certificate Principal Balance.

(5)  The Class P Certificates will not accrue interest.

          As of the Cut-off Date, the Original Mortgage Loans had an aggregate
Scheduled Principal Balance equal to $429,680,171.59.

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

                                       -5-

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

          SECTION 1.01. Defined Terms.

          Whenever used in this Agreement, including, without limitation, in the
Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.

          "Accepted Servicing Practices": The servicing standards set forth in
Section 3.01.

          "Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate, Class IO Certificate or Class CE Certificate
and each Distribution Date, interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Certificate for such Distribution Date
on the Certificate Principal Balance, in the case of the Class A Certificates
and the Mezzanine Certificates, or on the Notional Amount, in the case of the
Class IO Certificates and the Class CE Certificates, of such Certificate
immediately prior to such Distribution Date. The Class P Certificates are not
entitled to distributions in respect of interest and, accordingly, will not
accrue interest. All distributions of interest on the Class A Certificates and
the Mezzanine Certificates will be calculated on the basis of a 360-day year and
the actual number of days in the applicable Interest Accrual Period. All
distributions of interest on the Class IO Certificates and the Class CE
Certificates will be based on a 360-day year consisting of twelve 30-day months.
Accrued Certificate Interest with respect to each Distribution Date, as to any
Class A Certificate, Mezzanine Certificate, Class IO Certificate or Class CE
Certificate, shall be reduced by an amount equal to the portion allocable to
such Certificate pursuant to Section 1.02 hereof of the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.24 and (b) the aggregate amount of
any Relief Act Interest Shortfall, if any, for such Distribution Date. In
addition, Accrued Certificate Interest with respect to each Distribution Date,
as to any Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Class CE Certificate of Realized Losses, if any,
pursuant to Section 4.04 hereof. Notwithstanding the foregoing, for federal
income tax purposes and under the REMIC Provisions, the Accrued Certificate
Interest for the Class IO Certificates and any Distribution Date will be deemed
to be the Uncertificated Interest for REMIC IV Regular Interest IV-LTIO for such
Distribution Date.

          "Adjustment Date": With respect to each Mortgage Loan, the first day
of the month in which the Mortgage Rate of a Mortgage Loan changes pursuant to
the related Mortgage Note. The first Adjustment Date following the Cut-off Date
as to each Mortgage Loan is set forth in the Mortgage Loan Schedule.

          "Administration Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one month's interest at the Administration Fee Rate on the

                                       -6-

<PAGE>

aggregate Scheduled Principal Balance of the Mortgage Loans and any REO
Properties as of the second preceding Due Date (or, in the case of the initial
Distribution Date, as of the Cut-off Date), calculated on the basis of a 360-day
year consisting of twelve 30-day months. The fee payable to the Trust
Administrator for all services rendered by it in the exercise and performance of
any of the powers and duties of the Trust Administrator hereunder will be paid
by the Trustee out of the Administration Fee.

          "Administration Fee Rate": 0.0070% per annum.

          "Advancing Person": As defined in Section 3.26 hereof.

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

          "Aggregate Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred on any Mortgage Loans from the
Cut-off Date to the last day of the preceding calendar month and the denominator
of which is the aggregate principal balance of such Mortgage Loans immediately
prior to the liquidation of such Mortgage Loans.

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

          "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

          "Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account as of the close of
business on the related Determination Date, (b) the aggregate of any amounts
received in respect of an REO Property withdrawn from any REO Account and
deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Master Servicer for such Distribution Date pursuant to
Section 4.03, (e) the aggregate of any advances made by the Trust Administrator
or the Trustee, as applicable, for such Distribution Date pursuant to Section
7.02(b) and (f) with respect to the initial Distribution Date, the Initial
Deposit, reduced (to not less than zero), by (2) the sum of (x) the

                                       -7-

<PAGE>

portion of the amount described in clause (1)(a) above that represents (i)
Monthly Payments on the Mortgage Loans received from a Mortgagor on or prior to
the Determination Date but due during any Due Period subsequent to the related
Due Period, (ii) Principal Prepayments on the Mortgage Loans received after the
related Prepayment Period (together with any interest payments received with
such Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Master Servicer, the
Trustee, the Originator, the Trust Administrator, the Seller or any Sub-Servicer
pursuant to Section 3.11 or Section 3.12 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) Stayed Funds, (vi) the Administration Fee
payable from the Distribution Account pursuant to Section 8.05, (vii) amounts
deposited in the Collection Account or the Distribution Account in error and
(viii) the amount of any Prepayment Charges collected by the Master Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans or any
Master Servicer Prepayment Charge Payment Amount, and (y) amounts reimbursable
to the Trustee or the Trust Administrator, as applicable, for an advance made
pursuant to Section 7.02(b) which advance the Trustee or Trust Administrator, as
applicable, has determined to be nonrecoverable from the Stayed Funds in respect
of which it was made.

          "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.

          "Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.

          "Book-Entry Certificate": The Class A Certificates and the Mezzanine
Certificates for so long as the Certificates of such Class shall be registered
in the name of the Depository or its nominee.

          "Book-Entry Custodian": The custodian appointed pursuant to Section
5.01.

          "Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings and loan institutions in the State of California, the
State of New York or in the city in which the Corporate Trust Office of the
Trust Administrator or the Corporate Trust Office of the Trustee is located, are
authorized or obligated by law or executive order to be closed.

          "Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which are more than a nominal amount in excess of the principal balance of any
existing first mortgage or subordinate mortgage on the related Mortgaged
Property and related closing costs.

          "Certificate": Any one of the Asset Backed Pass-Through Certificates,
Series 2000- NC1, Class A, Class M-1, Class M-2, Class M-3, Class IO, Class CE,
Class P, Class R-I, Class R-II, Class R-III, Class R-IV or Class R-V, issued
under this Agreement.

          "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which

                                       -8-

<PAGE>

is the aggregate Certificate Principal Balance (or the Notional Amount, in the
case of the Class IO Certificates and the Class CE Certificates) of such Class
of Certificates on such Distribution Date (after giving effect to any
distributions of principal and allocations of Realized Losses in reduction of
the Certificate Principal Balance (or the Notional Amount, in the case of the
Class IO Certificates and the Class CE Certificates) of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial aggregate Certificate Principal Balance (or the Notional Amount,
in the case of the Class IO Certificates and the Class CE Certificates) of such
Class of Certificates as of the Closing Date.

          "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee and the Trust Administrator may
conclusively rely upon a certificate of the Depositor or the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

          "Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant or on the books of
an indirect participating brokerage firm for which a Depository Participant acts
as agent.

          "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto on such immediately prior Distribution Date (or, in the case of any date
of determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC IV Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates then outstanding.

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

          "Class": Collectively, all of the Certificates bearing the same class
designation.

                                       -9-

<PAGE>

          "Class A Certificate": Any one of the Class A Certificates executed,
authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 56.00% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period minus $3,222,601.

          "Class CE Certificate": Any one of the Class CE Certificates executed,
authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class IO Certificate": Any one of the Class IO Certificates executed,
authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-7 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
71.50% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$3,222,601.

          "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 84.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate

                                      -10-

<PAGE>

Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period minus $3,222,601.

          "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-4 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 93.50% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $3,222,601.

          "Class P Certificate": Any one of the Class P Certificates executed,
authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-6 and evidencing a Regular
Interest in REMIC V for purposes of the REMIC Provisions.

          "Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-8 and evidencing the
Residual Interest in REMIC I for purposes of the REMIC Provisions.

          "Class R-II Certificate": Any one of the Class R-II Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-9 and evidencing the
Residual Interest in REMIC II for purposes of the REMIC Provisions.

          "Class R-III Certificate": Any one of the Class R-III Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-10 and evidencing the
Residual Interest in REMIC III for purposes of the REMIC Provisions.

          "Class R-IV Certificate": Any one of the Class R-IV Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-11 and evidencing the
Residual Interest in REMIC IV for purposes of the REMIC Provisions.

          "Class R-V Certificates": Any one of the Class R-V Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form

                                      -11-

<PAGE>

annexed hereto as Exhibit A-12 and evidencing the Residual Interest in REMIC V
for purposes of the REMIC Provisions.

          "Closing Date": March 24, 2000.

          "Code": The Internal Revenue Code of 1986.

          "Collection Account": The account or accounts created and maintained,
or caused to be created and maintained, by the Master Servicer pursuant to
Section 3.10(a), which shall be entitled "New Century Mortgage Corporation, as
Master Servicer for Firstar Bank, N.A., as Trustee, in trust for the registered
holders of New Century Mortgage Securities, Inc., New Century Home Equity Loan
Trust, Series 2000-NC1, Asset Backed Pass-Through Certificates." The Collection
Account must be an Eligible Account.

          "Commission": The Securities and Exchange Commission.

          "Corporate Trust Office": The principal corporate trust office of the
Trust Administrator or the Trustee, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office, with respect to the Trust Administrator, at
the date of the execution of this instrument is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, or at such other address as the Trust
Administrator may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Trustee and, with
respect to the Trustee, at the date of the execution of this instrument is
located at 1555 N. Rivercenter Drive, Milwaukee, Wisconsin 53212, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Trust
Administrator.

          "Corresponding Certificate": With respect to REMIC III Regular
Interest III-LT2, REMIC III Regular Interest III-LT3, REMIC III Regular Interest
III-LT4, REMIC III Regular Interest III-LT5, REMIC III Regular Interest III-LTIO
and REMIC III Regular Interest III-LTP, the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, the Class IO
Certificates and Class P Certificates, respectively. With respect to REMIC IV
Regular Interest IV- LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular
Interest IV-LT4, REMIC IV Regular Interest IV-LT5, REMIC IV Regular Interest
IV-LTIO and REMIC IV Regular Interest IV-LTP, the Class A Certificates, Class
M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, the Class IO
Certificates and Class P Certificates, respectively.

          "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate Certificate Principal Balances of the Mezzanine Certificates and the
Class CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account
distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.

          "Cumulative Loss Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred

                                      -12-

<PAGE>

from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the sum of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date.

          "Cut-off Date": With respect to each Original Mortgage Loan, March 1,
2000. With respect to all Qualified Substitute Mortgage Loans, their respective
dates of substitution. References herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates
for such Mortgage Loans.

          "DCR": Duff & Phelps Credit Rating Co., or its successor in interest.

          "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

          "Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.

          "Definitive Certificates": As defined in Section 5.01(b).

          "Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Substitute Mortgage Loan.

          "Delinquency Percentage": As of the last day of the related Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master Servicer pursuant to Section 3.16(c) shall not be included in
either the numerator or the denominator for purposes of calculating the
Delinquency Percentage.

          "Depositor": New Century Mortgage Securities, Inc., a Delaware
corporation, or its successor in interest.

          "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. 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 and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                                      -13-

<PAGE>

          "Depository Institution": Any depository institution or trust company,
including the Trustee and the Trust Administrator, that (a) is incorporated
under the laws of the United States of America or any State thereof, (b) is
subject to supervision and examination by federal or state banking authorities
and (c) has outstanding unsecured commercial paper or other short-term unsecured
debt obligations (or, in the case of a depository institution that is the
principal subsidiary of a holding company, such holding company has unsecured
commercial paper or other short-term unsecured debt obligations) that are rated
D-1+ by DCR, F-1 by Fitch and P-1 by Moody's (or comparable ratings if DCR,
Fitch and Moody's are not the Rating Agencies).

          "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.

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

          "Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by REMIC I other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Master Servicer on behalf of
the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.

          "Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for Freddie Mac, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee or the
Trust Administrator based upon an Opinion of Counsel that the holding of an
Ownership Interest in a Residual Certificate by such Person may cause any of
REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.

                                      -14-

<PAGE>

          "Distribution Account": The trust account or accounts created and
maintained by the Trust Administrator pursuant to Section 3.10(b), which shall
be entitled "U.S. Bank National Association, as Trust Administrator for Firstar
Bank, N.A., as Trustee, in trust for the registered holders of New Century
Mortgage Securities, Inc., New Century Home Equity Loan Trust, Series 2000-NC1,
Asset Backed Pass-Through Certificates." The Distribution Account must be an
Eligible Account.

          "Distribution Date": The 25th day of any month, or if such 25th day is
not a Business Day, the Business Day immediately following such 25th day,
commencing in April 2000.

          "Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is generally
the day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.

          "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the related Due Date.

          "Eligible Account": Any of (i) an account or accounts maintained with
a Depository Institution, (ii) an account or accounts the deposits in which are
fully insured by the FDIC or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.

          "ERISA": The Employee Retirement Income Security Act of 1974, as
amended.

          "Estate in Real Property": A fee simple estate in a parcel of land.

          "Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date
over (ii) the Required Overcollateralized Amount for such Distribution Date.

          "Expense Adjusted Mortgage Rate": With respect to any Mortgage Loan or
REO Property, the then applicable Mortgage Rate thereon minus the sum of (i) the
Administration Fee Rate and (ii) the Servicing Fee Rate.

          "Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee or the Trust Administrator, or any director, officer, employee or agent
of the Trustee or the Trust Administrator, from the Trust Fund pursuant to
Section 8.05, any amounts payable from the Distribution Account in respect of
taxes pursuant to Section 10.01(g)(iv) and any costs of the Trust Administrator
for the recording of the assignments of mortgage pursuant to Section 2.01 (to
the extent the Master Servicer is unable to pay such costs).

          "Fannie Mae": Fannie Mae, formally known as the Federal National
Mortgage Association, or any successor thereto.

                                      -15-

<PAGE>

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

          "Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Originator, the Seller, the Depositor or the Master Servicer pursuant to
or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a
determination made by the Master Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Master Servicer,
in its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so recovered. The Master Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery Determination
made thereby.

          "Fitch": Fitch IBCA, Inc., or its successor in interest.

          "Freddie Mac": Freddie Mac, formally known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.

          "Gross Margin": With respect to each Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note that is added to the Index on
each Adjustment Date in accordance with the terms of the related Mortgage Note
used to determine the Mortgage Rate for such Mortgage Loan.

          "Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Originator and their respective Affiliates, (b) does not have any
direct financial interest in or any material indirect financial interest in the
Depositor, the Originator, the Master Servicer or any Affiliate thereof, and (c)
is not connected with the Depositor, the Originator, the Master Servicer or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee, trust
administrator, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Originator, the Master Servicer or any Affiliate thereof merely
because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor, the Originator, the Master Servicer or any
Affiliate thereof, as the case may be.

          "Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Master Servicer) if the Trustee and the Trust Administrator have
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.

                                      -16-

<PAGE>

          "Index": With respect to each Mortgage Loan and each related
Adjustment Date, the average of the interbank offered rates for six-month United
States dollar deposits in the London market as published in THE WALL STREET
JOURNAL and as most recently available either (i) as of the first business day
45 days prior to such Adjustment Date or (ii) as of the first business day of
the month preceding the month of such Adjustment Date, as specified in the
related Mortgage Note.

          Initial Deposit": $20,165.10 in cash to be deposited by the Depositor
with the Trustee on or before the Closing Date, which represents with respect to
each Mortgage Loan having a first payment date due in May 2000, interest accrued
at the Net Mortgage Rate for each such Mortgage Loan for the initial Interest
Accrual Period.

          "Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.

          "Interest Accrual Period": With respect to any Distribution Date and
the Class A Certificates, the Mezzanine Certificates, REMIC IV Regular Interest
IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular Interest IV-LT4,
REMIC IV Regular Interest IV-LT5, REMIC IV Regular Interest IV-LT2S, REMIC IV
Regular Interest IV-LT3S, REMIC IV Regular Interest IV- LT4S and REMIC Regular
Interest IV-LT5S, the period commencing on the Distribution Date of the month
immediately preceding the month in which such Distribution Date occurs (or, in
the case of the first Distribution Date, commencing on the Closing Date) and
ending on the day preceding such Distribution Date. With respect to any
Distribution Date and the Class IO Certificates, the Class CE Certificates,
REMIC IV Regular Interest IV-LT1, REMIC IV Regular Interest IV-LTIO, REMIC IV
Regular Interest IV-LT6, the REMIC I Regular Interests, the REMIC II Regular
Interests and the REMIC III Regular Interests, the one-month period ending on
the last day of the calendar month preceding the month in which such
Distribution Date occurs.

          "Interest Carry Forward Amount": With respect to any Distribution Date
and any Class of Class A Certificates, Class IO Certificates or Mezzanine
Certificates, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class of Certificates as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class of Certificates in respect of interest on such immediately preceding
Distribution Date, (ii) the amount of any Interest Carry Forward Amount for such
Class of Certificates remaining unpaid from the previous Distribution Date and
(iii) accrued interest on the sum of (i) and (ii) above calculated at the
related Pass-Through Rate for the most recently ended Interest Accrual Period.

          "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class IO Certificates, REMIC IV
Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT2S, REMIC IV Regular
Interest IV-LT3, REMIC IV Regular Interest IV- LT3S, REMIC IV Regular Interest
IV-LT4, REMIC IV Regular Interest IV-LT4S, REMIC IV Regular Interest IV-LT5,
REMIC IV Regular Interest IV-LT5S and REMIC IV Regular Interest IV- LTIO and any
Interest Accrual Period therefor, the second London Business Day preceding the
commencement of such Interest Accrual Period.

                                      -17-

<PAGE>

          "Interest Distribution Amount": With respect to any Distribution Date
and any Class A Certificates, any Mezzanine Certificates, any Class IO
Certificates and any Class CE Certificates, the aggregate Accrued Certificate
Interest on the Certificates of such Class for such Distribution Date.

          "Interest Remittance Amount": With respect to any Distribution Date,
that portion of the Available Distribution Amount for such Distribution Date
attributable to interest received or advanced on the Mortgage Loans.

          "Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.

          "Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from REMIC I by reason of its being purchased, sold or replaced pursuant
to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01. With
respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.

          "Liquidation Proceeds": The amount (other than Insurance Proceeds or
amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Master Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan
through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

          "Loan-to-Value Ratio": As of any date of determination, the fraction,
expressed as a percentage, the numerator of which is the principal balance of
the related Mortgage Loan at such date and the denominator of which is the Value
of the related Mortgaged Property.

          "London Business Day": Any day on which banks in the City of London
are open and conducting transactions in United States dollars.

          "Loss Severity Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
principal balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.

          "Master Servicer": New Century Mortgage Corporation or any successor
master servicer appointed as herein provided, in its capacity as Master Servicer
hereunder.

                                      -18-

<PAGE>

          "Master Servicer Event of Default": One or more of the events
described in Section 7.01.

          "Master Servicer Prepayment Charge Payment Amount": The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 2.05 or Section 3.01.

          "Master Servicer Remittance Date": With respect to any Distribution
Date, 3:00 p.m. New York time on the 18th day of the calendar month in which
such Distribution Date occurs or, if such 18th day is not a Business Day, the
Business Day immediately succeeding such 18th day.

          "Master Servicer Termination Test": With respect to any Distribution
Date, the Master Servicer Termination Test will be failed if the Cumulative Loss
Percentage exceeds 6.70%.

          "Maximum III-LT6 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC III Remittance Rate applicable to REMIC III Regular Interest III-LT6 for
such Distribution Date on a balance equal to the Uncertificated Balance of REMIC
III Regular Interest III-LT6 minus the REMIC III Overcollateralized Amount, in
each case for such Distribution Date, over (ii) Uncertificated Interest on REMIC
IV Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular
Interest IV-LT4 and REMIC IV Regular Interest IV-LT5 for such Distribution Date.

          "Maximum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.

          "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.

          "Minimum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.

          "Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.07 and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.

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

          "Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.

                                      -19-

<PAGE>

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

          "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee and delivered to the Trust Administrator pursuant to Section 2.01 or
Section 2.03(d) of this Agreement, as held from time to time as a part of the
Trust Fund, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule.

          "Mortgage Loan Purchase Agreement": The agreement among the Seller,
the Originator and the Depositor, regarding the sale of the Mortgage Loans by
the Seller to the Depositor, substantially in the form of Exhibit D annexed
hereto.

          "Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC I on such date, attached hereto as Schedule 1. The Mortgage
Loan Schedule shall set forth the following information with respect to each
Mortgage Loan:

      (i)  the Mortgage Loan identifying number;

     (ii)  the Mortgagor's name;

    (iii)  the street address of the Mortgaged Property including the state and
           zip code;

     (iv)  a code indicating whether the Mortgaged Property is owner-occupied;

      (v)  the type of Residential Dwelling constituting the Mortgaged Property;

     (vi)  the original months to maturity;

    (vii)  the stated remaining months to maturity from the Cut-off Date based
           on the original amortization schedule;

   (viii)  the Loan-to-Value Ratio at origination;

     (ix)  the Mortgage Rate in effect immediately following the Cut-off Date;

      (x)  (A) the date on which the first Monthly Payment was due on
           the Mortgage Loan and, (B) if such date is not consistent
           with the Due Date currently in effect, such Due Date;

     (xi)  the stated maturity date;

    (xii)  the amount of the Monthly Payment at origination;

   (xiii)  the amount of the Monthly Payment due on the first Due Date after the
           Cut-off Date;

                                      -20-

<PAGE>

    (xiv)  the last Due Date on which a Monthly Payment was actually applied to
           the unpaid Stated Principal Balance;

     (xv)  the original principal amount of the Mortgage Loan;

    (xvi)  the Scheduled Principal Balance of the Mortgage Loan as of the close
           of business on the Cut-off Date;

   (xvii)  the Adjustment Dates;

   (xviii) the Gross Margin;

    (xix)  a code indicating the purpose of the Mortgage Loan (I.E., purchase
           financing, Rate/Term Refinancing, Cash-Out Refinancing);

     (xx)  the Maximum Mortgage Rate;

    (xxi)  the Minimum Mortgage Rate;

   (xxii)  the Mortgage Rate at origination;

  (xxiii)  the Periodic Rate Cap and the maximum first Adjustment Date Mortgage
           Rate adjustment;

   (xxiv)  a code indicating the documentation program (I.E., Full
           Documentation, Limited Documentation, Stated Income Documentation);

    (xxv)  [intentionally omitted];

   (xxvi)  the first Adjustment Date immediately following the Cut-off Date;

  (xxvii)  the risk grade;

 (xxviii)  [intentionally omitted];

   (xxix)  [intentionally omitted];

    (xxx)  [intentionally omitted];

   (xxxi)  the Value of the Mortgaged Property;

  (xxxii)  the sale price of the Mortgaged Property, if applicable;

 (xxxiii)  the actual unpaid principal balance of the Mortgage Loan as of the
           Cut-off Date;

  (xxxiv)  the type and term of the related Prepayment Charge;

                                      -21-

<PAGE>

   (xxxv)  [intentionally omitted];

  (xxxvi)  [intentionally omitted];

 (xxxvii)  the rounding code (I.E., nearest 0.125%, next highest 0.125%);

(xxxviii)  [intentionally omitted];

  (xxxix)  [intentionally omitted];

     (xl)  the program code.

          The Mortgage Loan Schedule shall set forth the following information
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Depositor in accordance with the
provisions of this Agreement. With respect to any Qualified Substitute Mortgage
Loan, the Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.

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

          "Mortgage Pool": The pool of Mortgage Loans, identified on Schedule 1
from time to time, and any REO Properties acquired in respect thereof.

          "Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (A) as of any date
of determination until the first Adjustment Date following the Cut-off Date
shall be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate
in effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Mortgage Loan on
any Adjustment Date shall never be more than the lesser of (i) the sum of the
Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage Rate,
and shall never be less than the greater of (i) the Mortgage Rate in effect
immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and
(ii) the related Minimum Mortgage Rate. With respect to each Mortgage Loan that
becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the date
such Mortgage Loan became an REO Property.

          "Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.

                                      -22-

<PAGE>

          "Mortgagor": The obligor on a Mortgage Note.

          "Net Monthly Excess Cashflow": With respect to any Distribution Date,
the sum of (i) any Overcollateralization Reduction Amount for such Distribution
Date and (ii) the excess of (x) the Available Distribution Amount for such
Distribution Date over (y) the sum for such Distribution Date of (A) the Senior
Interest Distribution Amount payable to the holders of the Class A Certificates
and the Interest Distribution Amount payable to the holders of the Mezzanine
Certificates and (B) the sum of the amounts described in clauses (b)(i) through
(iii) of the definition of Principal Distribution Amount.

          "Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property) as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee Rate.

          "Net WAC 30/360 Pass-Through Rate": With respect to any Distribution
Date, a rate per annum equal to the weighted average of the REMIC II Remittance
Rates for REMIC II Regular Interest II-LT1 and REMIC II Regular Interest II-LT2,
weighted based on their Uncertificated Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs.

          "Net WAC Actual/360 Pass-Through Rate": With respect to any
Distribution Date, a rate per annum equal to the Net WAC 30/360 Pass-Through
Rate multiplied by a fraction, the numerator of which is 30 and the denominator
of which is the actual number of days elapsed in the Interest Accrual Period for
the Class A Certificates, the Mezzanine Certificates, REMIC IV Regular Interest
IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular Interest IV-LT4,
REMIC IV Regular Interest IV-LT5, REMIC IV Regular Interest IV-LT2S, REMIC IV
Regular Interest IV- LT32S, REMIC IV Regular Interest IV-LT4S and REMIC IV
Regular Interest IV-LT5S.

          "New Lease": Any lease of REO Property entered into on behalf of REMIC
I, including any lease renewed or extended on behalf of REMIC I, if REMIC I has
the right to renegotiate the terms of such lease.

          "Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Master Servicer, will not or, in the case of
a proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.

          "Nonrecoverable Servicing Advance": Any Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property that,
in the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed Servicing Advance, would not be ultimately recoverable from
related Late Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.

          "Non-United States Person": Any Person other than a United States
Person.

                                      -23-

<PAGE>

          "Notional Amount": With respect to the Class CE Certificates and any
Distribution Date, the Uncertificated Balance of the REMIC IV Regular Interests
(other than the Uncertificated Balance of REMIC IV Regular Interest IV-LTP) for
such Distribution Date. With respect to the Class IO Certificates and any
Distribution Date, an amount equal to the Uncertificated Notional Amount for the
REMIC II Regular Interest II-LTIO.

          "Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the
Originator, the Seller or the Depositor, as applicable.

          "One-Month LIBOR": With respect to the Class A Certificates, the
Mezzanine Certificates, the Class IO Certificates, REMIC IV Regular Interest
IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular Interest IV-LT4 and
REMIC IV Regular Interest IV-LT5 and any Interest Accrual Period therefor, the
rate determined by the Trust Administrator on the related Interest Determination
Date on the basis of the offered rate for one-month U.S. dollar deposits, as
such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that if such rate does not appear on
Telerate Page 3750, the rate for such date will be determined on the basis of
the offered rates of the Reference Banks for one-month U.S. dollar deposits, as
of 11:00 a.m. (London time) on such Interest Determination Date. In such event,
the Trust Administrator will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on such Interest
Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trust Administrator shall select an alternative comparable index (over
which the Trust Administrator has no control), used for determining one-month
Eurodollar lending rates that is calculated and published (or otherwise made
available) by an independent party.

          "One-Month LIBOR Pass-Through Rate": With respect to the Class A
Certificates and REMIC IV Regular Interest IV-LT2, a per annum rate equal to
One-Month LIBOR plus 0.27%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans and REO Properties remaining in the Trust Fund is reduced
to less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date, or One-Month LIBOR plus 0.54%, in the case of any
Distribution Date thereafter.

          With respect to the Class M-1 Certificates and REMIC IV Regular
Interest IV-LT3, a per annum rate equal to One-Month LIBOR plus 0.46%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to less than 10% of the

                                      -24-

<PAGE>

aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
or One-Month LIBOR plus 0.69%, in the case of any Distribution Date thereafter.

          With respect to the Class M-2 Certificates and REMIC IV Regular
Interest IV-LT4, a per annum rate equal to One-Month LIBOR plus 0.87%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
or One-Month LIBOR plus 1.305%, in the case of any Distribution Date thereafter.

          With respect to the Class M-3 Certificates and REMIC IV Regular
Interest IV-LT5, a per annum rate equal to One-Month LIBOR plus 2.10%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
or One-Month LIBOR plus 3.15%, in the case of any Distribution Date thereafter.

          "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor or the Master Servicer,
acceptable to the Trustee, if such opinion is delivered to the Trustee, or
acceptable to the Trust Administrator, if such opinion is to be delivered to the
Trust Administrator, except that any opinion of counsel relating to (a) the
qualification of any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V as a
REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent counsel.

          "Original Mortgage Loan": Any of the Mortgage Loans included in REMIC
I as of the Closing Date.

          "Originator": New Century Mortgage Corporation, or its successor in
interest, in its capacity as originator under the Mortgage Loan Purchase
Agreement.

          "Overcollateralized Amount": With respect to any Distribution Date,
the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (b)(i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).

          "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date prior to taking into account the
payment of any Overcollateralization Increase Amount on such Distribution Date.

          "Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued

                                      -25-

<PAGE>

Certificate Interest for the Class CE Certificates for such Distribution Date as
reduced by Realized Losses allocated thereto with respect to such Distribution
Date pursuant to Section 4.04.

          "Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.

          "Ownership Interest": As to any Certificate, any ownership or security
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, as owner or as pledgee.

          "Pass-Through Rate": With respect to the Class A Certificates and the
Mezzanine Certificates and any Distribution Date, a rate per annum equal to the
lesser of (i) the related One- Month LIBOR Pass-Through Rate for such
Distribution Date and (ii) the Net WAC Actual/360 Pass- Through Rate for such
Distribution Date. With respect to the Class IO Certificates and any
Distribution Date, a per annum rate equal to the greater of (i) 0.000% per annum
and (ii) two multiplied by the excess of 6.000% per annum over the greater of
(x) One-Month LIBOR as in effect for the related Interest Accrual Period and (y)
2.500% per annum. With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (i)
through (vii) below, and the denominator of which is the Uncertificated Balance
of the REMIC IV Regular Interests (other than the Uncertificated Balance of
REMIC IV Regular Interest IV-LTP). For purposes of calculating the Pass-Through
Rate for the Class CE Certificates, the numerator is equal to the sum of the
following components (in each case subject to adjustment based on the actual
number of days elapsed in the respective Interest Accrual Periods for the
indicated REMIC Regular Interests for such Distribution Date):

          (i) the REMIC IV Remittance Rate for REMIC IV Regular Interest IV-LT1
     minus two (2) times the weighted average of the REMIC IV Remittance Rates
     for REMIC IV Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT3,
     REMIC IV Regular Interest IV-LT4, REMIC IV Regular Interest IV-LT5 and
     REMIC IV Regular Interest IV-LT6, with the rate on REMIC IV Regular
     Interest IV-LT6 subject to a cap of zero for the purpose of this
     calculation, applied to an amount equal to the Uncertificated Balance of
     REMIC IV Regular Interest IV-LT1;

          (ii) the weighted average of the REMIC IV Remittance Rates for REMIC
     IV Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV
     Regular Interest IV-LT4 and REMIC IV Regular Interest IV-LT5 minus two (2)
     times the weighted average of the REMIC IV Remittance Rates for REMIC IV
     Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular
     Interest IV-LT4, REMIC IV Regular Interest IV-LT5 and REMIC IV Regular
     Interest IV-LT6, with the rate on REMIC IV Regular Interest IV-LT6 subject
     to a cap of zero for the purpose of this calculation, applied to an amount
     equal to the sum of the Uncertificated Balances of REMIC IV Regular
     Interest IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular
     Interest IV-LT4 and REMIC IV Regular Interest IV-LT5;

                                      -26-

<PAGE>

          (iii) the REMIC IV Remittance Rate for REMIC IV Regular Interest
     IV-LT6 minus two (2) times the weighted average of the REMIC IV Remittance
     Rates for REMIC IV Regular Interest IV-LT2, REMIC IV Regular Interest
     IV-LT3, REMIC IV Regular Interest IV-LT4, REMIC IV Regular Interest IV-LT5
     and REMIC IV Regular Interest IV-LT6, with the rate on REMIC IV Regular
     Interest IV-LT6 subject to a cap of zero for the purpose of this
     calculation, applied to an amount equal to the Uncertificated Balance of
     REMIC IV Regular Interest IV-LT6;

          (iv) 100% of the interest on REMIC IV Regular Interest IV-LT2S;

          (v) 100% of the interest on REMIC IV Regular Interest IV-LT3S;

          (vi) 100% of the interest on REMIC IV Regular Interest IV-LT4S; and

          (vii) 100% of the interest on REMIC IV Regular Interest IV-LT5S.

          "Percentage Interest": With respect to any Class of Certificates
(other than the Residual Certificates), the undivided percentage ownership in
such Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance or Notional
Amount represented by such Certificate and the denominator of which is the
aggregate initial Certificate Principal Balance or Notional Amount of all of the
Certificates of such Class. The Class A Certificates and the Mezzanine
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $10,000 and integral multiples
of $1.00 in excess thereof. The Class IO Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Notional Amounts
of $10,000 and integral multiples of $1.00 in excess thereof. The Class P
Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances of $20 and integral multiples thereof. The Class
CE Certificates are issuable only in minimum Percentage Interests corresponding
to minimum initial Certificate Principal Balances of $10,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance or Notional Amount of such Class or to an otherwise authorized
denomination for such Class plus such remainder. With respect to any Residual
Certificate, the undivided percentage ownership in such Class evidenced by such
Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and multiples thereof.

          "Periodic Rate Cap": With respect to each Mortgage Loan and any
Adjustment Date therefor, the fixed percentage set forth in the related Mortgage
Note, which is the maximum amount by which the Mortgage Rate for such Mortgage
Loan may increase or decrease (without regard to the Maximum Mortgage Rate or
the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage Rate in
effect immediately prior to such Adjustment Date.

          "Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued by the Depositor, the Master Servicer, the Trustee, the Trust
Administrator or any of their respective Affiliates:

                                      -27-

<PAGE>

               (i) direct obligations of, or obligations fully guaranteed as to
     timely payment of principal and interest by, the United States or any
     agency or instrumentality thereof, provided such obligations are backed by
     the full faith and credit of the United States;

               (ii) demand and time deposits in, certificates of deposit of, or
     bankers' acceptances issued by, any Depository Institution;

               (iii) repurchase obligations with respect to any security
     described in clause (i) above entered into with a Depository Institution
     (acting as principal);

               (iv) securities bearing interest or sold at a discount that are
     issued by any corporation incorporated under the laws of the United States
     of America or any state thereof and that are rated by each Rating Agency
     that rates such securities in its highest long-term unsecured rating
     categories at the time of such investment or contractual commitment
     providing for such investment;

               (v) commercial paper (including both non-interest-bearing
     discount obligations and interest-bearing obligations payable on demand or
     on a specified date not more than 30 days after the date of acquisition
     thereof) that is rated by each Rating Agency that rates such securities in
     its highest short-term unsecured debt rating available at the time of such
     investment;

               (vi) units of money market funds that have been rated "AAA" by
     DCR (if rated by DCR), "AAA" by Fitch (if rated by Fitch) and "Aaa" by
     Moody's; and

               (viii) if previously confirmed in writing to the Trustee and the
     Trust Administrator, any other demand, money market or time deposit, or any
     other obligation, security or investment, as may be acceptable to the
     Rating Agencies as a permitted investment of funds backing securities
     having ratings equivalent to its highest initial rating of the Class A
     Certificates;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.

          "Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization or Non-United States Person.

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

          "P&I Advance": As to any Mortgage Loan or REO Property, any advance
made by the Master Servicer in respect of any Distribution Date pursuant to
Section 4.03.

                                      -28-

<PAGE>

          "Plan": Any employee benefit plan or certain other retirement plans
and arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.

          "Prepayment Assumption": A prepayment rate for the Mortgage Loans of
28% CPR. The Prepayment Assumption is used solely for determining the accrual of
original issue discount on the Certificates for federal income tax purposes. A
CPR (or Constant Prepayment Rate) represents an annualized constant assumed rate
of prepayment each month of a pool of mortgage loans relative to its outstanding
principal balance for the life of such pool.

          "Prepayment Charge": With respect to any Prepayment Period, 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 (other than any Master Servicer Prepayment Charge Payment Amount).

          "Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges on the Mortgage Loans included in REMIC I on such date, attached hereto
as Schedule 2 (including the Prepayment Charge Summary attached thereto). The
Prepayment Charge Schedule shall set forth the following information with
respect to each related Mortgage Loan:

     (i)   the Mortgage Loan identifying number;

     (ii)  a code indicating the type of Prepayment Charge;

     (iii) the state of origination of the related Mortgage Loan;

     (iv)  the date on which the first monthly payment was due on the related
           Mortgage Loan;

     (v)   the term of the related Mortgage Loan; and

     (vi)  the principal balance of the related Mortgage Loan as of the Cut-off
           Date.

          The Prepayment Charge Schedule shall be amended from time to time by
the Depositor in accordance with the provisions of this Agreement.

          "Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part that was applied by the
Master Servicer to reduce the outstanding principal balance of such loan on a
date preceding the Due Date in the succeeding Prepayment Period, an amount equal
to interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.

                                      -29-

<PAGE>

          "Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the calendar month in which such Distribution Date
occurs.

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

          (a)  the excess of the Available Distribution Amount over the amount
               payable on the Class A Certificates, the Mezzanine Certificates
               and the Class IO Certificates pursuant to Section 4.01(a)(2); and

          (b)  the sum of:

               (i) the principal portion of each Monthly Payment on the Mortgage
               Loans due during the related Due Period, whether or not received
               on or prior to the related Determination Date;

               (ii) the Stated Principal Balance of any Mortgage Loan that was
               purchased during the related Prepayment Period pursuant to or as
               contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and
               the amount of any shortfall deposited in the Collection Account
               in connection with the substitution of a Deleted Mortgage Loan
               pursuant to Section 2.03 during the related Prepayment Period;

               (iii) the principal portion of all other unscheduled collections
               (including, without limitation, Principal Prepayments, Insurance
               Proceeds, Liquidation Proceeds and REO Principal Amortization)
               received during the related Prepayment Period, net of any portion
               thereof that represents a recovery of principal for which an
               advance was made by the Master Servicer pursuant to Section 4.03
               in respect of a preceding Distribution Date;

               (iv) the principal portion of any Realized Losses incurred on the
               Mortgage Loans in the calendar month preceding such Distribution
               Date; and

               (v) the amount of any Overcollateralization Increase Amount for
               such Distribution Date;

               minus:

               (vi) the amount of any Overcollateralization Reduction Amount for
               such Distribution Date.

          "Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.

                                      -30-

<PAGE>

          "Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee and the Trust Administrator, an amount equal to the sum
of (i) 100% of the Stated Principal Balance thereof as of the date of purchase
(or such other price as provided in Section 9.01), (ii) in the case of (x) a
Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an advance by the Master Servicer
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section
3.16(b), and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Master Servicer, the Trustee or the Trust Administrator in respect of the breach
or defect giving rise to the purchase obligation.

          "Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Scheduled Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Rate not less than
(and not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) have a Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) have a Minimum Mortgage
Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage Loan, (v)
have a Gross Margin equal to the Gross Margin of the Deleted Mortgage Loan, (vi)
have a next Adjustment Date not more than two months later than the next
Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (viii) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (x) have a risk grading determined by the
Originator at least equal to the risk grading assigned on the Deleted Mortgage
Loan and (xi) conform to each representation and warranty set forth in Section 6
of the Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan.
In the event that one or more mortgage loans are substituted for one or more
Deleted Mortgage Loans, the amounts

                                      -31-

<PAGE>

described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Rates, the terms described
in clause (vii) hereof shall be determined on the basis of weighted average
remaining term to maturity, the Loan-to-Value Ratios described in clause (ix)
hereof shall be satisfied as to each such mortgage loan, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xi) hereof must be satisfied
as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.

          "Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds of
which are not more than a nominal amount in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

          "Rating Agency or Rating Agencies": DCR, Fitch and Moody's or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee, the Trust Administrator and the
Master Servicer.

          "Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero) equal
to (i) the unpaid principal balance of such Mortgage Loan as of the commencement
of the calendar month in which the Final Recovery Determination was made, plus
(ii) accrued interest from the Due Date as to which interest was last paid by
the Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the
proceeds, if any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery Determination was made, net of amounts that
are payable therefrom to the Master Servicer with respect to such Mortgage Loan
pursuant to Section 3.11(a)(iii).

          With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during

                                      -32-

<PAGE>

such calendar month, plus (iii) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such Final
Recovery Determination was made, plus (iv) any amounts previously withdrawn from
the Collection Account in respect of the related Mortgage Loan pursuant to
Section 3.11(a)(ix) and Section 3.16(b), minus (v) the aggregate of all P&I
Advances and Servicing Advances (in the case of Servicing Advances, without
duplication of amounts netted out of the rental income, Insurance Proceeds and
Liquidation Proceeds described in clause (vi) below) made by the Master Servicer
in respect of such REO Property or the related Mortgage Loan for which the
Master Servicer has been or, in connection with such Final Recovery
Determination, will be reimbursed pursuant to Section 3.23 out of rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property, minus (vi) the total of all net rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property that has been, or
in connection with such Final Recovery Determination, will be transferred to the
Distribution Account pursuant to Section 3.23.

          With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

          With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.

          "Record Date": With respect to each Distribution Date and any
Book-Entry Certificate, the Business Day immediately preceding such Distribution
Date. With respect to each Distribution Date and any other Certificates,
including any Definitive Certificates, the last Business Day of the month
immediately preceding the month in which such Distribution Date occurs.

          "Reference Banks": Bankers Trust Company, Barclay's Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in
interest; provided, however, that if any of the foregoing banks are not suitable
to serve as a Reference Bank, then any leading banks selected by the Trust
Administrator which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Depositor or any Affiliate thereof and (iii) which have been designated as
such by the Trust Administrator.

          "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.

          "Regular Certificate": Any Class A Certificate, Mezzanine Certificate,
Class IO Certificate, Class CE Certificate or Class P Certificate.

          "Regular Interest": A "regular interest" in a REMIC within the meaning
of Section 860G(a)(1) of the Code.

                                      -33-

<PAGE>

          "Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.

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

          "REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.

          "REMIC I": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a REMIC election is to be made, consisting of: (i) such Mortgage Loans
and Prepayment Charges as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto, and together with all
collections thereon and proceeds thereof; (ii) any REO Property, together with
all collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); (v) the Collection Account (other than any
amounts representing any Master Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Master Servicer
Prepayment Charge Payment Amount) and any REO Account, and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto. Notwithstanding
the foregoing, however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges payable in connection with Principal
Prepayments made before the Cut-off Date.

          "REMIC I Regular Interest": Any of the four separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest (other than REMIC I
Regular Interest I-LTP1, with respect to interest) shall accrue interest at the
related REMIC I Remittance Rate in effect from time to time, and shall be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto. The designations for the
respective REMIC I Regular Interests are set forth in the Preliminary Statement
hereto.

          "REMIC I Regular Interest I-LT1": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LT1 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

          "REMIC I Regular Interest I-LT2": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LT2 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and

                                      -34-

<PAGE>

conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

          "REMIC I Regular Interest I-LTP1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP1
shall be entitled to 50% of the Prepayment Charges collected by the Master
Servicer and to a distribution of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto.

          "REMIC I Regular Interest I-LTP2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to 50% of the Prepayment Charges collected by the
Master Servicer and to a distribution of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

          "REMIC I Remittance Rate": With respect to REMIC I Regular Interest
I-LT1 and any Distribution Date, a per annum rate equal to two times the excess
of the weighted average of the Expense Adjusted Mortgage Rates on the then
outstanding Mortgage Loans and REO Properties over 6.000% per annum. With
respect to REMIC I Regular Interest I-LT2 and REMIC I Regular Interest I-LTP2
and any Distribution Date, a per annum rate equal to 12%.

          "REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit of
REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.

          "REMIC II Regular Interest": Any of the four separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
"regular interest" in REMIC II. Each REMIC II Regular Interest (other than REMIC
II Regular Interest II-LTP, with respect to interest, and other than REMIC II
Regular Interest II-LTIO, with respect to principal) shall accrue interest at
the related REMIC II Remittance Rate in effect from time to time, and shall be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto. The designations for the
respective REMIC II Regular Interests are set forth in the Preliminary Statement
hereto.

          "REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                      -35-

<PAGE>

          "REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC II Regular Interest II-LTIO": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTIO
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its Uncertificated Notional Amount. REMIC II Regular Interest
II- LTIO has no principal balance and is not entitled to distributions of
principal.

          "REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.

          "REMIC II Remittance Rate": With respect to REMIC II Regular Interest
II-LT1 and any Distribution Date, a per annum rate equal to two times the excess
of the weighted average of the Expense Adjusted Mortgage Rates on the then
outstanding Mortgage Loans and REO Properties over 6.000% per annum. With
respect to REMIC II Regular Interest II-LT2 and any Distribution Date, a per
annum rate equal to two times the lesser of (x) One-Month LIBOR for such
Distribution Date and (y) 6.000% per annum. With respect to REMIC II Regular
Interest II-LTIO and any Distribution Date, a per annum rate equal to the
greater of (i) 0.000% per annum and (ii) two multiplied by the excess of 6.000%
per annum over the greater of (x) One-Month LIBOR as in effect for the related
Interest Accrual Period and (y) 2.500% per annum.

          "REMIC III": The segregated pool of assets consisting of all of the
REMIC II Regular Interests conveyed in trust to the Trustee, for the benefit of
REMIC IV, as holder of the REMIC III Regular Interests, and the Class R-III
Certificateholders pursuant to Section 2.09, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.

          "REMIC III Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount (subject to adjustment based on the actual number
of days elapsed in the respective Interest Accrual Periods for the indicated
Regular Interests for such Distribution Date) equal to (a) the product of (i)
the aggregate Stated Principal Balance of the Mortgage Loans and REO Properties
then outstanding and (ii) the REMIC III Remittance Rate for REMIC III Regular
Interest III-LT1 minus two (2) times the weighted average of the REMIC IV
Remittance Rates for REMIC IV Regular Interest IV-LT2, REMIC IV Regular Interest
IV-LT3, REMIC IV Regular Interest IV-LT4, REMIC IV Regular Interest IV-LT5 and
REMIC IV Regular Interest IV-LT6, with the rate on REMIC IV Regular Interest
IV-LT6 subject to a cap of zero for purposes of this calculation, divided by (b)
12.

                                      -36-

<PAGE>

          "REMIC III Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC III
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC III Regular Interest III-LT2, REMIC III Regular Interest III-LT3, REMIC
III Regular Interest III-LT4 and REMIC III Regular Interest III-LT5, in each
case as of such date of determination.

          "REMIC III Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Balances of REMIC III Regular Interest III-LT2, REMIC III
Regular Interest III-LT3, REMIC III Regular Interest III-LT4 and REMIC III
Regular Interest III-LT5 and the denominator of which is the aggregate of the
Uncertificated Balances of REMIC III Regular Interest III-LT2, REMIC III Regular
Interest III-LT3, REMIC III Regular Interest III-LT4, REMIC III Regular Interest
III-LT5 and REMIC III Regular Interest III-LT6.

          "REMIC III Regular Interest": Any of the eight separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a "regular interest" in REMIC III. Each REMIC III Regular
Interest (other than REMIC III Regular Interest III-LTP, with respect to
interest, and other than REMIC III Regular Interest III-LTIO with respect to
principal) shall accrue interest at the related REMIC III Remittance Rate in
effect from time to time or shall otherwise be entitled to interest as set forth
herein, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC III Regular Interests are set forth in the
Preliminary Statement hereto.

          "REMIC III Regular Interest III-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT1 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC III Regular Interest III-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT2 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC III Regular Interest III-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT3 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                      -37-

<PAGE>

          "REMIC III Regular Interest III-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT4 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC III Regular Interest III-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT5 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC III Regular Interest III-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LT6 shall accrue interest at the related REMIC III Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC III Regular Interest III-LTIO": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LTIO shall be entitled to receive all interest distributed to REMIC II
Regular Interest II-LTIO. REMIC III Regular Interest III-LTIO has no principal
balance and is not entitled to distributions of principal.

          "REMIC III Regular Interest III-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC III. REMIC III Regular Interest
III-LTP shall be entitled to any Prepayment Charges collected by the Master
Servicer and to a distribution of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto.

          "REMIC III Remittance Rate": With respect to each REMIC III Regular
Interest (other than REMIC III Regular Interest III-LTIO and REMIC III Regular
Interest III-LTP) and any Distribution Date, the Net WAC 30/360 Pass-Through
Rate.

          "REMIC III Required Overcollateralized Amount": 1% of the Required
Overcollateralization Amount.

          "REMIC IV": The segregated pool of assets consisting of all of the
REMIC III Regular Interests conveyed in trust to the Trustee, for the benefit of
REMIC V, as holder of the REMIC IV Regular Interests, and the Class R-IV
Certificateholders pursuant to Section 2.11, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.

                                      -38-

<PAGE>

          "REMIC IV Regular Interest": Any of the twelve separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a "regular interest" in REMIC IV. Each REMIC IV Regular Interest
(other than REMIC IV Regular Interest IV-LTP, with respect to interest, and
other than REMIC IV Regular Interest IV-LTIO, REMIC IV Regular Interest IV-
LT2S, REMIC IV Regular Interest IV-LT3S, REMIC IV Regular Interest IV-LT4S and
REMIC IV Regular Interest IV-LT5S, with respect to principal) shall accrue
interest at the related REMIC IV Remittance Rate in effect from time to time or
shall otherwise be entitled to interest as set forth herein, and shall be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto. The designations for the
respective REMIC IV Regular Interests are set forth in the Preliminary Statement
hereto.

          "REMIC IV Regular Interest IV-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT1
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT2
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT3
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT4
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT5
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                      -39-

<PAGE>

          "REMIC IV Regular Interest IV-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT6
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LTIO": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LTIO
shall be entitled to all interest distributed to REMIC III Regular Interest
III-LTIO. REMIC IV Regular Interest IV-LTIO has no principal balance and is not
entitled to distributions of principal.

          "REMIC IV Regular Interest IV-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Balance as set forth in
the Preliminary Statement hereto.

          "REMIC IV Regular Interest IV-LT2S": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT2S
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

          "REMIC IV Regular Interest IV-LT3S": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT3S
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

          "REMIC IV Regular Interest IV-LT4S": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT4S
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

          "REMIC IV Regular Interest IV-LT5S": One of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder and
designated as a Regular Interest in REMIC IV. REMIC IV Regular Interest IV-LT5S
shall accrue interest at the related REMIC IV Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.

          "REMIC IV Remittance Rate": With respect to REMIC IV Regular Interest
IV-LT1 and REMIC IV Regular Interest IV-LT6 and any Distribution Date, the Net
WAC 30/360 Pass- Through Rate. With respect to REMIC IV Regular Interest IV-LT2,
REMIC IV Regular Interest IV- LT3, REMIC IV Regular Interest IV-LT4 and REMIC IV
Regular Interest IV-LT5 and any Distribution Date, the lesser of (i) the related
One-Month LIBOR Pass-Through Rate and (ii) the Net WAC Actual/360 Pass-Through
Rate. With respect to REMIC IV Regular Interest IV-LT2S,

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REMIC IV Regular Interest IV-LT3S, REMIC IV Regular Interest IV-LT4S and REMIC
IV Regular Interest IV-LT5S and any Distribution Date, a rate per annum equal to
excess of the REMIC III Remittance Rate for the related Uncertificated
Corresponding Component over the REMIC IV Remittance Rate for REMIC IV Regular
Interest IV-LT2, REMIC IV Regular Interest IV-LT3, REMIC IV Regular Interest
IV-LT4 and REMIC IV Regular Interest IV-LT5, respectively.

          "REMIC V": The segregated pool of assets consisting of all of the
REMIC IV Regular Interests conveyed in trust to the Trustee, for the benefit of
the REMIC V Certificateholders pursuant to Section 2.13, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

          "REMIC V Certificate": Any Regular Certificate or Class R-V
Certificate.

          "REMIC V Certificateholder": The Holder of any REMIC V Certificate.

          "REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G 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.

          "Remittance Report": A report in form and substance acceptable to the
Trust Administrator on a magnetic disk or tape prepared by the Master Servicer
pursuant to Section 4.03 with such additions, deletions and modifications as
agreed to by the Trust Administrator and the Master Servicer.

          "Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

          "REO Account": The account or accounts maintained, or caused to be
maintained, by the Master Servicer in respect of an REO Property pursuant to
Section 3.23.

          "REO Disposition": The sale or other disposition of an REO Property on
behalf of REMIC I.

          "REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of REMIC I, one month's
interest at the applicable Net Mortgage Rate on the Stated Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.

          "REO Principal Amortization": With respect to any REO Property, for
any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether in
the form of rental income, sale proceeds (including, without limitation, that
portion of the Termination Price paid in connection with a purchase of all of
the Mortgage Loans and REO Properties pursuant to Section 9.01 that is allocable
to such REO

                                      -41-

<PAGE>

Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23(c) in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Master
Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in respect of the
related Mortgage Loan and unreimbursed Servicing Advances and P&I Advances in
respect of such REO Property or the related Mortgage Loan, over (b) the REO
Imputed Interest in respect of such REO Property for such calendar month.

          "REO Property": A Mortgaged Property acquired by the Master Servicer
on behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.

          "Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit E-1 or Exhibit E-2 attached hereto.

          "Required Overcollateralized Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, $13,965,072, (ii) on or after the Stepdown
Date provided a Trigger Event is not in effect, the greater of (x) 6.50% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period and (y) $3,222,601, and (iii) on or after the Stepdown
Date if a Trigger Event is in effect, the Required Overcollateralized Amount for
the immediately preceding Distribution Date.

          "Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trust Administrator determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trust Administrator are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (ii) in the event that the Trust Administrator
can determine no such arithmetic mean, the lowest one-month U.S. dollar lending
rate which New York City banks selected by the Trust Administrator are quoting
on such Interest Determination Date to leading European banks.

          "Residential Dwelling": Any one of the following: (i) an attached,
detached or semi- detached one-family dwelling, (ii) an attached, detached or
semi-detached two- to four-family dwelling, (iii) a one-family dwelling unit in
a Fannie Mae eligible condominium project, or (iv) an attached, detached or
semi-detached one-family dwelling in a planned unit development, none of which
is a co-operative, mobile or manufactured home (as defined in 42 United States
Code, Section 5402(6)).

          "Residual Certificate": Any one of the Class R-I, Class R-II, Class
R-III, Class R-IV or Class R-V Certificates.

          "Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.

          "Responsible Officer": When used with respect to the Trustee or the
Trust Administrator, the Chairman or Vice Chairman of the Board of Directors or
Trustees, the Chairman or Vice Chairman of the Executive or Standing Committee
of the Board of Directors or Trustees, the President, the Chairman of the
Committee on Trust Matters, any vice president, any assistant vice

                                      -42-

<PAGE>

president, the Secretary, any assistant secretary, the Treasurer, any assistant
treasurer, the Cashier, any assistant cashier, any trust officer or assistant
trust officer, the Controller and any assistant controller or any other officer
of the Trustee or the Trust Administrator, as the case may be, customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

          "Scheduled Principal Balance": With respect to any Mortgage Loan: (a)
as of the Cut-off Date, the outstanding principal balance of such Mortgage Loan
as of such date, net of the principal portion of all unpaid Monthly Payments, if
any, due on or before such date; (b) as of any Due Date subsequent to the
Cut-off Date up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such Mortgage Loan, the Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the Cut-off Date, whether or not received, (ii) all Principal
Prepayments received before such Due Date but after the Cut-off Date, (iii) the
principal portion of all Liquidation Proceeds and Insurance Proceeds received
before such Due Date but after the Cut-off Date, net of any portion thereof that
represents principal due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) on a Due Date occurring on or before the
date on which such proceeds were received and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation occurring before such
Due Date, but only to the extent such Realized Loss represents a reduction in
the portion of principal of such Mortgage Loan not yet due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With respect to any REO Property: (a) as of any Due Date subsequent to the date
of its acquisition on behalf of the Trust Fund up to and including the Due Date
in the calendar month in which a Liquidation Event occurs with respect to such
REO Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of such REO Property for all
previously ended calendar months; and (b) as of any Due Date subsequent to the
occurrence of a Liquidation Event with respect to such REO Property, zero.

          "Seller": NC Capital Corporation or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.

          "Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and the Class IO
Certificates and (ii) the Interest Carry Forward Amount, if any, for such
Distribution Date for the Class A Certificates and the Class IO Certificates.

          "Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.

          "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the

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<PAGE>

Master Servicer in the performance of its servicing obligations, including, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, in respect of a particular Mortgage Loan, (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property and (iv) the performance of its obligations under Section 3.01, Section
3.09, Section 3.14, Section 3.16 and Section 3.23. The Master Servicer shall not
be required to make any Nonrecoverable Servicing Advances.

          "Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full or in part
made by the Mortgagor during such calendar month, interest for the number of
days covered by such payment of interest) at the applicable Servicing Fee Rate
on the same principal amount on which interest on such Mortgage Loan accrues for
such calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

          "Servicing Fee Rate": 0.50% per annum.

          "Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of Servicing Officers furnished by
the Master Servicer to the Trust Administrator, the Trustee and the Depositor on
the Closing Date, as such list may from time to time be amended.

          "Single Certificate": With respect to any Class of Certificates (other
than the Class P Certificates and the Residual Certificates), a hypothetical
Certificate of such Class evidencing a Percentage Interest for such Class
corresponding to an initial Certificate Principal Balance (or Notional Amount in
the case of the Class IO Certificates) of $1,000. With respect to the Class P
Certificates and the Residual Certificates, a hypothetical Certificate of such
Class evidencing a 100% Percentage Interest in such Class.

          "Startup Day": With respect to each of REMIC I, REMIC II, REMIC III,
REMIC IV and REMIC V, the day designated as such pursuant to Section 10.01(b)
hereof.

          "Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the Scheduled Principal Balance of such Mortgage Loan
as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or advanced by
the Master Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, (ii) all Principal Prepayments received after the Cut-off
Date, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied
by the Master Servicer as recoveries of principal in accordance with the
provisions of Section 3.16, to the extent distributed pursuant to Section 4.01
on or before such date of determination, and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation made during or prior
to the Prepayment Period for the most recent Distribution Date coinciding with
or preceding

                                      -44-

<PAGE>

such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Master Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

          "Stayed Funds": If the Master Servicer is the subject of a proceeding
under the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of the Master Servicer, a trustee in bankruptcy or
a federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.

          "Stepdown Date": The later to occur of (i) the Distribution Date
occurring in April 2003 and (ii) the first Distribution Date on which the Credit
Enhancement Percentage (calculated for this purpose only after taking into
account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 44.00%.

          "Sub-Servicer": Any Person with which the Master Servicer has entered
into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

          "Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.

          "Sub-Servicing Agreement": The written contract between the Master
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

          "Substitution Shortfall Amount": As defined in Section 2.03(d).

          "Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to the classification of portions
thereof as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed

                                      -45-

<PAGE>

with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.

          "Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).

          "Termination Price": As defined in Section 9.01.

          "Terminator": As defined in Section 9.01.

          "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

          "Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.

          "Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.

          "Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds the lesser of (i) 40% of
the Credit Enhancement Percentage and (ii) 17.60%.

          "Trust Administrator": U.S. Bank National Association, a national
banking association, or its successor in interest, or any successor trust
administrator appointed as herein provided.

          "Trust Fund": Collectively, all of the assets of REMIC I, REMIC II,
REMIC III, REMIC IV and REMIC V and the other assets conveyed by the Depositor
to the Trustee pursuant to Section 2.01.

          "Trustee": Firstar Bank, N.A., a national banking association, or its
successor in interest, or any successor trustee appointed as herein provided.

          "Uncertificated Balance": The amount of any REMIC I Regular Interest,
REMIC II Regular Interest, REMIC III Regular Interest or REMIC IV Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest, each REMIC II
Regular Interest, each REMIC III Regular Interest and each REMIC IV Regular
Interest shall equal the amount set forth in the Preliminary Statement hereto as
its initial uncertificated balance. On each Distribution Date, the
Uncertificated Balance of each REMIC I Regular Interest, each REMIC II Regular
Interest, each REMIC III Regular Interest and each REMIC IV Regular Interest
shall be reduced by all distributions of principal made on such REMIC I Regular
Interest, such REMIC II Regular Interest, such REMIC III Regular Interest or
such REMIC IV Regular Interest, as applicable, on such Distribution Date
pursuant to Section 4.01 and, if and to the extent necessary and appropriate,
shall be further reduced on such Distribution Date by Realized

                                      -46-

<PAGE>

Losses as provided in Section 4.04. The Uncertificated Balances of REMIC III
Regular Interest III- LT6 and REMIC IV Regular Interest IV-LT6 shall be
increased by interest deferrals as provided in Section 4.01(a)(1)(A)(i) and
Section 4.01(a)(1)(B)(i), respectively. The Uncertificated Balance of each REMIC
I Regular Interest, each REMIC II Regular Interest, each REMIC III Regular
Interest and each REMIC IV Regular Interest shall never be less than zero.

          "Uncertificated Corresponding Component": With respect to: REMIC IV
Regular Interest IV-LT1, REMIC III Regular Interest III-LT1; REMIC IV Regular
Interest IV-LT2 and REMIC IV Regular Interest IV-LT2S, REMIC III Regular
Interest III-LT2; REMIC IV Regular Interest IV-LT3 and REMIC IV Regular Interest
IV-LT3S, REMIC III Regular Interest III-LT3; REMIC IV Regular Interest IV-LT4
and REMIC IV Regular Interest IV-LT4S, REMIC III Regular Interest III-LT4; REMIC
IV Regular Interest IV-LT5 and REMIC IV Regular Interest IV-LT5S, REMIC III
Regular Interest III-LT5; REMIC IV Regular Interest IV-LT6, REMIC III Regular
Interest III-LT6; REMIC IV Regular Interest IV-LTIO, REMIC III Regular Interest
III-LTIO and REMIC IV Regular Interest IV-LTP, REMIC III Regular Interest
III-LTP.

          "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance or Uncertificated Notional Amount thereof
immediately prior to such Distribution Date. With respect to any REMIC III
Regular Interest for any Distribution Date, one month's interest at the REMIC
III Remittance Rate applicable to such REMIC III Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC IV Regular Interest
for any Distribution Date, one month's interest at the REMIC IV Remittance Rate
applicable to such REMIC IV Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance or Uncertificated Notional Amount thereof
immediately prior to such Distribution Date. Uncertificated Interest in respect
of any REMIC I Regular Interest (other than REMIC I Regular Interest I-LTP1),
REMIC II Regular Interest (other than REMIC II Regular Interest II-LTP), REMIC
III Regular Interest (other than REMIC III Regular Interest III-LTP), REMIC IV
Regular Interest IV-LT1, REMIC IV Regular Interest IV-LT6, REMIC IV Regular
Interest IV-LT2S, REMIC IV Regular Interest IV-LT3S, REMIC IV Regular Interest
IV-LT4S and REMIC IV Regular Interest IV-LT5S, shall accrue on the basis of a
360-day year consisting of twelve 30-day months. Uncertificated Interest in
respect of REMIC IV Regular Interest IV-LT2, REMIC IV Regular Interest IV-LT3,
REMIC IV Regular Interest IV-LT4 and REMIC IV Regular Interest IV-LT5, shall
accrue on the basis of a 360-day year and the actual number of days in the
applicable Interest Accrual Period. Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest, REMIC II Regular
Interest, REMIC III Regular Interest or REMIC IV Regular Interest, shall be
reduced by an amount equal to the sum of (a) the aggregate Prepayment Interest
Shortfall, if any, for such Distribution Date to the extent not covered by
payments pursuant to Section 3.24 and (b) the aggregate amount of any Relief Act
Interest Shortfall, if any allocated, in each case, to such REMIC I Regular
Interest, REMIC II Regular Interest, REMIC III Regular Interest or REMIC IV
Regular Interest pursuant to Section 1.02. In addition, Uncertificated Interest
with respect to each Distribution Date, as to any REMIC I Regular Interest,
REMIC II Regular Interest, REMIC III

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<PAGE>

Regular Interest or REMIC IV Regular Interest, shall be reduced by Realized
Losses, if any, allocated to such REMIC I Regular Interest, REMIC II Regular
Interest, REMIC III Regular Interest or REMIC IV Regular Interest pursuant to
Section 1.02 and Section 4.04.

          "Uncertificated Notional Amount": With respect to REMIC II Regular
Interest II- LTIO, the sum of the Uncertificated Balances of REMIC I Regular
Interest I-LT2 and REMIC I Regular Interest I-LTP2; with respect to REMIC IV
Regular Interest IV-LT2S, REMIC IV Regular Interest IV-LT3S, REMIC IV Regular
Interest IV-LT4S and REMIC IV Regular Interest IV-LT5S, the Uncertificated
Balance of REMIC III Regular Interest III-LT2, REMIC III Regular Interest III-
LT3, REMIC III Regular Interest III-LT4 and REMIC III Regular Interest III-LT5,
respectively.

          "Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.

          "United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof (except, in the
case of a partnership, to the extent provided in regulations) or an estate whose
income is subject to United States federal income tax regardless of its source,
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 the authority to control all substantial decisions of the trust. To
the extent prescribed in regulations by the Secretary of the Treasury, which
have not yet been issued, a trust which was in existence on August 20, 1996
(other than a trust treated as owned by the grantor under subpart E of part I of
subchapter J of chapter 1 of the Code), and which was treated as a United States
person on August 20, 1996 may elect to continue to be treated as a United States
person notwithstanding the previous sentence. The term "United States" shall
have the meaning set forth in Section 7701 of the Code.

          "Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
Originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of Fannie Mae and Freddie Mac
and (b) the value thereof as determined by a review appraisal conducted by the
Master Servicer (in its capacity as Originator) in accordance with the Master
Servicer's underwriting guidelines, and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan, such
value of the Mortgaged Property is based solely upon the lesser of (1) the value
determined by an appraisal made for the Originator of such Refinanced Mortgage
Loan at the time of origination of such Refinanced Mortgage Loan by an appraiser
who met the minimum requirements of Fannie Mae and Freddie Mac and (2) the value
thereof as determined by a review appraisal conducted by the Master Servicer (in
its capacity as Originator) in accordance with the Master Servicer's
underwriting guidelines, and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
Originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value

                                      -48-

<PAGE>

determined by an appraisal made for the Originator of such Mortgage Loan at the
time of origination if the "lease option purchase price" was set 12 months or
more prior to origination.

          "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date of
determination, 97% of all Voting Rights will be allocated among the holders of
the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class IO Certificates in proportion to the then
outstanding Notional Amount of their Certificates, 1% of all Voting Rights will
be allocated to the holders of the Class P Certificates and 1/5 of 1% of all
Voting Rights will be allocated among the holders of each Class of Residual
Certificates. The Voting Rights allocated to each Class of Certificate shall be
allocated among Holders of each such Class in accordance with their respective
Percentage Interests as of the most recent Record Date.

          SECTION 1.02. Allocation of Certain Interest Shortfalls.

          For purposes of calculating the amount of Accrued Certificate Interest
and the amount of the Interest Distribution Amount for the Class A Certificates,
the Mezzanine Certificates, the Class IO Certificates and the Class CE
Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
Master Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class CE Certificates on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Mezzanine Certificates and
the Class IO Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount, as applicable, of
each such Certificate and (2) the aggregate amount of any Realized Losses
incurred for any Distribution Date shall be allocated among the Class CE
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount of each such Certificate.

          For purposes of calculating the amount of Uncertificated Interest for
the REMIC I Regular Interests for any Distribution Date, the aggregate amount of
any Prepayment Interest Shortfalls (to the extent not covered by payments by the
Master Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated to Uncertificated Interest payable to the REMIC I Regular Interests
(other than REMIC I Regular Interest I-LTP1) PRO RATA based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Uncertificated Balance of each such REMIC I Regular
Interest (other than REMIC I Regular Interest I-LTP1).

          For purposes of calculating the amount of Uncertificated Interest for
the REMIC II Regular Interests for any Distribution Date, the aggregate amount
of any Prepayment Interest Shortfalls (to the extent not covered by payments by
the Master Servicer pursuant to Section 3.24) and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated to Uncertificated Interest payable to the REMIC II Regular
Interests (other

                                      -49-

<PAGE>

than REMIC II Regular Interest II-LTP) PRO RATA based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Uncertificated Balance of each such REMIC II Regular Interest (other
than REMIC II Regular Interest II-LTP).

          For purposes of calculating the amount of Uncertificated Interest for
the REMIC III Regular Interests for any Distribution Date, the aggregate amount
of any Prepayment Interest Shortfalls (to the extent not covered by payments by
the Master Servicer pursuant to Section 3.24) and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to Uncertificated Interest payable to REMIC III
Regular Interest III-LT1 and REMIC III Regular Interest III-LT6 up to an
aggregate amount equal to the REMIC III Interest Loss Allocation Amount, 98% and
2%, respectively, and thereafter among REMIC III Regular Interest III-LT1, REMIC
III Regular Interest III-LT2, REMIC III Regular Interest III-LT3, REMIC III
Regular Interest III-LT4, REMIC III Regular Interest III-LT5 and REMIC III
Regular Interest III- LT6 PRO RATA based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Uncertificated Balance of each such REMIC III Regular Interest.

          All Prepayment Interest Shortfalls and Relief Act Interest Shortfalls
on the REMIC IV Regular Interests shall be allocated by the Trust Administrator
on each Distribution Date among the REMIC IV Regular Interests in the proportion
that Prepayment Interest Shortfalls and Relief Act Interest Shortfalls are
allocated to the related Uncertificated Corresponding Component.

                                      -50-

<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

          SECTION 2.01. Conveyance of the Mortgage Loans.

          The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse, for the benefit of the Certificateholders, all the right,
title and interest of the Depositor, including any security interest therein for
the benefit of the Depositor, in and to the Mortgage Loans identified on the
Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan
Purchase Agreement, and all other assets included or to be included in REMIC I.
Such assignment includes all interest and principal received by the Depositor or
the Master Servicer on or with respect to the Mortgage Loans (other than
payments of principal and interest due on such Mortgage Loans on or before the
Cut-off Date).

          In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trust Administrator, as custodian for
the Trustee (in which capacity the Trust Administrator will, unless otherwise
specified, be acting under this Article II), the following documents or
instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):

               (i) the original Mortgage Note, endorsed in blank or in the
          following form: "Pay to the order of Firstar Bank, N.A., as Trustee
          under the applicable agreement, without recourse," with all prior and
          intervening endorsements showing a complete chain of endorsement from
          the originator to the Person so endorsing to the Trustee;

               (ii) the original Mortgage with evidence of recording thereon,
          and the original recorded power of attorney, if the Mortgage was
          executed pursuant to a power of attorney, with evidence of recording
          thereon;

               (iii) an original Assignment in blank;

               (iv) the original recorded Assignment or Assignments showing a
          complete chain of assignment from the originator to the Person
          assigning the Mortgage to the Trustee as contemplated by the
          immediately preceding clause (iii);

               (v) the original or copies of each assumption, modification,
          written assurance or substitution agreement, if any; and

               (vi) the original lender's title insurance policy, together with
          all endorsements or riders that were issued with or subsequent to the
          issuance of such policy, insuring the priority of the Mortgage as a
          first lien on the Mortgaged Property represented therein as a fee
          interest vested in the Mortgagor, or in the event such

                                      -51-

<PAGE>

          original title policy is unavailable, a written commitment or uniform
          binder or preliminary report of title issued by the title insurance or
          escrow company.

          The Trust Administrator, at the expense of the Master Servicer, shall
promptly (within sixty Business Days following the later of the Closing Date and
the date of receipt by the Trust Administrator of the recording information for
a Mortgage, but in no event later than ninety days following the Closing Date)
submit or cause to be submitted for recording, at no expense to the Trust Fund,
the Trustee, the Trust Administrator or the Depositor, in the appropriate public
office for real property records, each Assignment referred to in Sections
2.01(iii) and (iv) above and the Depositor shall execute each original
Assignment in the following form: "Firstar Bank, N.A., as Trustee under the
applicable agreement." In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Master Servicer shall promptly
prepare or cause to be prepared a substitute Assignment or cure or cause to be
cured such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded. Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be completed and submitted for recording
with respect to any Mortgage Loan if the Trustee, the Trust Administrator and
each Rating Agency has received an opinion of counsel, satisfactory in form and
substance to the Trustee, the Trust Administrator and each Rating Agency, to the
effect that the recordation of such Assignments in any specific jurisdiction is
not necessary to protect the Trustee's interest in the related Mortgage Note;
provided further, however, notwithstanding the delivery of any opinion of
counsel, each Assignment shall be submitted or caused to be submitted for
recording by the Trust Administrator in the manner described above, at no
expense to the Trust Fund, the Trustee or the Trust Administrator, upon the
earliest to occur of: (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) failure of the Master
Servicer Termination Test, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Seller, (iv) the occurrence of a servicing transfer
as described in Section 7.02 hereof or (v) if the Seller is not the Master
Servicer and with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.
Notwithstanding the foregoing, if the Master Servicer is unable to pay the cost
of recording the Assignments, such expense will be paid by the Trust
Administrator and shall be reimbursable to the Trust Administrator as an
Extraordinary Trust Fund Expense.

          With respect to a maximum of approximately 2.0% of the Original
Mortgage Loans, by outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, if any original Mortgage Note referred to in Section
2.01(i) above cannot be located, the obligations of the Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to the Trust
Administrator of a photocopy of such Mortgage Note, if available, with a lost
note affidavit substantially in the form of Exhibit I attached hereto. If any of
the original Mortgage Notes for which a lost note affidavit was delivered to the
Trust Administrator is subsequently located, such original Mortgage Note shall
be delivered to the Trust Administrator within three Business Days. If any of
the documents referred to in Sections 2.01(ii), (iii) or (iv) above has, as of
the Closing Date, been submitted for recording but either (x) has not been
returned from the applicable public recording office or (y) has been lost or
such public recording office has retained the original of such document, the
obligations of the Depositor to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trust Administrator of a copy of each such
document certified by the Master Servicer (in its capacity as Originator) in the
case of (x) above or the applicable public recording

                                      -52-

<PAGE>

office in the case of (y) above to be a true and complete copy of the original
that was submitted for recording and (2) if such copy is certified by the Master
Servicer (in its capacity as Originator), delivery to the Trust Administrator
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. Notice shall be provided to the Trustee, the Trust
Administrator and the Rating Agencies by the Originator if delivery pursuant to
clause (2) above will be made more than 180 days after the Closing Date. If the
original lender's title insurance policy was not delivered pursuant to Section
2.01(vi) above, the Depositor shall deliver or cause to be delivered to the
Trust Administrator, promptly after receipt thereof, the original lender's title
insurance policy. The Depositor shall deliver or cause to be delivered to the
Trust Administrator promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.

          All original documents relating to the Mortgage Loans that are not
delivered to the Trust Administrator are and shall be held by or on behalf of
the Originator, the Seller, the Depositor or the Master Servicer, as the case
may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trust Administrator. Any such
original document delivered to or held by the Depositor that is not required
pursuant to the terms of this Section to be a part of a Mortgage File, shall be
delivered promptly to the Master Servicer.

          The Depositor herewith delivers to the Trustee and the Trust
Administrator an executed copy of the Mortgage Loan Purchase Agreement.

          SECTION 2.02. Acceptance of REMIC I by Trustee.

          The Trust Administrator, on behalf of the Trustee, acknowledges
receipt, subject to the provisions of Section 2.01 and subject to any exceptions
noted on the exception report described in the next paragraph below, the
documents referred to in Section 2.01 (other than such documents described in
Section 2.01(v)) above and all other assets included in the definition of "REMIC
I" under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited
into the Distribution Account) and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.

          The Trust Administrator agrees, for the benefit of the
Certificateholders, to review each Mortgage File on or before the Closing Date
and to certify in substantially the form attached hereto as Exhibit C-1 that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
exception report annexed thereto as not being covered by such certification),
(i) all documents constituting part of such Mortgage File (other than such
documents described in Section 2.01(v)) required to be delivered to it pursuant
to this Agreement are in its possession, (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan and
(iii) based on

                                      -53-

<PAGE>

its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(x)(A), (xi), (xii), (xv), (xvii), (xviii), (xx) through (xxiii) and (xxv) of
the definition of "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. It is herein acknowledged that, in conducting such
review, the Trust Administrator was under no duty or obligation (i) to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine whether they are genuine, enforceable, or appropriate for the
represented purpose or whether they have actually been recorded or that they are
other than what they purport to be on their face or (ii) to determine whether
any Mortgage File should include any of the documents specified in clause (v) of
Section 2.01.

          Prior to the first anniversary date of this Agreement the Trust
Administrator shall deliver to the Depositor, the Master Servicer and the
Trustee a final certification in the form annexed hereto as Exhibit C-3
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon, and the Master Servicer shall forward a copy thereof
to any Sub-Servicer.

          If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trust
Administrator finds any document or documents constituting a part of a Mortgage
File to be missing or defective in any material respect, at the conclusion of
its review the Trust Administrator shall so notify the Depositor, the Master
Servicer and the Trustee. In addition, upon the discovery by the Depositor, the
Master Servicer, the Trust Administrator or the Trustee of a breach of any of
the representations and warranties made by the Originator or the Seller in the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.

          The Trust Administrator shall, at the written request and expense of
any Certificateholder, provide a written report to such Certificateholder of all
Mortgage Files released to the Master Servicer for servicing purposes.

          SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
                        Originator, the Seller or the Depositor.

          (a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the
breach by the Originator or the Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan that materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trust Administrator shall
promptly notify the Originator, the Seller, the Master Servicer and the Trustee
of such defect, missing document or breach and request that the Originator or
the Seller, as the case may be, deliver such missing document or cure such
defect or breach within 60 days from the date the Originator or the Seller, as
the case may be, was notified of such missing document, defect or breach, and if
the Originator or the Seller, as the case may be, does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Trustee, in accordance with Section 3.02(b), shall enforce the
obligations of the Originator or the Seller, as the case may be, under the
Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC I
at the Purchase Price within

                                      -54-

<PAGE>

90 days after the date on which the Originator or the Seller, as the case may
be, was notified (subject to Section 2.03(e)) of such missing document, defect
or breach, if and to the extent that the Originator or the Seller, as the case
may be, is obligated to do so under the Mortgage Loan Purchase Agreement. The
Purchase Price for the repurchased Mortgage Loan shall be deposited in the
Collection Account and the Trust Administrator, upon receipt of written
certification from the Master Servicer of such deposit, shall release to the
Originator or the Seller, as the case may be, the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Originator or the Seller, as the case may be,
shall furnish to it and as shall be necessary to vest in the Originator or the
Seller, as the case may be, any Mortgage Loan released pursuant hereto neither
the Trustee nor the Trust Administrator shall have any further responsibility
with regard to such Mortgage File. In lieu of repurchasing any such Mortgage
Loan as provided above, if so provided in the Mortgage Loan Purchase Agreement,
the Originator or the Seller, as the case may be, may cause such Mortgage Loan
to be removed from REMIC I (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Originator or the Seller, as
the case may be, to cure or to repurchase (or to substitute for) any Mortgage
Loan as to which a document is missing, a material defect in a constituent
document exists or as to which such a breach has occurred and is continuing
shall constitute the sole remedy respecting such omission, defect or breach
available to the Trustee and the Certificateholders.

          (b) Subject to Section 2.03(e), within 90 days of the earlier of
discovery by the Depositor or receipt of notice by the Depositor of the breach
of any representation or warranty of the Depositor set forth in Section 2.04
with respect to any Mortgage Loan, which materially adversely affects the value
of such Mortgage Loan or the interest therein of the Certificateholders, the
Depositor shall (i) cure such breach in all material respects, (ii) repurchase
the Mortgage Loan from REMIC I at the Purchase Price or (iii) remove such
Mortgage Loan from REMIC I (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). If any such
breach is a breach of any of the representations and warranties included in
Section 2.04(a)(iv), and the Depositor is unable to cure such breach, the
Depositor shall repurchase or substitute the smallest number of Mortgage Loans
as shall be required to make such representation or warranty true and correct.
The Purchase Price for any repurchased Mortgage Loan shall be delivered to the
Master Servicer for deposit in the Collection Account, and the Trust
Administrator, upon receipt of written certification from the Master Servicer of
such deposit, shall at the Depositor's direction release to the Depositor the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment furnished by the Depositor, in each case without
recourse, as the Depositor shall furnish to it and as shall be necessary to vest
in the Depositor any Mortgage Loan released pursuant hereto.

          (c) As promptly as practicable following the earlier of discovery by
the Master Servicer or receipt of notice by the Master Servicer of the breach of
any representation, warranty or covenant of the Master Servicer set forth in
Section 2.05 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan or Prepayment Charge, the Master
Servicer shall cure such breach in all material respects.

                                      -55-

<PAGE>

          (d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Originator or the Seller, or Section 2.03(b), in the case of the Depositor, must
be effected prior to the date which is two years after the Startup Day for REMIC
I.

          As to any Deleted Mortgage Loan for which the Originator, the Seller
or the Depositor substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Originator, the Seller or the Depositor,
as the case may be, delivering to the Trust Administrator, on behalf of the
Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2.01, together with an Officers' Certificate providing that each such Qualified
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Shortfall Amount (as described below), if any, in connection with
such substitution. The Trust Administrator shall acknowledge receipt for such
Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, review such documents as specified in Section 2.02 and deliver to
the Depositor, the Master Servicer and the Trustee, with respect to such
Qualified Substitute Mortgage Loan or Loans, a certification substantially in
the form attached hereto as Exhibit C-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trust Administrator
shall deliver to the Depositor, the Master Servicer and the Trustee a
certification substantially in the form of Exhibit C-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions
noted thereon. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution are not part of REMIC I and will be
retained by the Depositor, the Originator or the Seller, as the case may be. For
the month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Depositor, the Originator or the Seller, as
the case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders 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 Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee and the
Trust Administrator. Upon such substitution, such Qualified Substitute Mortgage
Loan or Loans shall constitute part of the Mortgage Pool and shall be subject in
all respects to the terms of this Agreement and, in the case of a substitution
effected by the Originator or the Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by the Originator or the
Seller, all applicable representations and warranties thereof included in the
Mortgage Loan Purchase Agreement, and in the case of a substitution effected by
the Depositor, all applicable representations and warranties thereof set forth
in Section 2.04, in each case as of the date of substitution.

          For any month in which the Depositor, the Originator or the Seller
substitutes one or more Qualified Substitute Mortgage Loans for one or more
Deleted Mortgage Loans, the Master Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price
of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such
Qualified Substitute Mortgage Loan, the Scheduled Principal Balance thereof as
of the date of substitution, together with one month's interest on such
Scheduled Principal Balance at the

                                      -56-

<PAGE>

applicable Net Mortgage Rate, plus all outstanding P&I Advances and Servicing
Advances (including Nonrecoverable P&I Advances and Nonrecoverable Servicing
Advances) related thereto. On the date of such substitution, the Depositor, the
Originator or the Seller, as the case may be, will deliver or cause to be
delivered to the Master Servicer for deposit in the Collection Account an amount
equal to the Substitution Shortfall Amount, if any, and the Trust Administrator,
upon receipt of the related Qualified Substitute Mortgage Loan or Loans and
certification by the Master Servicer of such deposit, shall release to the
Depositor, the Originator or the Seller, as the case may be, the related
Mortgage File or Files and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Depositor, the Originator or the Seller, as the case may be, shall deliver to it
and as shall be necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.

          In addition, the Depositor, the Originator or the Seller, as the case
may be, shall obtain at its own expense and deliver to the Trust Administrator
and the Trustee an Opinion of Counsel to the effect that such substitution will
not cause (a) any federal tax to be imposed on any of REMIC I, REMIC II, REMIC
III, REMIC IV or REMIC V, including without limitation, any federal tax imposed
on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V to fail to qualify
as a REMIC at any time that any Certificate is outstanding.

          (e) Upon discovery by the Depositor, the Originator, the Seller, the
Master Servicer, the Trustee or the Trust Administrator that any Mortgage Loan
does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties. In connection
therewith, the Originator, the Seller or the Depositor shall repurchase or,
subject to the limitations set forth in Section 2.03(d), substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Such repurchase or substitution shall be made by (i) the
Originator or the Seller, as the case may be, if the affected Mortgage Loan's
status as a non- qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Originator or the Seller, as
the case may be, under the Mortgage Loan Purchase Agreement, or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of any representation or warranty of the Depositor set forth in Section
2.04, or if its status as a non- qualified mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section 2.03(a), if made by the Originator or
the Seller, or Section 2.03(b), if made by the Depositor. The Trustee and the
Trust Administrator shall reconvey to the Depositor, the Originator or the
Seller, as the case may be, 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.

          SECTION 2.04. Representations and Warranties of the Depositor.

          (a) The Depositor hereby represents and warrants to the Trust
Administrator and the Trustee for the benefit of the Certificateholders that as
of the Closing Date or as of such other date specifically provided herein:

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<PAGE>

               (i) The information set forth in the Mortgage Loan Schedule for
          the Original Mortgage Loans is complete, true and correct in all
          material respects at the date or dates respecting which such
          information is furnished;

               (ii) The Monthly Payment due under each Original Mortgage Loan is
          not 30 or more days delinquent in payment and has not been 30 or more
          days delinquent in payment more than once in the twelve month period
          prior to February 29, 2000 (assuming that a "rolling" 30 day
          delinquency is considered to be delinquent only once);

               (iii) Each Original Mortgage Loan had an original term to
          maturity of not greater than 30 years; each Original Mortgage Loan is
          an adjustable-rate mortgage loan with payments generally due on the
          first day of each month and each such Mortgage Loan is fully
          amortizing; effective with the first payment due after each Adjustment
          Date, the monthly payment amount for each Original Mortgage Loan will
          be adjusted to an amount which would amortize fully the outstanding
          principal balance of such Mortgage Loan over its remaining term and
          pay interest at the Mortgage Rate so adjusted; on the first Adjustment
          Date and on each Adjustment Date thereafter, the Mortgage Rate on each
          Original Mortgage Loan will be adjusted to equal the sum of the Index
          and the related Gross Margin, rounded to the nearest multiple of
          0.125%, subject to the Periodic Rate Cap, the Maximum Mortgage Rate
          and the Minimum Mortgage Rate applicable to such Mortgage Loan;

               (iv) (A) No more than approximately 32.00%, approximately 3.63%,
          approximately 4.71%, approximately 10.14%, approximately 3.31%,
          approximately 4.14%, approximately 5.98% and approximately 3.76% of
          the Original Mortgage Loans, by outstanding principal balance of the
          Original Mortgage Loans as of the Cut-off Date, will be secured by
          Mortgaged Properties located in California, Colorado, Florida,
          Illinois, Massachusetts, Michigan, Texas and Washington, respectively,
          and no more than 3.00% of the Original Mortgage Loans, by outstanding
          principal balance of the Original Mortgage Loans as of the Cut-off
          Date, will be secured by Mortgaged Properties located in any other
          state; (B) as of the Cut- off Date, no more than approximately 0.49%
          of the Original Mortgage Loans, by outstanding principal balance of
          the Original Mortgage Loans as of the Cut-off Date, are secured by
          Mortgaged Properties located in any one California zip code area, and
          no more than approximately 19.21% of the Original Mortgage Loans, by
          outstanding principal balance of the Original Mortgage Loans as of the
          Cut-off Date, are secured by units in two- to four-family dwellings,
          condominiums, planned unit developments or manufactured housing and
          (C) at least approximately 80.21% of the Original Mortgage Loans, by
          outstanding principal balance of the Original Mortgage Loans as of the
          Cut-off Date, are secured by real property with a single family
          residence erected thereon;

               (v) If the Mortgaged Property securing an Original Mortgage Loan
          is identified in the Federal Register by the Federal Emergency
          Management Agency ("FEMA") as having special flood hazards, as of the
          Closing Date, such Mortgaged

                                      -58-

<PAGE>

          Property is covered by a flood insurance policy that met the
          requirements of FEMA at the time such policy was issued;

               (vi) With respect to each Original Mortgage Loan, the
          Loan-to-Value Ratio was less than or equal to 95.00% at the
          origination of such Original Mortgage Loan; and

               (vii) With respect to at least approximately 94.04% of the
          Original Mortgage Loans by outstanding principal balance as of the
          Cut-off Date, at the time that such Mortgage Loan was made, the
          Mortgagor represented that the Mortgagor would occupy the Mortgaged
          Property as the Mortgagor's primary residence. With respect to
          approximately 5.96% of the Original Mortgage Loans by outstanding
          principal balance as of the Cut-off Date, at the time that such
          Mortgage Loan was made, the Mortgagor represented that the Mortgagor
          would occupy the Mortgaged Property as the Mortgagor's secondary
          residence or that the Mortgaged Property would be an investor
          property.

          (b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trust Administrator and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Master Servicer, the
Trustee or the Trust Administrator of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties, and in no event later than two Business Days from
the date of such discovery. It is understood and agreed that the obligations of
the Depositor set forth in Section 2.03(b) to cure, substitute for or repurchase
a Mortgage Loan constitute the sole remedies available to the Certificateholders
or to the Trust Administrator or the Trustee on their behalf respecting a breach
of the representations and warranties contained in this Section 2.04.

          SECTION 2.05. Representations, Warranties and Covenants of the Master
                        Servicer.

          The Master Servicer hereby represents, warrants and covenants to the
Trust Administrator and the Trustee, for the benefit of each of the Trustee, the
Trust Administrator, the Certificateholders and to the Depositor that as of the
Closing Date or as of such date specifically provided herein:

               (i) The Master Servicer is a corporation duly organized, validly
          existing and in good standing under the laws of the State of
          California and is duly authorized and qualified to transact any and
          all business contemplated by this Agreement to be conducted by the
          Master 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 and to service the Mortgage
          Loans in accordance with the terms of this Agreement;

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<PAGE>

               (ii) The Master Servicer has the full power and authority to
          conduct its business as presently conducted by it and to execute,
          deliver and perform, and to enter into and consummate, all
          transactions contemplated by this Agreement. The Master Servicer has
          duly authorized the execution, delivery and performance of this
          Agreement, has duly executed and delivered this Agreement, and this
          Agreement, assuming due authorization, execution and delivery by the
          Depositor, the Trust Administrator and the Trustee, constitutes a
          legal, valid and binding obligation of the Master Servicer,
          enforceable against it in accordance with its terms except as the
          enforceability thereof may be limited by bankruptcy, insolvency,
          reorganization or similar laws affecting the enforcement of creditors'
          rights generally and by general principles of equity;

               (iii) The execution and delivery of this Agreement by the Master
          Servicer, the servicing of the Mortgage Loans by the Master Servicer
          hereunder, the consummation by the Master Servicer of any other of the
          transactions herein contemplated, and the fulfillment of or compliance
          with the terms hereof are in the ordinary course of business of the
          Master Servicer and will not (A) result in a breach of any term or
          provision of the charter or by-laws of the Master Servicer or (B)
          conflict with, result in a breach, violation or acceleration of, or
          result in a default under, the terms of any other material agreement
          or instrument to which the Master Servicer is a party or by which it
          may be bound, or any statute, order or regulation applicable to the
          Master Servicer of any court, regulatory body, administrative agency
          or governmental body having jurisdiction over the Master Servicer; and
          the Master Servicer is not a party to, bound by, or in breach or
          violation of any indenture or other agreement or instrument, or
          subject to or in violation of any statute, order or regulation of any
          court, regulatory body, administrative agency or governmental body
          having jurisdiction over it, which materially and adversely affects
          or, to the Master Servicer's knowledge, would in the future materially
          and adversely affect, (x) the ability of the Master Servicer to
          perform its obligations under this Agreement or (y) the business,
          operations, financial condition, properties or assets of the Master
          Servicer taken as a whole;

               (iv) The Master Servicer is a HUD approved mortgagee pursuant to
          Section 203 and Section 211 of the National Housing Act. No event has
          occurred, including but not limited to a change in insurance coverage,
          that would make the Master Servicer unable to comply with HUD
          eligibility requirements or that would require notification to HUD;

               (v) The Master Servicer does not believe, nor does it have any
          reason or cause to believe, that it cannot perform each and every
          covenant made by it and contained in this Agreement;

               (vi) With respect to each Mortgage Loan, the Master Servicer, or
          Sub- Servicer, if any, is in possession of a complete Mortgage File,
          except for such documents as have been delivered to the Trust
          Administrator;

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<PAGE>

               (vii) No litigation is pending against the Master Servicer that
          would materially and adversely affect the execution, delivery or
          enforceability of this Agreement or the ability of the Master Servicer
          to service the Mortgage Loans or to perform any of its other
          obligations hereunder in accordance with the terms hereof;

               (viii) There are no actions or proceedings against, or
          investigations known to it of, the Master Servicer before any court,
          administrative or other tribunal (A) that might prohibit its entering
          into this Agreement, (B) seeking to prevent the consummation of the
          transactions contemplated by this Agreement or (C) that might prohibit
          or materially and adversely affect the performance by the Master
          Servicer of its obligations under, or validity or enforceability of,
          this Agreement;

               (ix) No consent, approval, authorization or order of any court or
          governmental agency or body is required for the execution, delivery
          and performance by the Master Servicer of, or compliance by the Master
          Servicer with, this Agreement or the consummation by it of the
          transactions contemplated by this Agreement, except for such consents,
          approvals, authorizations or orders, if any, that have been obtained
          prior to the Closing Date;

               (x) The information set forth in the Prepayment Charge Schedule
          (including the prepayment charge summary attached thereto) is
          complete, true and correct in all material respects on the date or
          dates when such information is furnished and each Prepayment Charge is
          permissible and enforceable in accordance with its terms (except to
          the extent that the enforceability thereof may be limited by
          bankruptcy, insolvency, moratorium, receivership and other similar
          laws relating to creditors' rights generally or the collectability
          thereof may be limited due to acceleration in connection with a
          foreclosure) under applicable state law;

               (xi) The Master Servicer will not waive any Prepayment Charge
          unless it is waived in accordance with the standard set forth in
          Section 3.01; and

               (xii) The Master Servicer covenants that its computer and other
          systems used in servicing the Mortgage Loans operate in a manner such
          that the Master Servicer can service the Mortgage Loans in accordance
          with the terms of this Agreement.

          It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trust Administrator and shall inure to the benefit of the Trust
Administrator, the Trustee, the Depositor and the Certificateholders. Upon
discovery by any of the Depositor, the Master Servicer, the Trust Administrator
or the Trustee of a breach of any of the foregoing representations, warranties
and covenants which materially and adversely affects the value of any Mortgage
Loan, Prepayment Charge or the interests therein of the Certificateholders, the
party discovering such breach shall give prompt written notice (but in no event
later than two Business Days following such discovery) to the Trust
Administrator and the Trustee. Subject to Section 7.01, unless such breach shall
not be susceptible of cure within 90 days, the obligation of the Master Servicer
set forth in Section 2.03(c) to cure breaches shall constitute the

                                      -61-

<PAGE>

sole remedy against the Master Servicer available to the Certificateholders, the
Depositor or the Trust Administrator and the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05. Notwithstanding the foregoing, within
90 days of the earlier of discovery by the Master Servicer or receipt of notice
by the Master Servicer of the breach of the representation or covenant of the
Master Servicer set forth in Sections 2.05(x) or 2.05(xi) above which materially
and adversely affects the interests of the Holders of the Class P Certificates
in any Prepayment Charge, the Master Servicer shall remedy such breach as
follows: (a) if the representation made by the Master Servicer in Section
2.05(x) above is breached and a Principal Prepayment has occurred in the
applicable Prepayment Period, the Master Servicer must pay the amount of the
scheduled Prepayment Charge, for the benefit of the holder of the Class P
Certificate, by depositing such amount into the Collection Account, net of any
amount previously collected by the Master Servicer or paid by the Master
Servicer, for the benefit of the Holders of the Class P Certificates, in respect
of such Prepayment Charge; and (b) if any of the covenants made by the Master
Servicer in Section 2.05(xi) above is breached, the Master Servicer must pay the
amount of such waived Prepayment Charge, for the benefit of the holders of the
Class P Certificates, by depositing such amount into the Collection Account. The
foregoing shall not, however, limit any remedies available to the
Certificateholders, the Depositor, the Trust Administrator or the Trustee on
behalf of the Certificateholders, pursuant to the Mortgage Loan Purchase
Agreement signed by the Master Servicer in its capacity as Originator,
respecting a breach of the representations, warranties and covenants of the
Master Servicer in its capacity as Originator contained in the Mortgage Loan
Purchase Agreement.

          SECTION 2.06. Issuance of the Class R-I Certificates.

          The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it (or the Trust Administrator on its behalf) of the
Mortgage Files, subject to the provisions of Section 2.01 and Section 2.02,
together with the assignment to it of all other assets included in REMIC I, the
receipt of which is hereby acknowledged. Concurrently with such assignment and
delivery and in exchange therefor, the Trust Administrator, pursuant to the
written request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor, the
Class R-I Certificates in authorized denominations. The interests evidenced by
the Class R-I Certificates, together with the REMIC I Regular Interests,
constitute the entire beneficial ownership interest in REMIC I. The rights of
the Class R-I Certificateholders and REMIC II (as holder of the REMIC I Regular
Interests) to receive distributions from the proceeds of REMIC I in respect of
the Class R-I Certificates and the REMIC I Regular Interests, respectively, and
all ownership interests evidenced or constituted by the Class R-I Certificates
and the REMIC I Regular Interests, shall be as set forth in this Agreement.

          SECTION 2.07. Conveyance of the REMIC I Regular Interests; Acceptance
                        of REMIC II by the Trustee.

          The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Class R-II
Certificateholders and REMIC II (as holder of the REMIC I Regular Interests).
The Trustee acknowledges receipt of the REMIC I Regular Interests and declares
that it holds and will hold the

                                      -62-

<PAGE>

same in trust for the exclusive use and benefit of all present and future Class
R-II Certificateholders and REMIC II (as holder of the REMIC I Regular
Interests). The rights of the Class R-II Certificateholders and REMIC II (as
holder of the REMIC I Regular Interests) to receive distributions from the
proceeds of REMIC II in respect of the Class R-II Certificates and REMIC II
Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-II Certificates and the REMIC II Regular Interests,
shall be as set forth in this Agreement.

          SECTION 2.08. Issuance of Class R-II Certificates.

          The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R-II Certificates in authorized denominations.
The interests evidenced by the Class R-II Certificates, together with the REMIC
II Regular Interests, constitute the entire beneficial ownership interest in
REMIC II.

          SECTION 2.09. Conveyance of the REMIC II Regular Interests; Acceptance
                        of REMIC III by the Trustee.

          The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC II Regular Interests for the benefit of the Class R-III
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests).
The Trustee acknowledges receipt of the REMIC II Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-III Certificateholders and REMIC III (as
holder of the REMIC II Regular Interests). The rights of the Class R-III
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests)
to receive distributions from the proceeds of REMIC III in respect of the Class
R-III Certificates and REMIC III Regular Interests, respectively, and all
ownership interests evidenced or constituted by the Class R-III Certificates and
the REMIC III Regular Interests, shall be as set forth in this Agreement.

          SECTION 2.10. Issuance of Class R-III Certificates.

          The Trustee acknowledges the assignment to it of the REMIC II Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R-III Certificates in authorized
denominations. The interests evidenced by the Class R-III Certificates, together
with the REMIC III Regular Interests, constitute the entire beneficial ownership
interest in REMIC III.

          SECTION 2.11. Conveyance of the REMIC III Regular Interests;
                        Acceptance of REMIC IV by the Trustee.

          The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC III Regular Interests for the benefit of the Class R-IV

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<PAGE>

Certificateholders and REMIC IV (as holder of the REMIC III Regular Interests).
The Trustee acknowledges receipt of the REMIC III Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-IV Certificateholders and REMIC IV (as holder
of the REMIC III Regular Interests). The rights of the Class R-IV
Certificateholders and REMIC IV (as holder of the REMIC III Regular Interests)
to receive distributions from the proceeds of REMIC IV in respect of the Class
R-IV Certificates and REMIC IV Regular Interests, respectively, and all
ownership interests evidenced or constituted by the Class R-IV Certificates and
the REMIC IV Regular Interests, shall be as set forth in this Agreement.

          SECTION 2.12. Issuance of Class R-IV Certificates.

          The Trustee acknowledges the assignment to it of the REMIC III Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R-IV Certificates in authorized denominations.
The interests evidenced by the Class R-IV Certificates, together with the REMIC
IV Regular Interests, constitute the entire beneficial ownership interest in
REMIC IV.

          SECTION 2.13. Conveyance of REMIC IV Regular Interests; Acceptance of
                        REMIC V by the Trustee.

          The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC IV Regular Interests for the benefit of the REMIC V
Certificateholders. The Trustee acknowledges receipt of the REMIC IV Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future REMIC V Certificateholders.
The rights of the REMIC V Certificateholders to receive distributions from the
proceeds of REMIC V in respect of the REMIC V Certificates, and all ownership
interests evidenced or constituted by the REMIC V Certificates, shall be as set
forth in this Agreement.

          SECTION 2.14. Issuance of REMIC V Certificates.

          The Trustee acknowledges the assignment to it of the REMIC IV Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the REMIC V Certificates in authorized denominations
evidencing the entire beneficial ownership interest in REMIC V.

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<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

          SECTION 3.01. Master Servicer to Act as Master Servicer.

          The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

               (i) any relationship that the Master Servicer, any Sub-Servicer
          or any Affiliate of the Master Servicer or any Sub-Servicer may have
          with the related Mortgagor;

               (ii) the ownership or non-ownership of any Certificate by the
          Master Servicer or any Affiliate of the Master Servicer;

               (iii) the Master Servicer's obligation to make P&I Advances or
          Servicing Advances; or

               (iv) the Master Servicer's or any Sub-Servicer's right to receive
          compensation for its services hereunder or with respect to any
          particular transaction.

To the extent consistent with the foregoing, the Master Servicer (a) shall seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes and (b) shall waive (or permit a subservicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and (ii) either (A)
such waiver would, in the reasonable judgement of the Master Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan and, if such waiver is made in connection
with a refinancing of the related Mortgage Loan, such refinancing is related to
a default or a reasonably foreseeable default or (B) such waiver is made in
connection with a refinancing of the related Mortgage Loan unrelated to a
default or a reasonably foreseeable default where (x) the related mortgagor has
stated to the Master Servicer or an applicable subservicer an intention to
refinance the related Mortgage Loan and (y) the Master Servicer has concluded in
its reasonable judgement that the waiver of such Prepayment Charge would induce
such mortgagor to refinance with the Master Servicer. If a Prepayment Charge is
waived as permitted by meeting the standards described in clauses (i) and
(ii)(B) above, then the Master Servicer is required to pay the amount of such
waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account together
with and at the time that the amount prepaid on the related Mortgage Loan is
required to be deposited into the Collection Account. Notwithstanding any other
provisions of this Agreement, any payments made by the Master Servicer

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<PAGE>

in respect of any waived Prepayment Charges pursuant to clauses (i) and (ii)(B)
shall be deemed to be paid outside of the Trust Fund. Subject only to the
above-described servicing standards and the terms of this Agreement and of the
respective Mortgage Loans, the Master Servicer shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 3.02, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer in its own name or in the name
of a Sub-Servicer is hereby authorized and empowered by the Trustee when the
Master Servicer believes it appropriate in its best judgment in accordance with
the servicing standards set forth above, to execute and deliver, on behalf of
the Certificateholders and the Trustee, and upon notice to the Trustee and the
Trust Administrator, 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 the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert
the ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Master Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee shall execute, at the written request of the Master Servicer, and
furnish to the Master Servicer and any Sub-Servicer any special or limited
powers of attorney and other documents necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder and the Trustee shall not be liable for the
actions of the Master Servicer or any Sub-Servicers under such powers of
attorney.

          Subject to Section 3.09 hereof, in accordance with the standards of
the preceding paragraph, the Master Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Master Servicer or by Sub-Servicers in effecting
the timely payment of taxes and assessments on a Mortgaged Property shall not,
for the purpose of calculating distributions to Certificateholders, be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.

          Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury regulations promulgated thereunder) and (B) cause any of REMIC I,
REMIC II, REMIC III, REMIC

                                      -66-

<PAGE>

IV or REMIC V to fail to qualify as a REMIC under the Code or the imposition of
any tax on "prohibited transactions" or "contributions after the startup date"
under the REMIC Provisions.

          The Master Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Master
Servicer from the responsibilities or liabilities arising under this Agreement.

          SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and
                        Sub-Servicers.

          (a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub- Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates. The
Trust Administrator and the Trustee are hereby authorized to acknowledge, at the
request of the Master Servicer, any Sub-Servicing Agreement that meets the
requirements applicable to Sub-Servicing Agreements set forth in this Agreement
and that is otherwise permitted under this Agreement.

          Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub- Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub- Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub- Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights; provided, further, that the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights shall not be required (i) to cure
any ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a
Sub-Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Master Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Master Servicer shall deliver
to the Trustee and the Trust Administrator copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Master Servicer's execution and delivery of such instruments.

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<PAGE>

          (b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement and of the Originator and the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a). Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, and
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans, or (ii) from a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller and the Originator shall be effected by the Master Servicer
to the extent it is not the Originator, the Seller or an Affiliate of the
Seller, and otherwise by the Trustee in accordance with the foregoing provisions
of this paragraph.

          SECTION 3.03. Successor Sub-Servicers.

          The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.

          Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trust Administrator or the
Trustee (if the Trust Administrator is acting as Master Servicer) without fee,
in accordance with the terms of this Agreement, in the event that the Master
Servicer (or the Trust Administrator, if it is then acting as Master Servicer)
shall, for any reason, no longer be the Master Servicer (including termination
due to a Master Servicer Event of Default).

          SECTION 3.04. Liability of the Master Servicer.

          Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and

                                      -68-

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conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans. The Master Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Master Servicer by such
Sub-Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.

          SECTION 3.05. No Contractual Relationship Between Sub-Servicers
                        and the Trust Administrator, the Trustee or
                        Certificateholders.

          Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trust Administrator, the Trustee or the
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer shall be solely liable
for all fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.

          SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
                        Trust Administrator.

          In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of the occurrence of a Master Servicer
Event of Default), the Trust Administrator or its designee shall thereupon
assume all of the rights and obligations of the Master Servicer under each
Sub-Servicing Agreement that the Master Servicer may have entered into, unless
the Trust Administrator or the Trustee elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such
assumption, the Trust Administrator, its designee or the successor servicer for
the Trust Administrator appointed pursuant to Section 7.02 shall be deemed,
subject to Section 3.03, to have assumed all of the Master Servicer's interest
therein and to have replaced the Master Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the Master Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trust Administrator, its designee or any successor Master
Servicer shall be deemed to have assumed any liability or obligation of the
Master Servicer that arose before it ceased to be the Master Servicer.

          The Master Servicer at its expense shall, upon request of the Trust
Administrator, deliver to the assuming party all documents and records relating
to each Sub-Servicing Agreement and the Mortgage Loans then being serviced and
an accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.

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          SECTION 3.07. Collection of Certain Mortgage Loan Payments.

          The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater than 180 days; provided, however, that any extension pursuant to clause
(ii) above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event of
any such arrangement pursuant to clause (ii) above, the Master Servicer shall
make timely advances on such Mortgage Loan during such extension pursuant to
Section 4.03 and in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangement. Notwithstanding
the foregoing, in the event that any Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable, the
Master 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 (such payment, a
"Short Pay- off"), or consent to the postponement of strict compliance with any
such term or otherwise grant indulgence to any Mortgagor.

          SECTION 3.08. Sub-Servicing Accounts.

          In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the Collection Account not later
than two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

          SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
                        Servicing Accounts.

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<PAGE>

          The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Master Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, all Escrow
Payments collected on account of the Mortgage Loans and shall thereafter deposit
such Escrow Payments in the Servicing Accounts, in no event more than two
Business Days after the receipt of such Escrow Payments, all Escrow Payments
collected on account of the Mortgage Loans for the purpose of effecting the
timely payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
timely payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article IX. As part of
its servicing duties, the Master Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in the Servicing Accounts, to the extent required
by law and, to the extent that interest earned on funds in the Servicing
Accounts is insufficient, to pay such interest from its or their own funds,
without any reimbursement therefor.

          SECTION 3.10. Collection Account and Distribution Account.

          (a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. On behalf of the Trust Fund,
the Master Servicer shall deposit or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Master Servicer's
receipt thereof, and shall thereafter deposit in the Collection Account, in no
event more than two Business Days after the Master Servicer's receipt thereof,
as and when received or as otherwise required hereunder, the following payments
and collections received or made by it subsequent to the Cut-off Date (other
than in respect of principal or interest on the related Mortgage Loans due on or
before the Cut-off Date), or payments (other than Principal Prepayments)
received by it on or prior to the Cut-off Date but allocable to a Due Period
subsequent thereto:

               (i) all payments on account of principal, including Principal
          Prepayments, on the Mortgage Loans;

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<PAGE>

               (ii) all payments on account of interest (net of the related
          Servicing Fee) on each Mortgage Loan;

               (iii) all Insurance Proceeds and Liquidation Proceeds (other than
          proceeds collected in respect of any particular REO Property and
          amounts paid in connection with a purchase of Mortgage Loans and REO
          Properties pursuant to Section 9.01);

               (iv) any amounts required to be deposited pursuant to Section
          3.12 in connection with any losses realized on Permitted Investments
          with respect to funds held in the Collection Account;

               (v) any amounts required to be deposited by the Master Servicer
          pursuant to the second paragraph of Section 3.14(a) in respect of any
          blanket policy deductibles;

               (vi) all proceeds of any Mortgage Loan repurchased or purchased
          in accordance with Section 2.03 or Section 9.01;

               (vii) all amounts required to be deposited in connection with
          shortfalls in principal amount of Qualified Substitute Mortgage Loans
          pursuant to Section 2.03; and

               (viii) all Prepayment Charges collected by the Master Servicer in
          connection with the Principal Prepayment of any of the Mortgage Loans.

          The foregoing requirements for deposit in the Collection Accounts
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
modification or assumption fees, or insufficient funds charges need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer as additional compensation. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.

          (b) On behalf of the Trust Fund, the Trust Administrator, as agent for
the Trustee, shall establish and maintain one or more accounts (such account or
accounts, the "Distribution Account"), held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust Fund, the Master
Servicer shall deliver to the Trust Administrator in immediately available funds
for deposit in the Distribution Account on or before 3:00 p.m. New York time (i)
on the Master Servicer Remittance Date, that portion of the Available
Distribution Amount (calculated without regard to the references in clause (2)
of the definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by the Master
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advancing Person pursuant to Section 3.26 and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next

                                      -72-

<PAGE>

succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Master Servicer shall,
on or before 3:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Trust Administrator, the Originator, the
Seller or any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts
to the Persons entitled thereto.

          (c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.12. The Master Servicer shall give notice to the Trustee and the
Trust Administrator of the location of the Collection Account maintained by it
when established and prior to any change thereof. The Trust Administrator shall
give notice to the Master Servicer, the Depositor and the Trustee of the
location of the Distribution Account when established and prior to any change
thereof.

          (d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trust Administrator for deposit in an account
(which may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee and the Trust Administrator shall
have the sole authority to withdraw any funds held pursuant to this subsection
(d). In the event the Master Servicer shall deliver to the Trust Administrator
for deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trust Administrator withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Master
Servicer shall deliver to the Trust Administrator from time to time for deposit,
and the Trust Administrator shall so deposit, in the Distribution Account:

               (i) any P&I Advances, as required pursuant to Section 4.03;

               (ii) any amounts required to be deposited pursuant to Section
          3.23(d) or (f) in connection with any REO Property;

               (iii) any amounts to be paid in connection with a purchase of
          Mortgage Loans and REO Properties pursuant to Section 9.01;

               (iv) any amounts required to be deposited pursuant to Section
          3.24 in connection with any Prepayment Interest Shortfall; and

               (v) any Stayed Funds, as soon as permitted by the federal
          bankruptcy court having jurisdiction in such matters.

          (e) Promptly upon receipt of any Stayed Funds, whether from the Master
Servicer, a trustee in bankruptcy, federal bankruptcy court or other source, the
Trust Administrator shall

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<PAGE>

deposit such funds in the Distribution Account, subject to withdrawal thereof
pursuant to Section 7.02(b) or as otherwise permitted hereunder.

          (f) The Master Servicer shall deposit in the Collection Account or
Distribution Account, as the case may be, any amounts required to be deposited
pursuant to Section 3.12(b) in connection with losses realized on Permitted
Investments with respect to funds held in the Collection Account or Distribution
Account, respectively.

          SECTION 3.11. Withdrawals from the Collection Account and Distribution
                        Account.

          (a) The Master Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.03:

               (i) to remit to the Trust Administrator for deposit in the
          Distribution Account the amounts required to be so remitted pursuant
          to Section 3.10(b) or permitted to be so remitted pursuant to the
          first sentence of Section 3.10(d);

               (ii) subject to Section 3.16(d), to reimburse the Master Servicer
          for P&I Advances, but only to the extent of amounts received which
          represent Late Collections (net of the related Servicing Fees) of
          Monthly Payments on Mortgage Loans with respect to which such P&I
          Advances were made in accordance with the provisions of Section 4.03;

               (iii) subject to Section 3.16(d), to pay the Master Servicer or
          any Sub- Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed
          Servicing Advances with respect to each Mortgage Loan, but only to the
          extent of any Late Collections, Liquidation Proceeds and Insurance
          Proceeds received with respect to such Mortgage Loan and (c) any
          Nonrecoverable Servicing Advances with respect to the final
          liquidation of a Mortgage Loan, but only to the extent that Late
          Collections, Liquidation Proceeds and Insurance Proceeds received with
          respect to such Mortgage Loan are insufficient to reimburse the Master
          Servicer or any Sub-Servicer for Servicing Advances;

               (iv) to pay to the Master Servicer as servicing compensation (in
          addition to the Servicing Fee) on the Master Servicer Remittance Date
          any interest or investment income earned on funds deposited in the
          Collection Account;

               (v) to pay to the Master Servicer, the Depositor, the Originator
          or the Seller, as the case may be, with respect to each Mortgage Loan
          that has previously been purchased or replaced pursuant to Section
          2.03 or Section 3.16(c) all amounts received thereon subsequent to the
          date of purchase or substitution, as the case may be;

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<PAGE>

               (vi) to reimburse the Master Servicer for any P&I Advance
          previously made which the Master Servicer has determined to be a
          Nonrecoverable P&I Advance in accordance with the provisions of
          Section 4.03;

               (vii) to reimburse the Master Servicer or the Depositor for
          expenses incurred by or reimbursable to the Master Servicer or the
          Depositor, as the case may be, pursuant to Section 6.03;

               (viii) to reimburse the Master Servicer, the Trustee or the Trust
          Administrator, as the case may be, for expenses reasonably incurred in
          connection with any breach or defect giving rise to the purchase
          obligation under Section 2.03 or Section 2.04 of this Agreement,
          including any expenses arising out of the enforcement of the purchase
          obligation;

               (ix) to pay, or to reimburse the Master Servicer for Servicing
          Advances in respect of, expenses incurred in connection with any
          Mortgage Loan pursuant to Section 3.16(b); and

               (x) to clear and terminate the Collection Account pursuant to
          Section 9.01.

          The Master 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, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above.
The Master Servicer shall provide written notification to the Trustee and the
Trust Administrator, on or prior to the next succeeding Master Servicer
Remittance Date, upon making any withdrawals from the Collection Account
pursuant to subclauses (vi) and (vii) above; provided that an Officer's
Certificate in the form described under Section 4.03(d) shall suffice for such
written notification to the Trustee and the Trust Administrator in respect of
clause (vi) hereof.

          (b) The Trust Administrator shall, from time to time, make withdrawals
from the Distribution Account, for any of the following purposes, without
priority:

               (i) to make distributions to Certificateholders in accordance
          with Section 4.01;

               (ii) to pay to itself and the Trustee amounts to which each is
          entitled pursuant to Section 8.05 or for Extraordinary Trust Fund
          Expenses;

               (iii) to pay to the Master Servicer on each Distribution Date as
          servicing compensation any interest or investment income earned on
          funds deposited in the Distribution Account pursuant to Section
          3.12(b);

               (iv) to reimburse itself pursuant to Section 7.02;

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               (v) to pay any amounts in respect of taxes pursuant to Section
          10.01(g)(iii);

               (vi) to pay to an Advancing Person reimbursements for P&I
          Advances and/or Servicing Advances pursuant to Section 3.26; and

               (vii) to clear and terminate the Distribution Account pursuant to
          Section 9.01.

          SECTION 3.12. Investment of Funds in the Collection Account and the
                        Distribution Account.

          (a) The Master Servicer may direct any depository institution
maintaining the Collection Account and the Distribution Account (each, for
purposes of this Section 3.12, an "Investment Account") to invest the funds
(other than the Initial Deposit) in such Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trust
Administrator is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trust Administrator is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trust
Administrator (in its capacity as such), as agent for the Trustee, or in the
name of a nominee of the Trust Administrator. The Trust Administrator shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account and the Distribution Account and any income
and gain realized thereon) over each such investment, and any certificate or
other instrument evidencing any such investment shall be delivered directly to
the Trust Administrator or its agent, together with any document of transfer
necessary to transfer title to such investment to the Trust Administrator or its
nominee. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trust
Administrator shall:

          (x)  consistent with any notice required to be given thereunder,
               demand that payment thereon be made on the last day such
               Permitted Investment may otherwise mature hereunder in an amount
               equal to the lesser of (1) all amounts then payable thereunder
               and (2) the amount required to be withdrawn on such date; and

          (y)  demand payment of all amounts due thereunder promptly upon
               determination by a Responsible Officer of the Trust Administrator
               that such Permitted Investment would not constitute a Permitted
               Investment in respect of funds thereafter on deposit in the
               Investment Account.

          (b) All income and gain realized from the investment of funds
deposited in the Collection Account, the Distribution Account and any REO
Account held by or on behalf of the Master Servicer shall be for the benefit of
the Master Servicer and shall be subject to its withdrawal

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in accordance with Section 3.11 or Section 3.23, as applicable, or withdrawal by
the Trustee or the Trust Administrator in accordance with Section 3.11 or
Section 3.25, as applicable. The Master Servicer shall deposit in the Collection
Account, the Distribution Account or any REO Account, as applicable, the amount
of any loss of principal incurred in respect of any such Permitted Investment
made with funds in such accounts immediately upon realization of such loss.

          (c) 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(v),
upon the request of the Holders of 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 3.13. [Reserved].

          SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions
                        and Fidelity Coverage.

          (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the lesser of the current principal balance
of such Mortgage Loan and the amount necessary to fully compensate for any
damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. The Master Servicer shall also cause to be
maintained fire insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property, plus accrued interest at the Mortgage Rate and related Servicing
Advances. The Master Servicer will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
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 or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the Master

                                      -77-

<PAGE>

Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the unpaid principal balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).

          In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) 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 two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.

          (b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee and the Trust Administrator. The Master
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.

          SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
                        Agreements.

          The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any

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such rights if prohibited by law from doing so. If the Master Servicer
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, or if any of the other conditions set forth in the proviso
to the preceding sentence apply, the Master Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Master Servicer
is also 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 the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Master Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption or substitution, the Master Servicer shall apply
such underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Master Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Master Servicer in respect of an assumption,
modification or substitution of liability agreement shall be retained by the
Master Servicer as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the related Mortgage Rate and the amount of the Monthly Payment) may
be amended or modified, except as otherwise required pursuant to the terms
thereof. The Master Servicer shall notify the Trustee and the Trust
Administrator that any such substitution, modification or assumption agreement
has been completed by forwarding to the Trust Administrator (with a copy to the
Trustee) the executed original of such substitution, modification or assumption
agreement, which document shall be added to the related Mortgage File and 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.

          Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master 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 by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.

          SECTION 3.16. Realization Upon Defaulted Mortgage Loans.

          (a) The Master Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, 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 pursuant to Section 3.07. The Master Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Master Servicer as contemplated in Section 3.11 and
Section 3.23. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage

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from an Uninsured Cause, the Master Servicer shall not be required to expend its
own funds toward the restoration of such property unless it shall determine in
its discretion that such restoration will increase the proceeds of liquidation
of the related Mortgage Loan after reimbursement to itself for such expenses.

          (b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Administrator, the Trust Fund or the Certificateholders
would be considered to hold title to, to be a "mortgagee-in-possession" of, or
to be an "owner" or "operator" of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Master
Servicer has also previously determined, based on its reasonable judgment and a
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:

               (1) such Mortgaged Property is in compliance with applicable
          environmental laws or, if not, that it would be in the best economic
          interest of the Trust Fund to take such actions as are necessary to
          bring the Mortgaged Property into compliance therewith; and

               (2) there are no circumstances present at such Mortgaged Property
          relating to the use, management or disposal of any hazardous
          substances, hazardous materials, hazardous wastes, or petroleum-based
          materials for which investigation, testing, monitoring, containment,
          clean-up or remediation could be required under any federal, state or
          local law or regulation, or that if any such materials are present for
          which such action could be required, that it would be in the best
          economic interest of the Trust Fund to take such actions with respect
          to the affected Mortgaged Property.

          The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

          If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall

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constitute Servicing Advances, subject to Section 4.03(d). The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the Master
Servicer, subject to the Master Servicer's right to be reimbursed therefor from
the Collection Account as provided in Section 3.11(a)(iii) and (a)(ix), such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans.

          (c) The Master Servicer may at its option purchase from REMIC I any
Mortgage Loan or related REO Property that is 90 days or more delinquent, which
the Master Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trust Administrator and the Trustee prior to purchase), at a
price equal to the Purchase Price; provided, however, that the Master Servicer
shall purchase any such Mortgage Loans or related REO Properties on the basis of
delinquency, purchasing the most delinquent Mortgage Loans or related REO
Properties first. The Purchase Price for any Mortgage Loan or related REO
Property purchased hereunder shall be deposited in the Collection Account, and
the Trust Administrator, upon receipt of written certification from the Master
Servicer of such deposit, shall release or cause to be released to the Master
Servicer the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Master Servicer shall furnish and as shall be necessary to vest in the
Master Servicer title to any Mortgage Loan or related REO Property released
pursuant hereto.

          (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: first, to
unpaid Servicing Fees; and second, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).

          SECTION 3.17. Trustee and Trust Administrator to Cooperate; Release of
                        Mortgage Files.

          (a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer will immediately
notify or cause to be notified the Trust Administrator and the Trustee by a
certification in the form of Exhibit E-2 (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.

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Upon receipt of such certification and request, the Trust Administrator shall
promptly release the related Mortgage File to the Master Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.

          (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trust Administrator
shall, upon any request made by or on behalf of the Master Servicer and delivery
to the Trust Administrator of a Request for Release in the form of Exhibit E-l,
release the related Mortgage File to the Master Servicer, and the Trustee shall,
at the direction of the Master Servicer, execute such documents as shall be
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Master Servicer to return each and every document previously
requested from the Mortgage File to the Trust Administrator when the need
therefor by the Master Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Collection Account or the Mortgage File or such document
has 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 either
judicially or non-judicially, and the Master Servicer has delivered, or caused
to be delivered, to the Trust Administrator an additional Request for Release
certifying as to such liquidation or action or proceedings. Upon the request of
the Trust Administrator or the Trustee, the Master Servicer shall provide notice
to the Trust Administrator and the Trustee of the name and address of the Person
to which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated and that all amounts received or
to be received in connection with such liquidation that are required to be
deposited into the Collection Account have been so deposited, or that such
Mortgage Loan has become an REO Property, any outstanding Requests for Release
with respect to such Mortgage Loan shall be released by the Trust Administrator
to the Master Servicer or its designee.

          (c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer or the Sub-Servicer, as the
case may be, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such certification shall
include a request that such pleadings or documents be executed by the Trustee
and a statement as to the reason such documents or pleadings are required and
that the execution and delivery thereof by the Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.

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          SECTION 3.18. Servicing Compensation.

          As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Master Servicer shall
be entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.23. The right to receive the Servicing Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.

          Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Master Servicer only to the extent such fees or charges are received by the
Master Servicer. The Master Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account, pursuant to Section 3.11 to
be paid by the Trust Administrator from the Distribution Account and pursuant to
Section 3.23(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.12 and Section 3.24. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including premiums for the insurance required by Section 3.14, to the extent
such premiums are not paid by the related Mortgagors or by a Sub-Servicer,
servicing compensation of each Sub-Servicer, and to the extent provided herein
in Section 8.05, the fees and expenses of the Trustee and the Trust
Administrator) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

          SECTION 3.19. Reports to the Trust Administrator and the Trustee;
                        Collection Account Statements.

          Not later than twenty days after each Distribution Date, the Master
Servicer shall forward to the Trust Administrator, the Trustee and the Depositor
the most current available bank statement for the Collection Account. Copies of
such statement shall be provided by the Trust Administrator to any
Certificateholder and to any Person identified to the Trust Administrator as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Master Servicer to
the Trust Administrator.

          SECTION 3.20. Statement as to Compliance.

          The Master Servicer will deliver to the Trust Administrator, the
Trustee and the Depositor not later than 90 days following the end of the fiscal
year of the Master Servicer, which as of the Closing Date ends on the last day
in December, an Officers' Certificate stating, as to each signatory thereof,
that (i) a review of the activities of the Master Servicer during the preceding
year and of performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the

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fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trust Administrator to any Certificateholder and to any Person
identified to the Trust Administrator as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Master Servicer to the Trust Administrator.

          SECTION 3.21. Independent Public Accountants' Servicing Report.

          Not later than 90 days following the end of each fiscal year of the
Master Servicer, the Master Servicer, at its expense, shall cause a nationally
recognized firm of independent certified public accountants to furnish to the
Master Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Master
Servicer which includes an assertion that the Master Servicer has complied with
certain minimum residential mortgage loan servicing standards, identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by Sub-Servicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Master Servicer shall furnish a copy of such report to the
Trust Administrator, the Trustee and each Rating Agency. Copies of such
statement shall be provided by the Trust Administrator to any Certificateholder
upon request at the Master Servicer's expense, provided that such statement is
delivered by the Master Servicer to the Trust Administrator.

          SECTION 3.22. Access to Certain Documentation.

          The Master Servicer shall provide to the Office of Thrift Supervision,
the FDIC, and any other federal or state banking or insurance regulatory
authority that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Trustee, the
Trust Administrator and to any Person identified to the Master Servicer as a
prospective transferee of a Certificate, upon reasonable request during normal
business hours at the offices of the Master Servicer designated by it at the
expense of the Person requesting such access.

          SECTION 3.23. Title, Management and Disposition of REO Property.

          (a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Master Servicer, on behalf of REMIC I, shall either sell
any REO Property within three years after REMIC I acquires

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ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, no later than 60 days before the day
on which the three-year grace period would otherwise expire, an extension of the
three-year grace period, unless the Master Servicer shall have delivered to the
Trust Administrator and the Trustee an Opinion of Counsel, addressed to the
Trust Administrator, the Trustee and the Depositor, to the effect that the
holding by REMIC I of such REO Property subsequent to three years after its
acquisition will not result in the imposition on REMIC I, REMIC II, REMIC III,
REMIC IV or REMIC V of taxes on "prohibited transactions" thereof, as defined in
Section 860F of the Code, or cause any of REMIC I, REMIC II, REMIC III, REMIC IV
or REMIC V to fail to qualify as a REMIC under Federal law at any time that any
Certificates are outstanding. The Master Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by REMIC I, REMIC II,
REMIC III, REMIC IV or REMIC V of any "income from non-permitted assets" within
the meaning of Section 860F(a)(2)(B) of the Code, or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.

          (b) The Master Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties an
account held in trust for the Trustee for the benefit of the Certificateholders
(the "REO Account"), which shall be an Eligible Account. The Master Servicer
shall be permitted to allow the Collection Account to serve as the REO Account,
subject to separate ledgers for each REO Property. The Master Servicer shall be
entitled to retain or withdraw any interest income paid on funds deposited in
the REO Account.

          (c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:

               (i) all insurance premiums due and payable in respect of such REO
          Property;

               (ii) all real estate taxes and assessments in respect of such REO
          Property that may result in the imposition of a lien thereon; and

               (iii) all costs and expenses necessary to maintain such REO
          Property.

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<PAGE>

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

          Notwithstanding the foregoing, none of the Master Servicer, the Trust
Administrator or the Trustee shall:

               (i) authorize the Trust Fund to enter into, renew or extend any
          New Lease with respect to any REO Property, if the New Lease by its
          terms will give rise to any income that does not constitute Rents from
          Real Property;

               (ii) authorize any amount to be received or accrued under any New
          Lease other than amounts that will constitute Rents from Real
          Property;

               (iii) authorize any construction on any REO Property, other than
          the completion of a building or other improvement thereon, and then
          only if more than ten percent of the construction of such building or
          other improvement was completed before default on the related Mortgage
          Loan became imminent, all within the meaning of Section 856(e)(4)(B)
          of the Code; or

               (iv) authorize any Person to Directly Operate any REO Property on
          any date more than 90 days after its date of acquisition by the Trust
          Fund;

unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trust Administrator and the Trustee, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by REMIC I, in which case the Master Servicer may take such actions
as are specified in such Opinion of Counsel.

          The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:

               (i) the terms and conditions of any such contract shall not be
          inconsistent herewith;

               (ii) any such contract shall require, or shall be administered to
          require, that the Independent Contractor pay all costs and expenses
          incurred in connection with the operation and management of such REO
          Property, including those listed above and remit all related revenues
          (net of such costs and expenses) to the Master Servicer as soon as
          practicable, but in no event later than thirty days following the
          receipt thereof by such Independent Contractor;

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<PAGE>

               (iii) none of the provisions of this Section 3.23(c) relating to
          any such contract or to actions taken through any such Independent
          Contractor shall be deemed to relieve the Master Servicer of any of
          its duties and obligations to the Trustee on behalf of the
          Certificateholders with respect to the operation and management of any
          such REO Property; and

               (iv) the Master Servicer shall be obligated with respect thereto
          to the same extent as if it alone were performing all duties and
          obligations in connection with the operation and management of such
          REO Property.

The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.

          (d) In addition to the withdrawals permitted under Section 3.23(c),
the Master Servicer may from time to time make withdrawals from the REO Account
for any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing
Fees in respect of the related Mortgage Loan; and (ii) to reimburse itself or
any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances made in
respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

          (e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its Accepted Servicing Practices.

          (f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).

          (g) The Master Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any

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Mortgaged Property and cancellation of indebtedness income with respect to any
Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.

          SECTION 3.24. Obligations of the Master Servicer in Respect of
                        Prepayment Interest Shortfalls.

          The Master Servicer shall deliver to the Trust Administrator for
deposit into the Distribution Account on or before 3:00 p.m. New York time on
the Master Servicer Remittance Date from its own funds an amount equal to the
lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from full or partial Principal Prepayments
during the related Prepayment Period and (ii) the aggregate Servicing Fee for
the related Prepayment Period. Any amounts paid by the Master Servicer pursuant
to this Section 3.24 shall not be reimbursed by REMIC I.

          SECTION 3.25. Obligations of the Master Servicer in Respect of
                        Mortgage Rates and Monthly Payments.

          In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trust Administrator for
deposit in the Distribution Account from its own funds the amount of any such
shortfall and shall indemnify and hold harmless the Trust Fund, the Trust
Administrator, the Trustee, the Depositor and any successor master servicer in
respect of any such liability. Such indemnities shall survive the termination or
discharge of this Agreement. Notwithstanding the foregoing, this Section 3.25
shall not limit the ability of the Master Servicer to seek recovery of any such
amounts from the related Mortgagor under the terms of the related Mortgage Note,
as permitted by law.

          SECTION 3.26. Advance Facility.

          (a) The Master Servicer is hereby authorized to enter into a facility
with any Person which provides that such Person (an "Advancing Person") may fund
P&I Advances and/or Servicing Advances under this Agreement, although no such
facility shall reduce or otherwise affect the Master Servicer's obligation to
fund such P&I Advances and/or Servicing Advances. To the extent that an
Advancing Person funds any P&I Advance or any Servicing Advance and provides the
Trust Administrator with notice acknowledged by the Master Servicer that such
Advancing Person is entitled to reimbursement, such Advancing Person shall be
entitled to receive reimbursement pursuant to this Agreement for such amount to
the extent provided in Section 3.26(b). Such notice from the Advancing Person
must specify the amount of the reimbursement and must specify which Section of
this Agreement permits the applicable P&I Advance or Servicing Advance to be
reimbursed. The Trust Administrator shall have no duty or liability with respect
to any calculation of any reimbursement to be paid to an Advancing Person and
shall be entitled to rely without independent investigation on the Advancing
Person's notice provided pursuant to this

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Section 3.26. An Advancing Person whose obligations hereunder are limited to the
funding of P&I Advances and/or Servicing Advances shall not be required to meet
the qualifications of a Sub- Servicer pursuant to Section 3.02 hereof.

          (b) If an Advancing Person is entitled to reimbursement for any
particular P&I Advance or Servicing Advance, then the Master Servicer shall not
be permitted to reimburse itself therefor under Section 3.11(a)(ii), Section
3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), but instead the Master
Servicer shall include such amounts in the applicable remittance to the Trust
Administrator made pursuant to Section 3.10(b) to the extent of amounts on
deposit in the Collection Account on the related Master Servicer Remittance
Date. The Trust Administrator is hereby authorized to pay to an Advancing
Person, reimbursements for P&I Advances and Servicing Advances from the
Distribution Account to the same extent the Master Servicer would have been
permitted to reimburse itself for such P&I Advances and/or Servicing Advances in
accordance with Section 3.11(a)(ii), Section 3.11(a)(iii), Section 3.11(a)(vi)
or Section 3.11(a)(ix), as the case may be, had the Master Servicer made such
Advance or Servicing Advance. Notwithstanding the foregoing, an Advancing Person
is NOT entitled to be reimbursed by the Trust Administrator from the
Distribution Account for any unreimbursed Advances from funds held in the
Collection Account for future distribution pursuant to the provisions of Section
3.11(a)(ii) and Section 3.13.

                                      -89-

<PAGE>

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

          SECTION 4.01. Distributions.

          (a)(1)(A) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-I Certificates, as the
case may be:

               (i) to the Holders of REMIC I Regular Interests (other than REMIC
          I Regular Interest I-LTP1), in an amount equal to (A) the
          Uncertificated Interest for such Distribution Date, plus (B) any
          amounts in respect thereof remaining unpaid from previous Distribution
          Dates.

               (ii) to the Holders of the REMIC I Regular Interest I-LTP1 and
          REMIC I Regular Interest I-LTP2, pro rata by principal balance, on the
          Distribution Date immediately following the expiration of the latest
          Prepayment Charge term as identified on the Mortgage Loan Schedule or
          any Distribution Date thereafter until $100 has been distributed
          pursuant to this clause.

               (iii) on each Distribution Date, to the Holders of REMIC I
          Regular Interest I-LT1 and REMIC I Regular Interest I-LT2, in an
          amount equal to the remainder of the Available Distribution Amount for
          such Distribution Date after the distributions made pursuant to clause
          (i) and clause (ii) above, allocated pro rata by principal balance,
          until the principal balances of such REMIC I Regular Interests are
          reduced to zero.

               (iv) to the Holders of the Class R-I Certificates, any amounts
          remaining after the distributions pursuant to clauses (i) through
          (iii) above.

          (B) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC II to REMIC III on account of
the REMIC II Regular Interests or withdrawn from the Distribution Account and
distributed to the holders of the Class R-II Certificates, as the case may be:

               (i) to the Holders of REMIC II Regular Interests (other than
          REMIC II Regular Interest II-LTP), in an amount equal to (A) the
          Uncertificated Interest for such Distribution Date, plus (B) any
          amounts in respect thereof remaining unpaid from previous Distribution
          Dates.

               (ii) to the Holders of the REMIC II Regular Interest II-LTP on
          the Distribution Date immediately following the expiration of the
          latest Prepayment Charge term as identified on the Mortgage Loan
          Schedule or any Distribution Date thereafter until $100 has been
          distributed pursuant to this clause.

                                      -90-

<PAGE>

               (iii) on each Distribution Date, to the Holders of REMIC II
          Regular Interests LT1 and LT2, in an amount equal to the remainder of
          the Available Distribution Amount for such Distribution Date after the
          distributions made pursuant to clause (i) and clause (ii) above,
          allocated pro rata by principal balance, until the principal balances
          of such REMIC II Regular Interests are reduced to zero.

               (iv) to the Holders of the Class R-II Certificates, any amounts
          remaining after the distributions pursuant to clauses (i) through
          (iii) above.

          (C) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC III to REMIC IV on account of
the REMIC III Regular Interests or withdrawn from the Distribution Account and
distributed to the holders of the Class R- III Certificates, as the case may be:

               (i) to the Holders of REMIC III Regular Interests (other than
          REMIC III Regular Interest III-LTP), in an amount equal to (A) the
          Uncertificated Interest for such Distribution Date, plus (B) any
          amounts in respect thereof remaining unpaid from previous Distribution
          Dates. Amounts payable as Uncertificated Interest in respect of REMIC
          III Regular Interest III-LT6 shall be reduced when the REMIC III
          Overcollateralized Amount is less than the REMIC III Required
          Overcollateralized Amount, by the lesser of (x) the amount of such
          difference and (y) the Maximum III- LT6 Uncertificated Interest
          Deferral Amount; and

               (ii) on each Distribution Date, to the Holders of REMIC III
          Regular Interests, in an amount equal to the remainder of the
          Available Distribution Amount for such Distribution Date after the
          distributions made pursuant to clause (i) above, allocated as follows
          (except as provided below):

                    (a) to the Holders of the REMIC III Regular Interest
               III-LTP, on the Distribution Date immediately following the
               expiration of the latest Prepayment Charge term as identified on
               the Mortgage Loan Schedule or any Distribution Date thereafter
               until $100 has been distributed pursuant to this clause;

                    (b) to the Holders of the REMIC III Regular Interest
               III-LT1, 98.00% of the amount remaining after application of
               clause (a), until the Uncertificated Balance of such REMIC III
               Regular Interest is reduced to zero and any remaining amount to
               the Holders of the Class R-III Certificates;

                    (c) to the Holders of the REMIC III Regular Interest
               III-LT2, REMIC III Regular Interest III-LT3, REMIC III Regular
               Interest III-LT4 and REMIC III Regular Interest III-LT5, 1.00% of
               the amount remaining after application of clause (a), in the same
               proportion as principal payments are allocated to the
               Corresponding Certificates, until the Uncertificated Balances of
               such REMIC III Regular Interests are reduced to zero and any
               remaining amount to the Holders of the Class R-III Certificates;
               and

                                      -91-

<PAGE>

                    (d) to the Holders of the REMIC III Regular Interest
               III-LT6, 1.00% of the amount remaining after application of
               clause (a), until the Uncertificated Balance of such REMIC III
               Regular Interest is reduced to zero and any remaining amount to
               the Holders of the Class R-III Certificates;

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to a Overcollateralization Reduction Amount shall be allocated to
Holders of the REMIC III Regular Interest III-LT1 and REMIC III Regular Interest
III-LT6, respectively.

          (D) On each Distribution Date, the following amounts shall be
distributed by REMIC IV to REMIC V on account of the REMIC IV Regular Interests
or withdrawn from the Distribution Account and distributed to the holders of the
Class R-IV Certificates as the case may be:

               (i) any amounts paid as either Uncertificated Interest paid or
          accrued to the REMIC III Regular Interests (other than REMIC III
          Regular Interest III-LTP) shall be deemed to have been paid to the
          related Uncertificated Corresponding Component in REMIC IV in
          accordance with the REMIC IV Remittance Rates and any amounts deferred
          on REMIC III Regular Interest III-LT6 pursuant to Section
          4.01(a)(1)(A) shall be deemed to have been deferred with respect to
          REMIC IV Regular Interest IV-LT6;

               (ii) any amounts paid as principal on the REMIC III Regular
          Interests shall be deemed to have been paid to the related
          Uncertificated Corresponding Component in REMIC IV in accordance with
          the same priorities and conditions; and

               (iii) any remaining amounts to the Holders of the Class R-IV
          Certificates.

          (2) On each Distribution Date, the Trust Administrator shall withdraw
from the Distribution Account an amount equal to the Interest Remittance Amount
and distribute to the Certificateholders the following amounts, in the following
order of priority:

               (i) CONCURRENTLY, to the Holders of the Class A Certificates and
          the Class IO Certificates, an amount equal to the related Senior
          Interest Distribution Amount, any shortfall being allocated between
          the Class A Certificates and the Class IO Certificates PRO RATA on the
          basis of their respective Senior Interest Distribution Amounts before
          reduction;

               (ii) to the Holders of the Class M-1 Certificates, an amount
          equal to the Interest Distribution Amount allocable to the Class M-1
          Certificates;

               (iii) to the Holders of the Class M-2 Certificates, an amount
          equal to the Interest Distribution Amount allocable to the Class M-2
          Certificates; and

               (iv) to the Holders of the Class M-3 Certificates, an amount
          equal to the Interest Distribution Amount allocable to the Class M-3
          Certificates.

                                      -92-

<PAGE>

          (3) On each Distribution Date, the Trust Administrator shall withdraw
from the Distribution Account an amount equal to the Principal Distribution
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:

               (i) On each Distribution Date (a) prior to the Stepdown Date or
          (b) on which a Trigger Event is in effect, the Principal Distribution
          Amount shall be distributed in the following order of priority;

               FIRST, to the Holders of the Class A Certificates, until the
               Certificate Principal Balance of such Class has been reduced to
               zero;

               SECOND, to the Holders of the Class M-1 Certificates, until the
               Certificate Principal Balance of such Class has been reduced to
               zero;

               THIRD, to the Holders of the Class M-2 Certificates, until the
               Certificate Principal Balance of such Class has been reduced to
               zero; and

               FOURTH, to the Holders of the Class M-3 Certificates, until the
               Certificate Principal Balance of such Class has been reduced to
               zero.

               (ii) On each Distribution Date (a) on or after the Stepdown Date
          and (b) on which a Trigger Event is not in effect, the Principal
          Distribution Amount shall be distributed in the following order of
          priority;

               FIRST, the lesser of (x) the Principal Distribution Amount and
               (y) the Class A Principal Distribution Amount shall be
               distributed to the Holders of the Class A Certificates, until the
               Certificate Principal Balance of such Class has been reduced to
               zero;

               SECOND, the lesser of (x) the excess of (i) the Principal
               Distribution Amount over (ii) the amount distributed to the
               Holders of the Class A Certificates pursuant to clause first
               above and (y) the Class M-1 Principal Distribution Amount shall
               be distributed to the Holders of the Class M-1 Certificates,
               until the Certificate Principal Balance of such Class has been
               reduced to zero;

               THIRD, the lesser of (x) the excess of (i) the Principal
               Distribution Amount over (ii) the sum of the amounts distributed
               to the Holders of the Class A Certificates pursuant to clause
               first above and to the Holders of the Class M-1 Certificates
               pursuant to clause second above and (y) the Class M-2 Principal
               Distribution Amount shall be distributed to the Holders of the
               Class M-2 Certificates, until the Certificate Principal Balance
               of such Class has been reduced to zero; and

               FOURTH, the lesser of (x) the excess of (i) the Principal
               Distribution Amount over (ii) the sum of the amounts distributed
               to the Holders of the Class A Certificates pursuant to clause
               first above, to the Holders of the Class M-1

                                      -93-

<PAGE>

               Certificates pursuant to clause second above and to the Holders
               of the Class M-2 Certificates pursuant to clause third above and
               (y) the Class M-3 Principal Distribution Amount shall be
               distributed to the Holders of the Class M-3 Certificates, until
               the Certificate Principal Balance of such Class has been reduced
               to zero.

          (4) On each Distribution Date, the Net Monthly Excess Cashflow (or, in
the case of clause (i) below, the Net Monthly Excess Cashflow exclusive of any
Overcollateralization Reduction Amount) shall be distributed as follows:

               (i) to the Holders of the Class or Classes of Certificates then
               entitled to receive distributions in respect of principal, in an
               amount equal to the principal portion of any Realized Losses
               incurred or deemed to have been incurred on the Mortgage Loans,
               applied to reduce the Certificate Principal Balance of such
               Certificates until the aggregate Certificate Principal Balance of
               such Certificates is reduced to zero;

               (ii) to the Holders of the Class or Classes of Certificates then
               entitled to receive distributions in respect of principal, in an
               amount equal to the Overcollateralization Increase Amount,
               applied to reduce the Certificate Principal Balance of such
               Certificates until the aggregate Certificate Principal Balance of
               such Certificates is reduced to zero;

               (iii) to the Holders of the Class M-1 Certificates, in an amount
               equal to the Interest Carry Forward Amount allocable to such
               Class of Certificates;

               (iv) to the Holders of the Class M-2 Certificates, in an amount
               equal to the Interest Carry Forward Amount allocable to such
               Class of Certificates;

               (v) to the Holders of the Class M-3 Certificates, in an amount
               equal to the Interest Carry Forward Amount allocable to such
               Class of Certificates;

               (vi) CONCURRENTLY, to the Holders of the Class A Certificates and
               the Class IO Certificates PRO RATA, in an amount equal to the
               aggregate of any Prepayment Interest Shortfalls (to the extent
               not covered by payments pursuant to Section 3.24) and any Relief
               Act Interest Shortfall allocated to such Certificates;

               (vii) to the Holders of the Class M-1 Certificates, in an amount
               equal to the aggregate of any Prepayment Interest Shortfalls (to
               the extent not covered by payments pursuant to Section 3.24) and
               any Relief Act Interest Shortfall allocated to such Certificates;

               (viii) to the Holders of the Class M-2 Certificates, in an amount
               equal to the aggregate of any Prepayment Interest Shortfalls (to
               the extent not covered by

                                      -94-

<PAGE>

               payments pursuant to Section 3.24) and any Relief Act Interest
               Shortfall allocated to such Certificates;

               (ix) to the Holders of the Class M-3 Certificates, in an amount
               equal to the aggregate of any Prepayment Interest Shortfalls (to
               the extent not covered by payments pursuant to Section 3.24) and
               any Relief Act Interest Shortfall allocated to such Certificates;

               (x) to the Holders of the Class CE Certificates the Interest
               Distribution Amount and any Overcollateralization Reduction
               Amount for such Distribution Date; and

               (xi) to the Holders of the Class R-V Certificates, any remaining
               amounts; provided that if such Distribution Date is the
               Distribution Date immediately following the expiration of the
               latest Prepayment Charge term as identified on the Mortgage Loan
               Schedule or any Distribution Date thereafter, then any such
               remaining amounts will be distributed FIRST, to the Holders of
               the Class P Certificates, until the Certificate Principal Balance
               thereof has been reduced to zero; and SECOND, to the Holders of
               the Class R-V Certificates.

          (b) On each Distribution Date, the Trust Administrator shall withdraw
any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by the Master Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans or any Master Servicer
Prepayment Charge Payment Amount and shall distribute such amounts to the
Holders of the Class P Certificates. Such distributions shall not be applied to
reduce the Certificate Principal Balance of the Class P Certificates.

          (c) All distributions made with respect to each Class of Certificates
on each Distribution Date shall be allocated PRO RATA among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in Section 4.01(e) or Section 9.01 respecting
the final distribution on such Class), based on the aggregate Percentage
Interest represented by their respective Certificates, and shall be made by wire
transfer of immediately available funds to the account of any such Holder at a
bank or other entity having appropriate facilities therefor, if such Holder
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Certificates having an initial aggregate Certificate
Principal Balance or Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal Balance or
Notional Amount of such Class of Certificates, or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trust Administrator or such other location
specified in the notice to Certificateholders of such final distribution.

                                      -95-

<PAGE>

          Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trust Administrator,
the Trustee, the Depositor or the Master Servicer shall have any responsibility
therefor except as otherwise provided by this Agreement or applicable law.

          (d) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the Holders of
any Class of Certificates, the Trust Administrator, the Trustee or the Master
Servicer shall in any way be responsible or liable to the Holders of any other
Class of Certificates in respect of amounts properly previously distributed on
the Certificates.

          (e) Except as otherwise provided in Section 9.01, whenever the Trust
Administrator expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trust Administrator
shall, no later than three (3) days before the related Distribution Date, mail
to each Holder on such date of such Class of Certificates a notice to the effect
that:

          (i) the Trust Administrator expects that the final distribution with
     respect to such Class of Certificates will be made on such Distribution
     Date but only upon presentation and surrender of such Certificates at the
     office of the Trust Administrator therein specified, and

          (ii) no interest shall accrue on such Certificates from and after the
     end of the related Interest Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trust Administrator and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(e) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trust Administrator shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trust Administrator shall, directly or through an agent, mail
a final notice to the remaining non-tendering Certificateholders concerning
surrender of their Certificates but shall continue to hold any remaining funds
for the benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trust Administrator shall pay to Salomon
Smith Barney Inc. all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trust

                                      -96-

<PAGE>

Administrator as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(e). Any such amounts held in trust by the Trust Administrator shall be held
in an Eligible Account and the Trust Administrator may direct any depository
institution maintaining such account to invest the funds in one or more
Permitted Investments. All income and gain realized from the investment of funds
deposited in such accounts held in trust by the Trust Administrator shall be for
the benefit of the Trust Administrator; provided, however, that the Trust
Administrator shall deposit in such account the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon the realization of such loss.

          (f) Notwithstanding anything to the contrary herein, (i) in no event
shall the Certificate Principal Balance of a Class A Certificate or a Mezzanine
Certificate be reduced more than once in respect of any particular amount both
(a) allocated to such Certificate in respect of Realized Losses pursuant to
Section 4.04 and (b) distributed to the Holder of such Certificate in reduction
of the Certificate Principal Balance thereof pursuant to this Section 4.01 from
Net Monthly Excess Cashflow and (ii) in no event shall the Uncertificated
Balance of a REMIC III Regular Interest be reduced more than once in respect of
any particular amount both (a) allocated to such REMIC III Regular Interest in
respect of Realized Losses pursuant to Section 4.04 and (b) distributed on such
REMIC III Regular Interest in reduction of the Uncertificated Balance thereof
pursuant to this Section 4.01.

          SECTION 4.02. Statements to Certificateholders.

          On each Distribution Date, the Trust Administrator shall prepare and
forward by mail to each Holder of the Regular Certificates, a statement as to
the distributions made on such Distribution Date setting forth:

               (i) the amount of the distribution made on such Distribution Date
          to the Holders of the Certificates of each Class allocable to
          principal, and the amount of the distribution made on such
          Distribution Date to the Holders of the Class P Certificates allocable
          to Prepayment Charges;

               (ii) the amount of the distribution made on such Distribution
          Date to the Holders of the Certificates of each Class allocable to
          interest;

               (iii) the aggregate Servicing Fee received by the Master Servicer
          during the related Due Period and such other customary information as
          the Trust Administrator deems necessary or desirable, or which a
          Certificateholder reasonably requests, to enable Certificateholders to
          prepare their tax returns;

               (iv) the aggregate amount of P&I Advances for such Distribution
          Date;

               (v) the aggregate Stated Principal Balance of the Mortgage Loans
          and any REO Properties as of the close of business on such
          Distribution Date;

                                      -97-

<PAGE>

               (vi) the number, aggregate principal balance, weighted average
          remaining term to maturity and weighted average Mortgage Rate of the
          Mortgage Loans as of the related Due Date;

               (vii) the number and aggregate unpaid principal balance of
          Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
          days, (c) delinquent 90 or more days, in each case, as of the last day
          of the preceding calendar month, (d) as to which foreclosure
          proceedings have been commenced and (e) with respect to which the
          related Mortgagor has filed for protection under applicable bankruptcy
          laws, with respect to whom bankruptcy proceedings are pending or with
          respect to whom bankruptcy protection is in force;

               (viii) with respect to any Mortgage Loan that became an REO
          Property during the preceding calendar month, the loan number of such
          Mortgage Loan, the unpaid principal balance and the Stated Principal
          Balance of such Mortgage Loan as of the date it became an REO
          Property;

               (ix) the book value of any REO Property as of the close of
          business on the last Business Day of the calendar month preceding the
          Distribution Date;

               (x) the aggregate amount of Principal Prepayments made during the
          related Prepayment Period;

               (xi) the aggregate amount of Realized Losses incurred during the
          related Prepayment Period (or, in the case of Bankruptcy Losses
          allocable to interest, during the related Due Period), separately
          identifying whether such Realized Losses constituted Bankruptcy Losses
          and the aggregate amount of Realized Losses incurred since the Closing
          Date;

               (xii) the aggregate amount of Extraordinary Trust Fund Expenses
          withdrawn from the Collection Account or the Distribution Account for
          such Distribution Date;

               (xiii) the aggregate Certificate Principal Balance and Notional
          Amount, as applicable, of each Class of Certificates, after giving
          effect to the distributions, and allocations of Realized Losses, made
          on such Distribution Date, separately identifying any reduction
          thereof due to allocations of Realized Losses;

               (xiv) the Certificate Factor for each such Class of Certificates
          applicable to such Distribution Date;

               (xv) the Interest Distribution Amount in respect of the Class A
          Certificates, the Mezzanine Certificates, the Class IO Certificates
          and the Class CE Certificates for such Distribution Date and the
          Interest Carry Forward Amount, if any, with respect to the Class A
          Certificates, the Mezzanine Certificates and the Class IO Certificates
          on such Distribution Date, and in the case of the Class A
          Certificates, the

                                      -98-

<PAGE>

          Mezzanine Certificates, the Class IO Certificates and the Class CE
          Certificates, separately identifying any reduction thereof due to
          allocations of Realized Losses, Prepayment Interest Shortfalls and
          Relief Act Interest Shortfalls;

               (xvi) the aggregate amount of any Prepayment Interest Shortfall
          for such Distribution Date, to the extent not covered by payments by
          the Master Servicer pursuant to Section 3.24;

               (xvii) the aggregate amount of Relief Act Interest Shortfalls for
          such Distribution Date;

               (xviii) the Required Overcollateralized Amount and the Credit
          Enhancement Percentage for such Distribution Date;

               (xix) the Overcollateralization Increase Amount, if any, for such
          Distribution Date;

               (xx) the Overcollateralization Reduction Amount, if any, for such
          Distribution Date;

               (xxi) the respective Pass-Through Rates applicable to the Class A
          Certificates, the Mezzanine Certificates, the Class IO Certificates
          and the Class CE Certificates for such Distribution Date and the
          Pass-Through Rate applicable to the Class A Certificates and the
          Mezzanine Certificates for the immediately succeeding Distribution
          Date;

               (xxii) the Loss Severity Percentage with respect to each Mortgage
          Loan; and

               (xxiii) the Aggregate Loss Severity Percentage.

          In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

          Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to each Person who at any time
during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trust Administrator
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trust Administrator pursuant to
any requirements of the Code as from time to time are in force.

          On each Distribution Date, the Trust Administrator shall forward to
the Depositor, the Trustee, to each Holder of a Residual Certificate and to the
Master Servicer, a copy of the reports forwarded to the Regular
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.

                                      -99-

<PAGE>

          Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to each Person who at any time
during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.

          The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trust Administrator's duties are limited to
the extent that the Trust Administrator receives timely reports as required from
the Master Servicer.

          On each Distribution Date the Trust Administrator shall provide
Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each
class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Trust Administrator and Bloomberg.

          SECTION 4.03. Remittance Reports; P&I Advances.

          (a) On the Business Day following each Determination Date, the Master
Servicer shall deliver to the Trust Administrator and the Trustee by telecopy
(or by such other means as the Master Servicer, the Trust Administrator or the
Trustee, as the case may be, may agree from time to time) a Remittance Report
with respect to the related Distribution Date. On the same date, the Master
Servicer shall forward to the Trust Administrator by overnight mail a computer
readable magnetic tape containing the information set forth in such Remittance
Report with respect to the related Distribution Date. Such Remittance Report
will include (i) the amount of P&I Advances to be made by the Master Servicer in
respect of the related Distribution Date, the aggregate amount of P&I Advances
outstanding after giving effect to such P&I Advances, and the aggregate amount
of Nonrecoverable P&I Advances in respect of such Distribution Date and (ii)
such other information with respect to the Mortgage Loans as the Trust
Administrator may reasonably require to perform the calculations necessary to
make the distributions contemplated by Section 4.01 and to prepare the
statements to Certificateholders contemplated by Section 4.02. The Trust
Administrator shall not be responsible (except with regard to any information
regarding the Prepayment Charges to the extent set forth below) to recompute,
recalculate or verify any information provided to it by the Master Servicer.
Notwithstanding the foregoing, in connection with any Principal Prepayment on
any Mortgage Loan listed on Schedule 2 hereto, the Trust Administrator shall
verify that the related Prepayment Charge was delivered to the Trust
Administrator for deposit in the Distribution Account in the amount set forth on
such Schedule 2 or that such Prepayment Charge was waived in accordance with the
terms hereof.

          (b) The amount of P&I Advances to be made by the Master Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of (i)
the aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the

                                      -100-

<PAGE>

related Due Date in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Prepayment Period and as to which REO Property an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

          On or before 3:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Distribution Account an amount equal to
the aggregate amount of P&I Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Master Servicer in discharge of any such P&I Advance) or (iii) in the form of
any combination of (i) and (ii) aggregating the total amount of P&I Advances to
be made by the Master Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trust
Administrator will provide notice to the Trustee and the Master Servicer by
telecopy by the close of business on the third Business Day prior to the
Distribution Date in the event that the amount remitted by the Master Servicer
to the Trust Administrator on such date is less than the P&I Advances required
to be made by the Master Servicer for the related Distribution Date.

          (c) The obligation of the Master Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.

          (d) Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the Master Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor, the
Trust Administrator and the Trustee.

                                      -101-

<PAGE>

          SECTION 4.04. Allocation of Realized Losses.

          (a) Prior to each Determination Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Master Servicer
shall also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the Trust Administrator and
the Trustee by the Master Servicer prior to the Determination Date immediately
following the end of (i) in the case of Bankruptcy Losses allocable to interest,
the Due Period during which any such Realized Loss was incurred, and (ii) in the
case of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.

          (b) All Realized Losses on the Mortgage Loans shall be allocated by
the Trust Administrator on each Distribution Date as follows: first, to Net
Monthly Excess Cashflow; second, to the Class CE Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-3 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All references
above to the Certificate Principal Balance of any Class of Certificates shall be
to the Certificate Principal Balance of such Class immediately prior to the
relevant Distribution Date, before reduction thereof by any Realized Losses, in
each case to be allocated to such Class of Certificates, on such Distribution
Date.

          Any allocation of Realized Losses to a Mezzanine Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated; any allocation of Realized Losses to a Class
CE Certificate shall be made by reducing the amount otherwise payable in respect
thereof pursuant to Section 4.01(a)(4)(x). No allocations of any Realized Losses
shall be made to the Certificate Principal Balances of the Class A Certificates
or the Class P Certificates.

          As used herein, an allocation of a Realized Loss on a "PRO RATA basis"
among two or more specified Classes of Certificates means an allocation on a PRO
RATA basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.

                                      -102-

<PAGE>

          (c) All Realized Losses on the Mortgage Loans shall be allocated by
the Trust Administrator on each Distribution Date to the REMIC I Regular
Interest I-LT1 and REMIC I Regular Interest I-LT2 on a PRO RATA basis based on
their respective Uncertificated Balances.

          (d) All Realized Losses on the Mortgage Loans shall be allocated by
the Trust Administrator on each Distribution Date to the REMIC II Regular
Interest II-LT1 and REMIC II Regular Interest II-LT2 on a PRO RATA basis based
on their respective Uncertificated Balances.

          (e) All Realized Losses on the Mortgage Loans shall be allocated by
the Trust Administrator on each Distribution Date to the following REMIC III
Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC III Regular Interest III-LT1 and
REMIC III Regular Interest III-LT6 up to an aggregate amount equal to the REMIC
III Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of the REMIC III Regular Interest III-LT1 and REMIC III
Regular Interest III-LT6 up to an aggregate amount equal to the REMIC III
Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Balances of REMIC III Regular Interest III-LT1, REMIC III Regular
Interest III-LT5 and REMIC III Regular Interest III-LT6, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC III Regular Interest
III-LT5 has been reduced to zero; fourth to the Uncertificated Balances of REMIC
III Regular Interest III-LT1, REMIC III Regular Interest III-LT4 and REMIC III
Regular Interest III-LT6, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC III Regular Interest III-LT4 has been reduced to zero; fifth to
the Uncertificated Balances of REMIC III Regular Interest III-LT1, REMIC III
Regular Interest III-LT3 and REMIC III Regular Interest III-LT6, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC III Regular Interest
III-LT3 has been reduced to zero.

          (f) All Realized Losses on the REMIC IV Regular Interests shall be
allocated by the Trust Administrator on each Distribution Date among the REMIC
IV Regular Interests in the proportion that Realized Losses are allocated to the
related Uncertificated Corresponding Component.

          As used herein, an allocation of a Realized Loss on a "PRO RATA basis"
among the REMIC III Regular Interests (other than REMIC III Regular Interest
III-LTP) means an allocation on a PRO RATA basis among the REMIC III Regular
Interests (other than REMIC III Regular Interest III-LTP) on the basis of their
then outstanding Uncertificated Balances, in each case prior to giving effect to
distributions to be made on such Distribution Date.

          SECTION 4.05. Compliance with Withholding Requirements .

          Notwithstanding any other provision of this Agreement, the Trust
Administrator shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trust Administrator reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding. In the
event the Trust Administrator does withhold any amount from interest or original
issue discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trust Administrator shall indicate the
amount withheld to such Certificateholders.

                                      -103-

<PAGE>

          SECTION 4.06. Exchange Commission; Additional Information.

          Within 15 days after each Distribution Date, the Trust Administrator
shall file with the Commission via the Electronic Data Gathering and Retrieval
System, a Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an exhibit thereto. Prior to January 30, 2001, the Trust
Administrator shall file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 30, 2001, the Trust Administrator
shall file a Form 10-K, substantially in the form attached hereto as Exhibit H,
with respect to the Trust Fund. The Depositor hereby grants to the Trust
Administrator a limited power of attorney to execute and file each such document
on behalf of the Depositor. Such power of attorney shall continue until the
earlier of (i) receipt by the Trust Administrator from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. Upon request, the Trust Administrator shall deliver to the Depositor a
copy of any Form 8-K or Form 10-K filed pursuant to this Section 4.06.

                                      -104-

<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

          SECTION 5.01. The Certificates.

          (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

          The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-9. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.

          Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or the Trust Administrator to or upon
the order of the Depositor. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee or the Trust Administrator by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee or the Trust Administrator
by manual signature, and such certificate of authentication 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.

          (b) The Class A Certificates and the Mezzanine Certificates shall
initially be issued as one or more Certificates held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository and
registered in the name of the Depository or its nominee and, except as provided
below, registration of such Certificates may not be transferred by the Trust
Administrator except to another Depository that agrees to hold such Certificates
for the respective Certificate Owners with Ownership Interests therein. The
Certificate Owners shall hold their respective Ownership Interests in and to
such Certificates through the book-entry facilities of the Depository and,
except as provided below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures. The Trust Administrator is hereby initially
appointed as the Book-Entry Custodian and hereby agrees to act as such in
accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act

                                      -105-

<PAGE>

as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer, the Trustee and, if the Trust
Administrator is not the Book-Entry Custodian, the Trust Administrator, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor trust administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor's duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

          The Trust Administrator, the Trustee, the Master Servicer and the
Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trust Administrator may establish a
reasonable record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository of such
record date.

          If (i)(A) the Depositor advises the Trust Administrator in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Master Servicer Event
of Default, Certificate Owners representing in the aggregate not less than 51%
of the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $10,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $10,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Master Servicer, the Trust Administrator or the Trustee shall be liable for any
delay in the delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon

                                      -106-

<PAGE>

and performed by the Trust Administrator, to the extent applicable with respect
to such Definitive Certificates, and the Trust Administrator shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.

          SECTION 5.02. Registration of Transfer and Exchange of Certificates.

          (a) The Trust Administrator shall cause to be kept at one of the
offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11, a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.

          (b) No transfer of any Class IO Certificate, Class CE Certificate,
Class P Certificate or Residual Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class IO Certificate, Class CE Certificate,
Class P Certificate or Residual Certificate is to be made without registration
or qualification (other than in connection with the initial transfer of any such
Certificate by the Depositor to an affiliate of the Depositor), the Trust
Administrator shall require receipt of: (i) if such transfer is purportedly
being made in reliance upon Rule 144A under the 1933 Act, written certifications
from the Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the forms attached
hereto as Exhibit F-1; and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trust Administrator, the Trustee, the Master
Servicer in its capacity as such or any Sub-Servicer), together with copies of
the written certification(s) of the Certificateholder desiring to effect the
transfer and/or such Certificateholder's prospective transferee upon which such
Opinion of Counsel is based, if any. None of the Depositor, the Trust
Administrator or the Trustee is obligated to register or qualify any such
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of any such Certificate shall, and does hereby
agree to, indemnify the Trust Administrator, the Trustee, the Depositor and the
Master Servicer 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.

          (c) No transfer of a Mezzanine Certificate, Class CE Certificate,
Class P Certificate or Residual Certificate or any interest therein shall be
made to any Plan subject to ERISA or Section 4975 of the Code, any Person
acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C.F.R. ss. 2510.3-101
("Plan Assets") unless the Depositor, the Trust Administrator, the Trustee and
the Master Servicer are provided with an Opinion of Counsel which establishes to
the satisfaction of the Depositor, the Trust Administrator, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trust Administrator,

                                      -107-

<PAGE>

the Trustee or the Trust Fund to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Depositor, the Master Servicer, the Trust Administrator, the
Trustee or the Trust Fund. In the case of the Mezzanine Certificates, in lieu of
such Opinion of Counsel, any prospective Transferee of such Certificates may
provide a certification (which in the case of the Mezzanine Certificates sold in
book-entry form, the Transferee will be deemed to have represented such
certification) in the form of Exhibit G to this Agreement (or other form
acceptable to the Depositor, the Trust Administrator, the Trustee and the Master
Servicer), which the Trust Administrator may rely upon without further inquiry
or investigation. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that such affiliate is
not a Plan or a Person investing Plan Assets) and the Trust Administrator shall
be entitled to conclusively rely upon a representation (which, upon the request
of the Trust Administrator, shall be a written representation) from the
Depositor of the status of such transferee as an affiliate of the Depositor.

          If any Mezzanine Certificate, Class CE Certificate, Class P
Certificate or Residual Certificate or any interest therein is acquired or held
in violation of the provisions of the preceding paragraph, the next preceding
permitted beneficial owner will be treated as the beneficial owner of that
Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, the
Master Servicer, the Trust Administrator, the Trustee and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by those
parties as a result of that acquisition or holding.

          (d) (i) Each Person who has or who acquires any Ownership Interest in
a Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trust Administrator or its designee under clause
(iii)(A) below to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of Transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:

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

                    (B) In connection with any proposed Transfer of any
               Ownership Interest in a Residual Certificate, the Trust
               Administrator shall require delivery to it, and shall not
               register the Transfer of any Residual Certificate until its
               receipt of, an affidavit and agreement (a "Transfer Affidavit and
               Agreement," in the form attached hereto as Exhibit F-2) from the
               proposed Transferee, in form and substance satisfactory to the
               Trust Administrator,

                                      -108-

<PAGE>

               representing and warranting, among other things, that such
               Transferee is a Permitted Transferee, that it is not acquiring
               its Ownership Interest in the Residual Certificate that is the
               subject of the proposed Transfer as a nominee, trustee or agent
               for any Person that is not a Permitted Transferee, that for so
               long as it retains its Ownership Interest in a Residual
               Certificate, it will endeavor to remain a Permitted Transferee,
               and that it has reviewed the provisions of this Section 5.02(d)
               and agrees to be bound by them.

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

                    (D) Each Person holding or acquiring any Ownership Interest
               in a Residual Certificate shall agree (x) to require a Transfer
               Affidavit and Agreement in the form attached hereto as Exhibit
               F-2 from any other Person to whom such Person attempts to
               transfer its Ownership Interest in a Residual Certificate and (y)
               not to transfer its Ownership Interest unless it provides a
               Transferor Affidavit (in the form attached hereto as Exhibit F-2)
               to the Trust Administrator stating that, among other things, it
               has no actual knowledge that such other Person is not a Permitted
               Transferee.

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

               (ii) The Trust Administrator will register the Transfer of any
          Residual Certificate only if it shall have received the Transfer
          Affidavit and Agreement and all of such other documents as shall have
          been reasonably required by the Trust Administrator as a condition to
          such registration. In addition, no Transfer of a Residual Certificate
          shall be made unless the Trust Administrator shall have received a
          representation letter from the Transferee of such Certificate to the
          effect that such Transferee is a Permitted Transferee.

               (iii) (A) If any purported Transferee shall become a Holder of
          a Residual Certificate in violation of the provisions of this Section
          5.02(d), then the last preceding Permitted Transferee shall be
          restored, to the extent permitted by law, to all rights as holder
          thereof retroactive to the date of registration of such Transfer of
          such Residual Certificate. The Trust Administrator shall be under no
          liability to any Person for any registration of Transfer of a Residual
          Certificate that is in fact not

                                      -109-

<PAGE>

          permitted by this Section 5.02(d) or for making any payments due on
          such Certificate to the holder thereof or for taking any other action
          with respect to such holder under the provisions of this Agreement.

                     (B) If any purported Transferee shall become a holder of a
          Residual Certificate in violation of the restrictions in this Section
          5.02(d) and to the extent that the retroactive restoration of the
          rights of the holder of such Residual Certificate as described in
          clause (iii)(A) above shall be invalid, illegal or unenforceable, then
          the Trust Administrator shall have the right, without notice to the
          holder or any prior holder of such Residual Certificate, to sell such
          Residual Certificate to a purchaser selected by the Trust
          Administrator on such terms as the Trust Administrator may choose.
          Such purported Transferee shall promptly endorse and deliver each
          Residual Certificate in accordance with the instructions of the Trust
          Administrator. Such purchaser may be the Trust Administrator itself or
          any Affiliate of the Trust Administrator. The proceeds of such sale,
          net of the commissions (which may include commissions payable to the
          Trust Administrator or its Affiliates), expenses and taxes due, if
          any, will be remitted by the Trust Administrator to such purported
          Transferee. The terms and conditions of any sale under this clause
          (iii)(B) shall be determined in the sole discretion of the Trust
          Administrator, and the Trust Administrator shall not be liable to any
          Person having an Ownership Interest in a Residual Certificate as a
          result of its exercise of such discretion.

               (iv) The Trust Administrator shall make available to the Internal
          Revenue Service and those Persons specified by the REMIC Provisions
          all information necessary to compute any tax imposed (A) as a result
          of the Transfer of an Ownership Interest in a Residual Certificate to
          any Person who is a Disqualified Organization, including the
          information described in Treasury regulations sections 1.860D-1(b)(5)
          and 1.860E-2(a)(5) with respect to the "excess inclusions" of such
          Residual Certificate and (B) as a result of any regulated investment
          company, real estate investment trust, common trust fund, partnership,
          trust, estate or organization described in Section 1381 of the Code
          that holds an Ownership Interest in a Residual Certificate having as
          among its record holders at any time any Person which is a
          Disqualified Organization. Reasonable compensation for providing such
          information may be accepted by the Trust Administrator.

               (v) The provisions of this Section 5.02(d) set forth prior to
          this subsection (v) may be modified, added to or eliminated, provided
          that there shall have been delivered to the Trust Administrator at the
          expense of the party seeking to modify, add to or eliminate any such
          provision the following:

                    (A) written notification from each Rating Agency to the
               effect that the modification, addition to or elimination of such
               provisions will not cause such Rating Agency to downgrade its
               then-current ratings of any Class of Certificates; and

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<PAGE>

                    (B) an Opinion of Counsel, in form and substance
               satisfactory to the Trust Administrator, to the effect that such
               modification of, addition to or elimination of such provisions
               will not cause any of REMIC I, REMIC II, REMIC III, REMIC IV or
               REMIC V to cease to qualify as a REMIC and will not cause any of
               REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V, as the case
               may be, to be subject to an entity-level tax caused by the
               Transfer of any Residual Certificate to a Person that is not a
               Permitted Transferee or a Person other than the prospective
               transferee to be subject to a REMIC-tax caused by the Transfer of
               a Residual Certificate to a Person that is not a Permitted
               Transferee.

          (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trustee,
or the Trust Administrator on behalf of the Trustee shall execute, and the
Trustee or the Trust Administrator shall authenticate and deliver, in the name
of the designated Transferee or Transferees, one or more new Certificates of the
same Class of a like aggregate Percentage Interest.

          (f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Trust Administrator maintained for
such purpose pursuant to Section 8.11. Whenever any Certificates are so
surrendered for exchange, the Trustee, or the Trust Administrator on behalf of
the Trustee, shall execute, and the Trustee or the Trust Administrator shall
authenticate and deliver, the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall (if so required by the Trust Administrator) be
duly endorsed by, or be accompanied by a written instrument of transfer in the
form satisfactory to the Trust Administrator duly executed by, the Holder
thereof or his attorney duly authorized in writing.

          (g) No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trust Administrator may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.

          (h) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Trust Administrator in accordance with its
customary procedures.

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

          If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee and the Trust Administrator such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trust Administrator or the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee, or the Trust
Administrator on behalf of the Trustee shall execute, and the Trustee or the
Trust Administrator shall authenticate and deliver, in exchange for or in lieu
of any

                                      -111-

<PAGE>

such mutilated, destroyed, lost or stolen Certificate, a new Certificate of the
same Class and of like denomination and Percentage Interest. Upon the issuance
of any new Certificate under this Section, the Trust Administrator 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 and the Trust Administrator) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
REMIC created hereunder, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.

          SECTION 5.04. Persons Deemed Owners.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Master Servicer, the Trust
Administrator, the Trustee or any agent of any of them shall be affected by
notice to the contrary.

          SECTION 5.05. Certain Available Information.

          On or prior to the date of the first sale of any Class IO Certificate,
Class CE Certificate, Class P Certificate or Residual Certificate to an
Independent third party, the Depositor shall provide to the Trust Administrator
ten copies of any private placement memorandum or other disclosure document used
by the Depositor in connection with the offer and sale of such Certificates. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Trust Administrator, the Depositor promptly shall inform the Trust
Administrator of such event and shall deliver to the Trust Administrator ten
copies of the private placement memorandum or disclosure document, as revised,
amended or supplemented. The Trust Administrator shall maintain at its Corporate
Trust Office and shall make available free of charge during normal business
hours for review by any Holder of a Certificate or any Person identified to the
Trust Administrator as a prospective transferee of a Certificate, originals or
copies of the following items: (i) in the case of a Holder or prospective
transferee of a Class IO Certificate, Class CE Certificate, Class P Certificate
or Residual Certificate, the related private placement memorandum or other
disclosure document relating to such Class of Certificates, in the form most
recently provided to the Trust Administrator; and (ii) in all cases, (A) this
Agreement and any amendments hereof entered into pursuant to Section 11.01, (B)
all monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date, (C) all certifications delivered by a Responsible Officer of the
Trust Administrator since the Closing Date pursuant to Section 10.01(h), (D) any
and all Officers' Certificates delivered to the Trust Administrator by the
Master Servicer since the Closing Date to evidence the Master Servicer's
determination that any P&I Advance or Servicing Advance was, or if made, would
be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance,
respectively, and (E) any and all Officers' Certificates delivered to the Trust
Administrator by the Master Servicer since the Closing Date pursuant to Section
4.04(a). Copies and mailing of any and all of the foregoing items

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<PAGE>

will be available from the Trust Administrator upon request at the expense of
the Person requesting the same.

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                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

          SECTION 6.01. Liability of the Depositor and the Master Servicer.

          The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and
Master Servicer and undertaken hereunder by the Depositor and the Master
Servicer herein.

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

          Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation. The
Depositor and the Master Servicer each will 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, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

          The Depositor or the Master Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master 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; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agencies'
ratings of the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies).

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

          None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master 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 Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of

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<PAGE>

willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of
the Depositor or the Master Servicer may rely in good faith on any document of
any kind which, PRIMA FACIE, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
relating to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. Neither the Depositor nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under this Agreement and, in its opinion,
does not involve it in any expense or liability; provided, however, that each of
the Depositor and the Master Servicer may in its discretion undertake any such
action which it may deem necessary or desirable with respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, unless the Depositor or the Master
Servicer acts without the consent of Holders of Certificates entitled to at
least 51% of the Voting Rights, the legal expenses and costs of such action and
any liability resulting therefrom (except any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder) shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and the Master Servicer shall be entitled to
be reimbursed therefor from the Collection Account as and to the extent provided
in Section 3.11, any such right of reimbursement being prior to the rights of
the Certificateholders to receive any amount in the Collection Account.

          SECTION 6.04. Limitation on Resignation of the Master Servicer.

          The Master 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 pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Trust Administrator. No
resignation of the Master Servicer shall become effective until the Trustee, the
Trust Administrator or a successor servicer shall have assumed the Master
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.

          Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
assignment shall not prohibit the Master Servicer from designating a Subservicer
as payee of any indemnification amount payable to the Master Servicer hereunder;
provided, however, that as provided in Section 3.06 hereof, no Subservicer shall
be a third-party beneficiary hereunder and the parties hereto shall not be
required to recognize any Subservicer as an indemnitee under this Agreement. If,
pursuant

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<PAGE>

to any provision hereof, the duties of the Master Servicer are transferred to a
successor master servicer, the entire amount of the Servicing Fee and other
compensation payable to the Master Servicer pursuant hereto shall thereafter be
payable to such successor master servicer.

          SECTION 6.05. Rights of the Depositor in Respect of the Master
                        Servicer.

          The Master Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub-Servicer shall afford) the Depositor, the Trustee
and the Trust Administrator, upon reasonable notice, during normal business
hours, access to all records maintained by the Master Servicer (and any such
Sub-Servicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Sub-Servicer) responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Depositor, the Trustee and the Trust Administrator
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's capacity to perform its
obligations under this Agreement as it possesses (and that any such Sub-Servicer
possesses). To the extent such information is not otherwise available to the
public, the Depositor, the Trustee and the Trust Administrator shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee, the Trust Administrator or the Trust Fund, and in any
case, the Depositor, the Trustee or the Trust Administrator, as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information. The Depositor may, but is not obligated to,
enforce the obligations of the Master Servicer under this Agreement and may, but
is not obligated to, perform, or cause a designee to perform, any defaulted
obligation of the Master Servicer under this Agreement or exercise the rights of
the Master Servicer under this Agreement; provided that the Master Servicer
shall not be relieved of any of its obligations under this Agreement by virtue
of such performance by the Depositor or its designee. The Depositor shall not
have any responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.

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<PAGE>

                                   ARTICLE VII

                                     DEFAULT

          SECTION 7.01. Master Servicer Events of Default.

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

               (i) any failure by the Master Servicer to remit to the Trust
          Administrator for distribution to the Certificateholders any payment
          (other than a P&I Advance required to be made from its own funds on
          any Master Servicer Remittance Date pursuant to Section 4.03) required
          to be made under the terms of the Certificates and this Agreement
          which continues unremedied for a period of one Business Day after the
          date upon which written notice of such failure, requiring the same to
          be remedied, shall have been given to the Master Servicer by the
          Depositor, the Trustee or the Trust Administrator (in which case
          notice shall be provided by telecopy), or to the Master Servicer, the
          Depositor, the Trustee and the Trust Administrator by the Holders of
          Certificates entitled to at least 25% of the Voting Rights; or

               (ii) any failure on the part of the Master Servicer duly to
          observe or perform in any material respect any other of the covenants
          or agreements on the part of the Master Servicer contained in this
          Agreement, or the breach by the Master Servicer of any representation
          and warranty contained in Section 2.05, which continues unremedied for
          a period of 30 days after the earlier of (i) the date on which written
          notice of such failure, requiring the same to be remedied, shall have
          been given to the Master Servicer by the Depositor, the Trustee, the
          Trust Administrator or to the Master Servicer, the Depositor, the
          Trustee and the Trust Administrator by the Holders of Certificates
          entitled to at least 25% of the Voting Rights and (ii) actual
          knowledge of such failure by a Servicing Officer of the Master
          Servicer; or

               (iii) a decree or order of a court or agency or supervisory
          authority having jurisdiction in the premises in an involuntary case
          under any present or future federal or state bankruptcy, insolvency or
          similar law or the appointment of a conservator or receiver or
          liquidator in any insolvency, readjustment of debt, marshalling of
          assets and liabilities or similar proceeding, or for the winding-up or
          liquidation of its affairs, shall have been entered against the Master
          Servicer and such decree or order shall have remained in force
          undischarged or unstayed for a period of 90 days; or

               (iv) the Master Servicer shall consent to the appointment of a
          conservator or receiver or liquidator in any insolvency, readjustment
          of debt, marshalling of assets and liabilities or similar proceedings
          of or relating to it or of or relating to all or substantially all of
          its property; or

               (v) the Master Servicer shall admit in writing its inability to
          pay its debts generally as they become due, file a petition to take
          advantage of any applicable

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<PAGE>

          insolvency or reorganization statute, make an assignment for the
          benefit of its creditors, or voluntarily suspend payment of its
          obligations; or

               (vi) any failure by the Master Servicer of the Master Servicer
          Termination Test; or

               (vii) any failure of the Master Servicer to make any P&I Advance
          on any Master Servicer Remittance Date required to be made from its
          own funds pursuant to Section 4.03 which continues unremedied until
          3:00 p.m. New York time on the second Business Day immediately
          following the Master Servicer Remittance Date.

If a Master Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor and the Trust Administrator
if given by the Trustee or to the Trustee and the Trust Administrator if given
by the Depositor), terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. If
a Master Servicer Event of Default described in clause (vii) hereof shall occur,
the Trustee shall, by notice in writing to the Master Servicer, the Trust
Administrator and the Depositor, terminate all of the rights and obligations of
the Master Servicer in its capacity as Master Servicer under this Agreement and
in and to the Mortgage Loans and the proceeds thereof. On or after the receipt
by the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Certificates
(other than as a Holder of any Certificate) or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trust Administrator pursuant to and under
this Section, and, without limitation, the Trust Administrator is hereby
authorized and empowered, as attorney-in-fact or otherwise, to execute and
deliver, on behalf of and at the expense of the Master Servicer, 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. The Master Servicer agrees promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trust Administrator with all documents and records requested by it
to enable it to assume the Master Servicer's functions under this Agreement, and
to cooperate with the Trust Administrator and the Trustee in effecting the
termination of the Master Servicer's responsibilities and rights under this
Agreement, including, without limitation, the transfer within one Business Day
to the Trust Administrator for administration by it of all cash amounts which at
the time shall be or should have been credited by the Master Servicer to the
Collection Account held by or on behalf of the Master Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
any REO Property serviced by the Master Servicer (provided, however, that the
Master Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination,
whether in respect of P&I Advances or otherwise, and shall continue to be
entitled to the benefits of Section 6.03, notwithstanding any such termination,
with respect to events occurring prior to such termination). For purposes of
this Section 7.01, each of the Trustee and the Trust Administrator shall not be

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deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee or the Trust Administrator, as applicable,
assigned to and working in the Trustee's or the Trust Administrator's, as the
case may be, Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a Master Servicer Event of
Default is received by the Trustee or the Trust Administrator, as applicable,
and such notice references the Certificates, the Trust Fund or this Agreement.

          SECTION 7.02. Trust Administrator or Trustee to Act; Appointment of
Successor.

          (a)       (1) On and after the time the Master Servicer receives a
notice of termination, the Trust Administrator (and in the event the Trust
Administrator fails in its obligation, the Trustee) shall be the successor in
all respects to the Master Servicer in its capacity as Master Servicer under
this Agreement and the transactions set forth or provided for herein, and all
the responsibilities, duties and liabilities relating thereto and arising
thereafter shall be assumed by the Trust Administrator or the Trustee, as
applicable, (except for any representations or warranties of the Master Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.03(c) and the obligation to deposit amounts in respect of losses
pursuant to Section 3.12) by the terms and provisions hereof including, without
limitation, the Master Servicer's obligations to make P&I Advances pursuant to
Section 4.03; provided, however, that if the Trust Administrator or the Trustee,
as applicable, is prohibited by law or regulation from obligating itself to make
advances regarding delinquent mortgage loans, then the Trust Administrator or
the Trustee, as applicable, shall not be obligated to make P&I Advances pursuant
to Section 4.03; and provided further, that any failure to perform such duties
or responsibilities caused by the Master Servicer's failure to provide
information required by Section 7.01 shall not be considered a default by the
Trust Administrator or the Trustee, as applicable, as successor to the Master
Servicer hereunder. As compensation therefor, the Trust Administrator or the
Trustee, as applicable, shall be entitled to the Servicing Fee and all funds
relating to the Mortgage Loans to which the Master Servicer would have been
entitled if it had continued to act hereunder. Notwithstanding the above and
subject to Section 7.02(a)(2) below, the Trust Administrator or the Trustee, as
applicable, may, if it shall be unwilling to so act, or shall, if it is unable
to so act or if it is prohibited by law from making advances regarding
delinquent mortgage loans or if the Holders of Certificates entitled to at least
51% of the Voting Rights so request in writing to the Trust Administrator or
Trustee, as applicable, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
acceptable to each Rating Agency and having a net worth of not less than
$15,000,000, as the successor to the Master Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer under this Agreement.

                    (2) No appointment of a successor to the Master Servicer
under this Agreement shall be effective until the assumption by the successor of
all of the Master Servicer's responsibilities, duties and liabilities hereunder.
In connection with such appointment and assumption described herein, the Trust
Administrator or the Trustee, as applicable, may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Master Servicer as such hereunder. The Depositor,
the Trustee, the Trust Administrator and such successor shall take such action,
consistent with this Agreement, as shall be

                                      -119-

<PAGE>

necessary to effectuate any such succession. Pending appointment of a successor
to the Master Servicer under this Agreement, the Trust Administrator or the
Trustee, as applicable, shall act in such capacity as hereinabove provided.

          (b) If the Master Servicer fails to remit to the Trust Administrator
for distribution to the Certificateholders any payment required to be made under
the terms of this Agreement (for purposes of this Section 7.02(b), a
"Remittance") because the Master Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trust Administrator shall (and
in the event the Trust Administrator fails in its obligation, the Trustee) upon
notice of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
the Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator or the deposit thereof in the Distribution Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from the Master
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Distribution Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.

          SECTION 7.03. Notification to Certificateholders.

          (a) Upon any termination of the Master Servicer pursuant to Section
7.01 above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trust Administrator shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register.

          (b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee or the Trust Administrator becomes aware of the
occurrence of such an event, the Trustee or the Trust Administrator shall
transmit (or, in the case of the Trustee, the Trustee shall cause the Trust
Administrator to transmit) by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Master Servicer Event of Default shall
have been cured or waived.

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<PAGE>

          SECTION 7.04. Waiver of Master Servicer Events of Default.

          The Holders representing at least 66% of the Voting Rights evidenced
by all Classes of Certificates affected by any default or Master Servicer Event
of Default hereunder may waive such default or Master Servicer Event of Default;
provided, however, that a default or Master Servicer Event of Default under
clause (i) or (vii) of Section 7.01 may be waived only by all of the Holders of
the Regular Certificates. Upon any such waiver of a default or Master Servicer
Event of Default, such default or Master Servicer Event of Default shall cease
to exist and shall be deemed to have been remedied for every purpose hereunder.
No such waiver shall extend to any subsequent or other default or Master
Servicer Event of Default or impair any right consequent thereon except to the
extent expressly so waived.

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                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

          SECTION 8.01. Duties of Trustee and Trust Administrator.

          Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Event of Default and after the curing of all
Master Servicer Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. During a Master Servicer Event of Default, each of the Trustee and
the Trust Administrator 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. Any permissive right of the Trustee or
the Trust Administrator enumerated in this Agreement shall not be construed as a
duty.

          Each of the Trustee and the Trust Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to it, which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders.

          No provision of this Agreement shall be construed to relieve the
Trustee or the Trust Administrator from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:

               (i) Prior to the occurrence of a Master Servicer Event of
          Default, and after the curing of all such Master Servicer Events of
          Default which may have occurred, the duties and obligations of each of
          the Trustee and the Trust Administrator shall be determined solely by
          the express provisions of this Agreement, neither the Trustee nor the
          Trust Administrator shall be liable 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 or the Trust Administrator and, in the
          absence of bad faith on the part of the Trustee or the Trust
          Administrator, as applicable, the Trustee or the Trust Administrator,
          as the case may be, 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 or the Trust
          Administrator, as the case may be, that conform to the requirements of
          this Agreement;

               (ii) Neither the Trustee nor the Trust Administrator shall be
          personally liable for an error of judgment made in good faith by a
          Responsible Officer or Responsible Officers of it unless it shall be
          proved that it was negligent in ascertaining the pertinent facts; and

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               (iii) Neither the Trustee nor the Trust Administrator shall be
          personally liable with respect to any action taken, suffered or
          omitted to be taken by it in good faith in accordance with the
          direction of the Holders of Certificates entitled to at least 25% of
          the Voting Rights relating to the time, method and place of conducting
          any proceeding for any remedy available to it or exercising any trust
          or power conferred upon it under this Agreement.

          SECTION 8.02. Certain Matters Affecting the Trustee and the Trust
                        Administrator.

          (a) Except as otherwise provided in Section 8.01:

               (i) Each of the Trustee and the Trust Administrator may request
          and rely upon and shall be protected in acting or refraining from
          acting upon any resolution, Officers' Certificate, certificate of
          auditors or any other certificate, statement, instrument, opinion,
          report, notice, request, consent, order, appraisal, bond or other
          paper or document reasonably believed by it to be genuine and to have
          been signed or presented by the proper party or parties;

               (ii) Each of the Trustee and the Trust Administrator may consult
          with counsel 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) Neither the Trustee nor the Trust Administrator shall be
          under any obligation to exercise any of the trusts or powers vested in
          it by this Agreement or to institute, conduct or defend any litigation
          hereunder or in relation hereto at the request, order or direction of
          any of the Certificateholders, pursuant to the provisions of this
          Agreement, unless such Certificateholders shall have offered to the
          Trustee or the Trust Administrator, as applicable, reasonable security
          or indemnity against the costs, expenses and liabilities which may be
          incurred therein or thereby; nothing contained herein shall, however,
          relieve the Trustee or the Trust Administrator of the obligation, upon
          the occurrence of a Master Servicer Event of Default (which has not
          been cured or waived), to exercise such of the rights and powers
          vested in it by this Agreement, and to 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;

               (iv) Neither the Trustee nor the Trust Administrator shall be
          personally liable for any action taken, suffered or omitted by it in
          good faith and believed by it to be authorized or within the
          discretion or rights or powers conferred upon it by this Agreement;

               (v) Prior to the occurrence of a Master Servicer Event of Default
          hereunder and after the curing of all Master Servicer Events of
          Default which may have occurred, neither the Trustee nor the Trust
          Administrator shall be bound to

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          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 to do so by the Holders of
          Certificates entitled to at least 25% of the Voting Rights; provided,
          however, that if the payment within a reasonable time to the Trustee
          or the Trust Administrator, as applicable, of the costs, expenses or
          liabilities likely to be incurred by it in the making of such
          investigation is, in the opinion of the Trustee or the Trust
          Administrator, as applicable, not reasonably assured to the Trustee or
          the Trust Administrator, as applicable, by such Certificateholders,
          the Trustee or the Trust Administrator, as applicable, may require
          reasonable indemnity against such expense, or liability from such
          Certificateholders as a condition to taking any such action;

               (vi) Each of the Trustee and the Trust Administrator may execute
          any of the trusts or powers hereunder or perform any duties hereunder
          either directly or by or through agents or attorneys; and

               (vii) Neither the Trustee nor the Trust Administrator shall be
          personally liable for any loss resulting from the investment of funds
          held in the Collection Account at the direction of the Master Servicer
          pursuant to Section 3.12.

          (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it 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 or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

          SECTION 8.03. Neither Trustee nor Trust Administrator Liable for
                        Certificates or Mortgage Loans.

          The recitals contained herein and in the Certificates (other than the
signature of the Trustee or the Trust Administrator, on behalf of the Trustee,
the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.12) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.12) or of the Certificates (other than the signature of the Trustee, or the
Trust Administrator on behalf of the Trustee, and authentication of the Trustee
or the Trust Administrator on the Certificates) or of any Mortgage Loan or
related document. Neither the Trustee nor the Trust Administrator shall be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer, other than any funds held by or on behalf of the Trustee
or the Trust Administrator in accordance with Section 3.10.

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          SECTION 8.04. Trustee and Trust Administrator May Own Certificates.

          Each of the Trustee and the Trust Administrator in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee or Trust
Administrator, as applicable.

          SECTION 8.05. Trustee's and Trust Administrator's Fees and Expenses.

          (a) The Trust Administrator shall withdraw from the Distribution
Account on each Distribution Date and pay to itself the related portion of the
Administration Fee and pay to the Trustee the related portion of the
Administration Fee and, to the extent that the funds therein are at anytime
insufficient for such purpose, the Master Servicer shall pay such fees. Each of
the Trustee and the Trust Administrator and any director, officer, employee or
agent of the Trustee or the Trust Administrator, as applicable, shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense (not including expenses, disbursements and advances incurred or made by
the Trustee or the Trust Administrator, as applicable, including the
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of the Trustee's or Trust Administrator's, as the case may
be, performance in accordance with the provisions of this Agreement) incurred by
the Trustee or the Trust Administrator, as applicable, in connection with any
claim or legal action or any pending or threatened claim or legal action arising
out of or in connection with the acceptance or administration of its obligations
and duties under this Agreement, other than any loss, liability or expense (i)
resulting from any breach of the Master Servicer's (and in the case of the
Trustee, the Trust Administrator's or in the case of the Trust Administrator,
the Trustee's) obligations in connection with this Agreement, (ii) that
constitutes a specific liability of the Trustee or the Trust Administrator, as
applicable, pursuant to Section 10.01(g) or (iii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder or in the case of the Trust Administrator, as a
result of a breach of the Trust Administrator's obligations under Article X
hereof. The Master Servicer agrees to indemnify the Trustee and the Trust
Administrator, from, and hold each harmless against, any loss, liability or
expense arising in respect of any breach by the Master Servicer of its
obligations in connection with this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee or the Trust Administrator, as the case may be. Any payment hereunder
made by the Master Servicer to the Trustee or the Trust Administrator shall be
from the Master Servicer's own funds, without reimbursement from REMIC I
therefor.

          (b) The Master Servicer shall pay any annual rating agency fees of the
Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

          SECTION 8.06. Eligibility Requirements for Trustee and Trust
                        Administrator.

          Each of the Trustee and the Trust Administrator hereunder shall at all
times be a corporation or an association (other than the Depositor, the
Originator, the Seller, the Master Servicer or, in the case of the Trustee, any
Affiliate of the foregoing) organized and doing business under the laws of any
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 (or a member

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of a bank holding company whose capital and surplus is at least $50,000,000) and
subject to supervision or examination by federal or state authority. If such
corporation or association publishes reports of conditions at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee or the Trust Administrator, as the case may be, shall resign immediately
in the manner and with the effect specified in Section 8.07.

          SECTION 8.07. Resignation and Removal of the Trustee and the Trust
                        Administrator.

          Either of the Trustee or the Trust Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, the Master Servicer, to the Certificateholders and, if
the Trustee is resigning, to the Trust Administrator, or, if the Trust
Administrator is resigning, to the Trustee. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee or trust
administrator (which may be the same Person in the event both the Trustee and
the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee or Trust
Administrator and to the successor trustee or trust administrator, as
applicable. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or Trust Administrator, as applicable, and the
Master Servicer by the Depositor. If no successor trustee or trust administrator
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee or Trust
Administrator, as applicable, may petition any court of competent jurisdiction
for the appointment of a successor trustee or trust administrator, as
applicable.

          If at any time the Trustee or the Trust Administrator shall cease to
be eligible in accordance with the provisions of Section 8.06 and shall fail to
resign after written request therefor by the Depositor (or in the case of the
Trust Administrator, the Trustee), or if at any time the Trustee or the Trust
Administrator shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or the Trust Administrator or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or the Trust Administrator or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor (or
in the case of the Trust Administrator, the Trustee) may remove the Trustee or
the Trust Administrator, as applicable, and appoint a successor trustee or trust
administrator (which may be the same Person in the event both the Trustee and
the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or Trust
Administrator, as the case may be, so removed and to the successor trustee or
trust administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or the Trust Administrator, as applicable, and
the Master Servicer by the Depositor.

          The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee or the Trust Administrator and appoint
a successor trustee or trust administrator by written instrument or instruments,
in triplicate, signed by such Holders or their

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<PAGE>

attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee or the Trust
Administrator, as the case may be, so removed and one complete set to the
successor so appointed. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Depositor. In addition, if the
Trustee has knowledge that the Trust Administrator has breached any of its
duties under this Agreement, the Trustee may remove the Trust Administrator in
the same manner as provided in the prior sentence. For purposes of this Section,
the Trustee shall not be deemed to have knowledge of a breach by the Trust
Administrator of any of its duties hereunder, unless a Responsible Officer of
the Trustee, assigned to and working in the Trustee's Corporate Trust Office has
actual knowledge thereof or unless written notice of any event which is in fact
such a breach is received by the Trustee, and such notice references the
Certificates, the Trust Fund or this Agreement.

          Any resignation or removal of the Trustee or the Trust Administrator
and appointment of a successor trustee or trust administrator, as the case may
be, pursuant to any of the provisions of this Section shall not become effective
until acceptance of appointment by the successor trustee or trust administrator
as provided in Section 8.08. Notwithstanding the foregoing, in the event the
Trust Administrator advises the Trustee that it is unable to continue to perform
its obligations pursuant to the terms of this Agreement prior to the appointment
of a successor, the Trustee shall be obligated to perform such obligations until
a new trust administrator is appointed. Such performance shall be without
prejudice to any claim by a party hereto or beneficiary hereof resulting from
the Trust Administrator's breach of its obligations hereunder.

          SECTION 8.08. Successor Trustee or Trust Administrator.

          Any successor trustee or trust administrator appointed as provided in
Section 8.07 shall execute, acknowledge and deliver to the Depositor, the
Trustee or the Trust Administrator, as applicable, and its predecessor trustee
or trust administrator an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee or trust
administrator shall become effective and such successor trustee or trust
administrator, 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 or trust
administrator herein. The predecessor trustee or trust administrator shall
deliver to the successor trustee or trust administrator all Mortgage Files and
related documents and statements to the extent held by it hereunder, as well as
all moneys, held by it hereunder, and the Depositor and the predecessor trustee
or trust administrator shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee or trust administrator all such rights,
powers, duties and obligations.

          No successor trustee or trust administrator shall accept appointment
as provided in this Section unless at the time of such acceptance such successor
trustee or trust administrator shall be eligible under the provisions of Section
8.06 and the appointment of such successor trustee or trust administrator shall
not result in a downgrading of any Class of Certificates by either Rating
Agency, as evidenced by a letter from each Rating Agency.

          Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession of such trustee or trust

                                      -127-

<PAGE>

administrator hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee or trust
administrator, the successor trustee or trust administrator shall cause such
notice to be mailed at the expense of the Depositor.

          SECTION 8.09. Merger or Consolidation of Trustee or Trust
                        Administrator.

          Any corporation or association into which either the Trustee or the
Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, 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.

          SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.

          Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of REMIC I or property securing the same may at the time be located, the Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-
trustees, jointly with the Trustee, or separate trustee or separate trustees, of
all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, such title to REMIC I, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.

          In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master 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 REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the 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 trust

                                      -128-

<PAGE>

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.

          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 or co-trustee.

          SECTION 8.11. Appointment of Office or Agency.

          The Trust Administrator will appoint an office or agency in the City
of St. Paul, Minnesota where the Certificates may be surrendered for
registration of transfer or exchange, and presented for final distribution, and
where notices and demands to or upon the Trust Administrator in respect of the
Certificates and this Agreement may be served.

          SECTION 8.12. Representations and Warranties.

          Each of the Trustee and the Trust Administrator hereby represents and
warrants to the Master Servicer, the Depositor and the Trustee or the Trust
Administrator, as applicable, as of the Closing Date, that:

          (i) it is a national banking association duly organized, validly
     existing and in good standing under the laws of the United States of
     America.

          (ii) The execution and delivery of this Agreement by it, and the
     performance and compliance with the terms of this Agreement by it, will not
     violate its articles of association or bylaws or constitute a default (or
     an event which, with notice or lapse of time, or both, would constitute a
     default) under, or result in the breach of, any material agreement or other
     instrument to which it is a party or which is applicable to it or any of
     its assets.

          (iii) It has the full power and authority to enter into and consummate
     all transactions contemplated by this Agreement, has duly authorized the
     execution, delivery and performance of this Agreement, and has duly
     executed and delivered this Agreement.

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

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          (v) It is not in violation of, and its execution and delivery of this
     Agreement and its performance and compliance with the terms of this
     Agreement will not constitute a violation of, any law, any order or decree
     of any court or arbiter, or any order, regulation or demand of any federal,
     state or local governmental or regulatory authority, which violation, in
     its good faith and reasonable judgment, is likely to affect materially and
     adversely either the ability of it to perform its obligations under this
     Agreement or its financial condition.

          (vi) No litigation is pending or, to the best of its knowledge,
     threatened against it, which would prohibit it from entering into this
     Agreement or, in its good faith reasonable judgment, is likely to
     materially and adversely affect either the ability of it to perform its
     obligations under this Agreement or its financial condition.

                                      -130-

<PAGE>

                                   ARTICLE IX

                                   TERMINATION

          SECTION 9.01  Termination Upon Repurchase or Liquidation of All
                        Mortgage Loans.

          (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Trustee and the Trust Administrator (other than the obligations of the Master
Servicer to the Trustee and the Trust Administrator pursuant to Section 8.05 and
of the Master Servicer to provide for and the Trust Administrator to make
payments in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC II Regular Interests, the REMIC III Regular Interests, the
REMIC IV Regular Interests or the Classes of Certificates as hereinafter set
forth) shall terminate upon payment to the Certificateholders and the deposit of
all amounts held by or on behalf of the Trustee and required hereunder to be so
paid or deposited on the Distribution Date coinciding with or following the
earlier to occur of (i) the purchase by the Terminator (as defined below) of all
Mortgage Loans and each REO Property remaining in REMIC I and (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Subject to Section 3.11 hereof, the purchase by the
Terminator of all Mortgage Loans and each REO Property remaining in REMIC I
shall be at a price (the "Termination Price") equal to the greater of (A) the
aggregate Purchase Price of all the Mortgage Loans included in REMIC I, plus the
appraised value of each REO Property, if any, included in REMIC I, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion and (B) the aggregate fair market
value of all of the assets of REMIC I (as determined by the Terminator and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01).

          (b) The Master Servicer shall have the right (the party exercising
such right, the "Terminator"), to purchase all of the Mortgage Loans and each
REO Property remaining in REMIC I pursuant to clause (i) of the preceding
paragraph no later than the Determination Date in the month immediately
preceding the Distribution Date on which the Certificates will be retired;
provided, however, that the Terminator may elect to purchase all of the Mortgage
Loans and each REO Property remaining in REMIC I pursuant to clause (i) above
only if the aggregate Stated Principal Balance of the Mortgage Loans and each
REO Property remaining in the Trust Fund at the time of such election is reduced
to less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date. By acceptance of the Residual Certificates, the Holder
of the Residual Certificates agrees, in connection with any termination
hereunder, to assign and transfer any amounts in excess of par, and to the
extent received in respect of such termination, to pay any such amounts to the
Holders of the Class CE Certificates.

          (c) Notice of the liquidation of the REMIC I Regular Interests shall
be given promptly by the Trust Administrator by letter to Certificateholders
mailed (a) in the event such notice

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<PAGE>

is given in connection with the purchase of the Mortgage Loans and each REO
Property by the Terminator, not earlier than the 15th day and not later than the
25th day of the month next preceding the month of the final distribution on the
Certificates or (b) otherwise during the month of such final distribution on or
before the Determination Date in such month, in each case specifying (i) the
Distribution Date upon which the Trust Fund will terminate and the final payment
in respect of the REMIC I Regular Interests, the REMIC II Regular Interests, the
REMIC III Regular Interests, the REMIC IV Regular Interests and the Certificates
will be made upon presentation and surrender of the related Certificates at the
office of the Trust Administrator therein designated, (ii) the amount of any
such final payment, (iii) that no interest shall accrue in respect of the REMIC
I Regular Interests, the REMIC II Regular Interests, the REMIC III Regular
Interests, the REMIC IV Regular Interests or the Certificates from and after the
Interest Accrual Period relating to the final Distribution Date therefor and
(iv) that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trust Administrator. In the event such notice
is given in connection with the purchase of all of the Mortgage Loans and each
REO Property remaining in REMIC I by the Terminator, the Terminator shall
deliver to the Trust Administrator for deposit in the Distribution Account not
later than the last Business Day of the month next preceding the month of the
final distribution on the Certificates an amount in immediately available funds
equal to the above-described purchase price. The Trust Administrator shall remit
to the Master Servicer from such funds deposited in the Distribution Account (i)
any amounts which the Master Servicer would be permitted to withdraw and retain
from the Collection Account pursuant to Section 3.11 and (ii) any other amounts
otherwise payable by the Trust Administrator to the Master Servicer from amounts
on deposit in the Distribution Account pursuant to the terms of this Agreement,
in each case prior to making any final distributions pursuant to Section
10.01(d) below. Upon certification to the Trust Administrator by a Servicing
Officer of the making of such final deposit, the Trust Administrator shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.

          (d) Upon presentation of the Certificates by the Certificateholders on
the final Distribution Date, the Trust Administrator shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with Section
4.01 in respect of the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holders of Certificates being retired on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust and
credited to the account of the appropriate non-tendering Holder or Holders. If
any Certificates as to which notice has been given pursuant to this Section 9.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trust Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trust
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Trust Administrator shall

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pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trust Administrator as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 9.01. Any such amounts held in trust by the Trust
Administrator shall be held in an Eligible Account and the Trust Administrator
may direct any depository institution maintaining such account to invest the
funds in one or more Permitted Investments. All income and gain realized from
the investment of funds deposited in such accounts held in trust by the Trust
Administrator shall be for the benefit of the Trust Administrator; provided,
however, that the Trust Administrator shall deposit in such account the amount
of any loss of principal incurred in respect of any such Permitted Investment
made with funds in such accounts immediately upon the realization of such loss.

          Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.

          SECTION 9.02 Additional Termination Requirements.

          (a) In the event that the Terminator purchases all the Mortgage Loans
and each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in REMIC I pursuant to Section 9.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements:

               (i) The Trustee shall specify the first day in the 90-day
          liquidation period in a statement attached to REMIC I's, REMIC II's,
          REMIC III's, REMIC IV's and REMIC V's final Tax Return pursuant to
          Treasury regulation Section 1.860F-1 and shall satisfy all
          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 Terminator;

               (ii) During such 90-day liquidation period and, at or prior to
          the time of making of the final payment on the Certificates, the
          Trustee shall sell all of the assets of REMIC I to the Terminator for
          cash; and

               (iii) At the time of the making of the final payment on the
          Certificates, the Trust Administrator shall distribute or credit, or
          cause to be distributed or credited, to the Holders of the Residual
          Certificates all cash on hand in the Trust Fund (other than cash
          retained to meet claims), and the Trust Fund shall terminate at that
          time.

          (b) At the expense of the requesting Terminator (or, if the Trust Fund
is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 9.01, at the expense of the Trust
Administrator without the right of reimbursement from the Trust Fund), the Trust
Administrator shall prepare or cause to be prepared the documentation required
in connection with the adoption of a plan of liquidation of each of REMIC I,
REMIC II, REMIC III, REMIC IV and REMIC V pursuant to this Section 9.02.

                                      -133-

<PAGE>

          (c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for each
of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V, which authorization shall
be binding upon all successor Certificateholders.

                                    ARTICLE X

                                REMIC PROVISIONS

          SECTION 10.01. REMIC Administration.

          (a) The Trustee shall elect to treat each of REMIC I, REMIC II, REMIC
III, REMIC IV and REMIC V as a REMIC under the Code and, if necessary, under
applicable state law. Each such election will be made by the Master Servicer on
behalf of the Trustee on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
the purposes of the REMIC election in respect of REMIC I, the REMIC I Regular
Interests shall be designated as the Regular Interests in REMIC I and the Class
R-I Certificates shall be designated as the Residual Interests in REMIC I. The
REMIC II Regular Interests shall be designated as the Regular Interests in REMIC
II and the Class R-II Certificates shall be designated as the Residual Interests
in REMIC II. The REMIC III Regular Interests shall be designated as the Regular
Interests in REMIC III and the Class R-III Certificates shall be designated as
the Residual Interests in REMIC III. The REMIC IV Regular Interests shall be
designated as the Regular Interests in REMIC IV and the Class R-IV Certificates
shall be designated as the Residual Interests in REMIC IV. The Class A
Certificates, the Mezzanine Certificates, the Class IO Certificates, the Class
CE Certificates and the Class P Certificates shall be designated as the Regular
Interests in REMIC V and the Class R-V Certificates shall be designated as the
Residual Interests in REMIC V. Neither the Trustee nor the Trust Administrator
shall permit the creation of any "interests" in REMIC I, REMIC II, REMIC III,
REMIC IV or REMIC V (within the meaning of Section 860G of the Code) other than
the REMIC III Regular Interests, the REMIC IV Regular Interests and the
interests represented by the Certificates.

          (b) The Closing Date is hereby designated as the "Startup Day" of
REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V within the meaning of Section
860G(a)(9) of the Code.

          (c) The Master Servicer shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any REMIC I, REMIC II,
REMIC III, REMIC IV or REMIC V that involve the Internal Revenue Service or
state tax authorities), other than the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Master Servicer, as agent for
all of REMIC I's, REMIC II's, REMIC III's, REMIC IV's and REMIC V's tax matters
person shall (i) act on behalf of the Trust Fund in relation to any tax matter
or controversy involving any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC
V and (ii) represent the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The holder of the largest Percentage Interest of each Class of
Residual Certificates shall be designated,

                                      -134-

<PAGE>

in the manner provided under Treasury regulations section 1.860F-4(d) and
Treasury regulations section 301.6231(a)(7)-1, as the tax matters person of the
related REMIC created hereunder. By their acceptance thereof, the holder of the
largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Master Servicer or an Affiliate as its agent to perform
all of the duties of the tax matters person for the Trust Fund.

          (d) The Master Servicer shall prepare and the Trustee shall sign and
the Trust Administrator shall file all of the Tax Returns in respect of each
REMIC created hereunder. The expenses of preparing and filing such returns shall
be borne by the Master Servicer without any right of reimbursement therefor.

          (e) The Master Servicer shall perform on behalf of each of REMIC I,
REMIC II, REMIC III, REMIC IV and REMIC V all reporting and other tax compliance
duties that are the responsibility of such REMIC under the Code, the REMIC
Provisions or other compliance guidance issued by the Internal Revenue Service
or any state or local taxing authority. Among its other duties, as required by
the Code, the REMIC Provisions or other such compliance guidance, the Master
Servicer shall provide (i) to any Transferor of a Residual Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any Person who is not a Permitted
Transferee, (ii) to the Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V. The
Depositor shall provide or cause to be provided to the Master Servicer, within
ten (10) days after the Closing Date, all information or data that the Master
Servicer reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without limitation,
the price, yield, prepayment assumption and projected cash flow of the
Certificates.

          (f) The Master Servicer, the Trustee and the Trust Administrator shall
take such action and shall cause each REMIC created hereunder to take such
action as shall be necessary to create or maintain the status thereof as a REMIC
under the REMIC Provisions. The Master Servicer, the Trustee and the Trust
Administrator shall not take any action, cause the Trust Fund to take any action
or fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V as a REMIC or (ii)
result in the imposition of a tax upon the Trust Fund (including but not limited
to the tax on prohibited transactions as defined in Section 860F(a)(2) of the
Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code) (either such event, an "Adverse REMIC Event") unless the Trustee and the
Trust Administrator have received an Opinion of Counsel, addressed to the
Trustee and the Trust Administrator (at the expense of the party seeking to take
such action but in no event at the expense of the Trust Administrator or the
Trustee) to the effect that the contemplated action will not, with respect to
any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V, endanger such status
or result in the imposition of such a tax, nor shall the Master Servicer take or
fail to take any action (whether or not authorized hereunder) as to which the
Trustee or the Trust Administrator has advised it in writing that it has
received an Opinion of Counsel to the effect that an Adverse REMIC Event could
occur with respect to such action; provided that the Master Servicer may
conclusively rely on such Opinion of Counsel

                                      -135-

<PAGE>

and shall incur no liability for its action or failure to act in accordance with
such Opinion of Counsel. In addition, prior to taking any action with respect to
any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V or the respective
assets of each, or causing REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V to
take any action, which is not contemplated under the terms of this Agreement,
the Master Servicer will consult with the Trustee and the Trust Administrator or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to REMIC I, REMIC II, REMIC III, REMIC
IV or REMIC V, and the Master Servicer shall not take any such action or cause
REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V to take any such action as to
which the Trustee or the Trust Administrator has advised it in writing that an
Adverse REMIC Event could occur; provided that the Master Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trust Administrator and the
Trustee may consult with counsel to make such written advice, and the cost of
same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee or
the Trust Administrator, as applicable. At all times as may be required by the
Code, the Trust Administrator, the Trustee or the Master Servicer will ensure
that substantially all of the assets of REMIC I, REMIC II, REMIC III and REMIC
IV will consist of "qualified mortgages" as defined in Section 860G(a)(3) of the
Code and "permitted investments" as defined in Section 860G(a)(5) of the Code,
to the extent such obligations are within such party's control and not otherwise
inconsistent with the terms of this Agreement.

          (g) In the event that any tax is imposed on "prohibited transactions"
of any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of such REMIC as defined in Section
860G(c) of the Code, on any contributions to any such REMIC after the Startup
Day therefor pursuant to Section 860G(d) of the Code, or any other tax is
imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trust Administrator pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article X, (ii) to the
Trustee pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article X,
(iii) to the Master Servicer pursuant to Section 10.03 hereof, if such tax
arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article X, or (iv) against amounts on
deposit in the Distribution Account and shall be paid by withdrawal therefrom.

          (h) On or before April 15 of each calendar year, commencing April 15,
2001, the Master Servicer shall deliver to each Rating Agency an Officer's
Certificate of the Master Servicer stating the Master Servicer's compliance with
this Article X.

          (i) The Master Servicer shall, for federal income tax purposes,
maintain books and records with respect to each of REMIC I, REMIC II, REMIC III,
REMIC IV and REMIC V on a calendar year and on an accrual basis.

          (j) Following the Startup Day, the Master Servicer, the Trustee and
the Trust Administrator shall not accept any contributions of assets to any of
REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V other than in connection with
any Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the

                                      -136-

<PAGE>

effect that the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding or subject such REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.

          (k) None of the Trustee, the Trust Administrator or the Master
Servicer shall enter into any arrangement by which REMIC I, REMIC II, REMIC III,
REMIC IV or REMIC V will receive a fee or other compensation for services nor
permit either REMIC to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.

          SECTION 10.02. Prohibited Transactions and Activities.

          None of the Depositor, the Master Servicer, the Trust Administrator or
the Trustee shall sell, dispose of or substitute for any of the Mortgage Loans
(except in connection with (i) the foreclosure of a Mortgage Loan, including but
not limited to, the acquisition or sale of a Mortgaged Property acquired by deed
in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any of REMIC I,
REMIC II, REMIC III, REMIC IV or REMIC V (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V after
the Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it has received an Opinion of Counsel,
addressed to the Trustee and the Trust Administrator (at the expense of the
party seeking to cause such sale, disposition, substitution, acquisition or
contribution but in no event at the expense of the Trustee or the Trust
Administrator) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of any of REMIC I, REMIC
II, REMIC III, REMIC IV or REMIC V as a REMIC or (b) cause any of REMIC I, REMIC
II, REMIC III, REMIC IV or REMIC V to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

          SECTION 10.03. Master Servicer, Trustee and Trust Administrator
                         Indemnification.

          (a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the
Master Servicer and the Trust Administrator for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by the
Trust Fund, the Depositor, the Master Servicer or the Trust Administrator, as a
result of a breach of the Trustee's covenants set forth in this Article X.

          (b) The Trust Administrator agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trustee,
as a result of a breach of the Trust Administrator's covenants set forth in this
Article X.

                                      -137-

<PAGE>

          (c) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the Trustee and the Trust Administrator for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trustee or the Trust
Administrator, as a result of a breach of the Master Servicer's covenants set
forth in Article III or this Article X.

                                      -138-

<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

          SECTION 11.01. Amendment.

          This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Trustee and the Trust Administrator without the consent of
any of the Certificateholders, (i) to cure any ambiguity or defect, (ii) to
correct, modify or supplement any provisions herein (including to give effect to
the expectations of Certificateholders), or (iii) to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel delivered to the Trustee
and the Trust Administrator, adversely affect in any material respect the
interests of any Certificateholder. No amendment shall be deemed to adversely
affect in any material respect the interests of any Certificateholder who shall
have consented thereto, and no Opinion of Counsel shall be required to address
the effect of any such amendment on any such consenting Certificateholder.

          This Agreement may also be amended from time to time by the Depositor,
the Master Servicer, the Trustee and the Trust Administrator with the consent of
the Holders of Certificates entitled to at least 66% of the Voting Rights for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Holders of Certificates; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are 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 at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.

          Notwithstanding any contrary provision of this Agreement, neither the
Trustee nor the Trust Administrator shall consent to any amendment to this
Agreement unless it shall have first received an Opinion of Counsel to the
effect that such amendment will not result in the imposition of any tax on any
of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V pursuant to the REMIC
Provisions or cause any of REMIC I, REMIC II, REMIC III, REMIC IV or REMIC V to
fail to qualify as a REMIC at any time that any Certificates are outstanding.

          Promptly after the execution of any such amendment the Trust
Administrator shall furnish a copy of such amendment to each Certificateholder.

          It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent

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<PAGE>

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 or the Trust
Administrator may prescribe.

          The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee or Trust
Administrator.

          Each of the Trustee and the Trust Administrator may, but shall not be
obligated to enter into any amendment pursuant to this Section that affects its
rights, duties and immunities under this Agreement or otherwise.

          SECTION 11.02. Recordation of Agreement; Counterparts.

          To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Certificateholders, but only upon
direction of the Trustee or the Trust Administrator accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.

          For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.

          SECTION 11.03. 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 representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
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 expressly
provided for 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 any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

          No Certificateholder shall have any right by virtue of any provision
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 default

                                      -140-

<PAGE>

and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 15 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 is
understood and intended, and 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 whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

          SECTION 11.04. Governing Law.

          This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

          SECTION 11.05. Notices.

          All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when received if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
or delivered in any other manner specified herein, to (a) in the case of the
Depositor, 18400 Von Karman, Suite 1000, Irvine, CA 92612 (telecopy number (714)
224-5000), or such other address or telecopy number as may hereafter be
furnished to the Master Servicer, the Trustee and the Trust Administrator in
writing by the Depositor, (b) in the case of the Master Servicer, 18400 Von
Karman, Suite 1000, Irvine, California 92612 (telecopy number: (949) 225-7878),
or such other address or telecopy number as may hereafter be furnished to the
Trustee, the Trust Administrator and the Depositor in writing by the Master
Servicer, (c) in the case of the Trust Administrator, 180 East Fifth Street, St.
Paul, Minnesota, 55101, Attention: Structured Finance/New Century 2000-NC1
(telecopy number (612) 244-0089), or such other address or telecopy number as
may hereafter be furnished to the Master Servicer, the Depositor and the Trustee
in writing by the Trust Administrator and (d) in the case of the Trustee, 1555
North RiverCenter Drive, Suite 301, Milwaukee, Wisconsin 53212, Attention:
Charles Pedersen (telecopy number (414) 905-5049), or such other address or
telecopy number as may hereafter be furnished to the Master Servicer, the Trust
Administrator and the Depositor in writing by the Trustee. Any notice required
or permitted to be given to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above.

                                      -141-

<PAGE>

          SECTION 11.06. 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 11.07. Notice to Rating Agencies.

          The Trust Administrator shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which it
has actual knowledge:

          1.   Any material change or amendment to this Agreement;

          2.   The occurrence of any Master Servicer Event of Default that has
               not been cured or waived;

          3.   The resignation or termination of the Master Servicer, the
               Trustee or the Trust Administrator;

          4.   The repurchase or substitution of Mortgage Loans pursuant to or
               as contemplated by Section 2.03;

          5.   The final payment to the Holders of any Class of Certificates;

          6.   Any change in the location of the Collection Account or the
               Distribution Account;

          7.   Any event that would result in the inability of the Trust
               Administrator or the Trustee, as applicable, to make advances
               regarding delinquent Mortgage Loans; and

          8.   The filing of any claim under any Master Servicer's blanket bond
               and errors and omissions insurance policy required by Section
               3.14 or the cancellation or material modification of coverage
               under any such instrument.

          In addition, the Trust Administrator shall promptly furnish to each
Rating Agency copies of each report to Certificateholders described in Section
4.02 and the Master Servicer shall promptly furnish to each Rating Agency copies
of the following:

          1.   Each annual statement as to compliance described in Section 3.20;
               and

          2.   Each annual independent public accountants' servicing report
               described in Section 3.21.

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<PAGE>

          Any such notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service to Duff &
Phelps Credit Rating Company, 17 State Street, New York, New York 10004, to
Fitch IBCA, Inc., One State Street, 32nd Floor, New York, New York 10004 and to
Moody's Investors Services, 99 Church Street, New York, New York 10007 or such
other addresses as the Rating Agencies may designate in writing to the parties
hereto.

          SECTION 11.08. Article and Section References.

          All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

          SECTION 11.09. Grant of Security Interest.

          It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee, be, and be construed as, a
sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Depositor, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obliga tions described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                                      -143-

<PAGE>

          IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Trust
Administrator and the Trustee have caused their names to be signed hereto by
their respective officers thereunto duly authorized, in each case as of the day
and year first above written.

                                      NEW CENTURY MORTGAGE SECURITIES, INC.,
                                      as Depositor

                                      By:________________________________
                                      Name:
                                      Title:

                                      NEW CENTURY MORTGAGE CORPORATION
                                      as Master Servicer

                                      By:________________________________
                                      Name:
                                      Title:

                                      U.S. BANK NATIONAL ASSOCIATION
                                      as Trust Administrator

                                      By:________________________________
                                      Name:     Eve D. Kaplan
                                      Title:    Vice President

                                      FIRSTAR BANK, N.A.
                                      as Trustee

                                      By:________________________________
                                      Name:      Charles F. Pederson
                                      Title:     Assistant Vice President

<PAGE>

STATE OF _____________ )
                       ) ss.:
COUNTY OF ___________  )

          On the __th day of March 2000, before me, a notary public in and for
said State, personally appeared ________________, known to me to be an Assistant
Vice President of New Century Mortgage Securities, Inc., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

          IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                             _______________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

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

          On the ____ day of March 2000, before me, a notary public in and for
said State, personally appeared _____________________, known to me to be
__________________ of New Century Mortgage Corporation, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

          IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                             _______________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF MINNESOTA     )
                       ) ss.:
COUNTY OF RAMSEY       )

          On the ____day of March 2000, before me, a notary public in and for
said State, personally appeared Eve D. Kaplan, known to me to be a Vice
President of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

          IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                             _______________________________
                                                       Notary Public

[Notarial Seal]

<PAGE>

STATE OF WISCONSIN                          )
                                            ) ss.:
COUNTY OF __________                        )

                  On the ____ day of March 2000, before me, a notary public in
and for said State, personally appeared Charles F. Pederson, known to me to be
an Assistant Vice President of Firstar Bank, N.A., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                             _______________________________
                                                      Notary Public

[Notarial Seal]

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