Document:

Exhibit 4(b)(14)

                    Form of IncomeNotes(SM) (CPI-Linked Note)

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

REGISTERED                                                  $

No. FL-                                                     CUSIP #

                         THE BEAR STEARNS COMPANIES INC.

                                 IncomeNotes(SM)
                      (LINKED TO THE CONSUMER PRICE INDEX)

Original Issue Date:                    Interest Reset Date(s):

Maturity Date:                          Interest Reset Period:

Interest Rate Basis: Linked to the      Interest Payment Date(s):
Consumer Price Index ("CPI")

Initial Interest Rate:                  Interest Payment Period:

Index Maturity:                         Interest Determination Date(s):

Spread (plus or minus):                 Redeemable On and After:

Maximum Interest Rate:                  Optional Repayment Date(s):

Minimum Interest Rate:                  Survivor's Option: Yes___ No___

Minimum Denominations: $1,000 increased in multiples of $1,000

+     The interest rate for each Interest Payment Period during the term of the
Notes following the initial Interest Payment Period will be the rate determined
as of the applicable Interest Determination Date pursuant to the following
formula:

   [(CPI(subscript: t) - CPI(subscript: t-12)) / CPI(subscript: t-12)] + ___%

<PAGE>

      CPI(subscript: t) = Current Index Level of CPI (as defined below), as
      published on Bloomberg CPURNSA; and

      CPI(subscript: t-12) = Index Level of CPI 12 months prior to
      CPI(subscript: t).

In no case, however, will the interest rate for the Notes be less than the
Minimum Interest Rate.

      CPI is the non-seasonally adjusted U.S. City Average All Items Consumer
Price Index for All Urban Consumers, published monthly by the Bureau of Labor
Statistics. CPI(subscript: t) for each Interest Reset Date is the CPI for the
third calendar month prior to such Interest Reset Date as published and reported
in the second calendar month prior to such Interest Reset Date.

      THE BEAR STEARNS COMPANIES INC., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to CEDE & CO., or registered assigns,
the principal amount stated above on the Maturity Date shown above (the
"Maturity Date") and to pay interest thereon at the rate per annum equal to the
Initial Interest Rate shown above until the first Interest Reset Date shown
above following the Original Issue Date shown above and thereafter at a rate
determined in accordance with the provisions shown above and on the reverse
hereof under the heading "Consumer Price Index," until the principal hereof is
fully paid or duly made available for payment. The Company will pay interest
(computed on the basis of a 360-day year of twelve 30-day months) monthly,
quarterly, semiannually or annually as indicated above on each Interest Payment
Date shown above commencing with the first Interest Payment Date shown above
immediately following the Original Issue Date shown above, and on the Maturity
Date, or, if applicable, the Redemption Date or Optional Repayment Date;
provided, however, that if the Original Issue Date shown above is between a
Regular Record Date (as defined below) and an Interest Payment Date, interest
payments will commence on the Interest Payment Date following the next
succeeding Regular Record Date; and provided, further, however, that if an
Interest Payment Date, Maturity Date, Redemption Date, Optional Repayment Date
or repayment date on exercise of a Survivor's Option (as defined on the reverse
hereof) would fall on a day that is not a Business Day (as defined on the
reverse hereof), unless otherwise specified on the face hereof, the related
payment of principal, premium, if any, or interest shall be made on the
following day that is a Business Day, and no interest shall accrue for the
period from and after that Interest Payment Date, Maturity Date, Redemption
Date, Optional Repayment Date or repayment date on exercise of a Survivor's
Option, as the case may be, to the next Business Day. The "Regular Record Date"
shall be the date whether or not a Business Day 15 calendar days immediately
preceding such Interest Payment Date, unless otherwise specified on the face
hereof.

      The interest so payable, and punctually paid or duly provided for, on the
Interest Payment Dates referred to above, will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, provided, however, that interest payable on the Maturity
Date, or if applicable, the Redemption Date, Optional Repayment Date or
repayment date on exercise of a Survivor's Option, will be paid to the Person to
whom the principal of this Note is payable. Any such interest which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may be paid to the Person in whose name this Note (or

                                      -2-
<PAGE>

one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to the Holder of this Note not less
than ten days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

            Payment of the principal of and interest on this Note shall be made
at the office or agency of the Trustee maintained for that purpose in the
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debt; provided, however, that payment of interest
on any Interest Payment Date (other than the Maturity Date, Redemption Date,
Optional Repayment Date or repayment date on exercise of a Survivor's Option, if
any) may be made at the option of the Company by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register, or by wire transfer of immediately available funds, if the registered
holder of at least $10,000,000 in principal amount (or such other principal
amount specified on the face hereof) of Notes entitled to such interest has so
requested by a notice in writing delivered to the Trustee not less than 16 days
prior to the Interest Payment Date on which such payment is due, which notice
shall provide appropriate instructions for such transfer.

            The principal hereof and interest due at maturity will be paid upon
maturity in immediately available funds against presentation of this Note at the
office or agency of the Trustee maintained for that purpose in the Borough of
Manhattan, The City of New York.

            REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH ON THE FACE HEREOF.

            This Note shall be governed by and construed in accordance with the
laws of the State of New York.

            This Note is one of the series of Medium-Term Notes, Series B, of
the Company.

            Unless the certificate of authentication hereon has been executed by
JPMorgan Chase Bank (formerly, The Chase Manhattan Bank), the Trustee under the
Indenture, or its successor thereunder by the manual signature of one of its
authorized signatories, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

                                      -3-
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated:

                                        THE BEAR STEARNS COMPANIES INC.

                                        By:_____________________________________
                                           Executive Vice President and Chief
                                           Financial Officer

ATTEST:

______________________________
Secretary

[Corporate Seal]

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

                                        JPMORGAN CHASE BANK, as Trustee

                                        By:_____________________________________
                                           Authorized Signature

                                      -4-
<PAGE>

                                [Reverse of Note]

                         THE BEAR STEARNS COMPANIES INC.

                                 IncomeNotes(SM)
                                 (FLOATING RATE)

            This Note is one of a duly authorized issue of debentures, notes or
other evidences of indebtedness (hereinafter called the "Securities") of the
Company of the series hereinafter specified, all such Securities issued and to
be issued under the Indenture dated as of May 31, 1991, as amended (herein
called the "Indenture"), between the Company and JPMorgan Chase Bank (formerly,
The Chase Manhattan Bank), as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and limitations of rights thereunder of the Company, the
Trustee and the Holders of the Securities, and the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different
repayment provisions, if any, may be subject to different sinking, purchase or
analogous funds, if any, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided or permitted. This
Note is one of a series of the Securities designated as Medium-Term Notes,
Series B (the "Notes"). The Notes of this series may be issued at various times
with different maturity dates, redemption dates and different principal
repayment provisions, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture.

            The interest payable on this Note on each Interest Payment Date will
include accrued interest from and including the Original Issue Date or from and
including the last date in respect of which interest has been paid, as the case
may be, to, but excluding, such Interest Payment Date, except that the interest
payment at the Maturity Date, Redemption Date, Optional Repayment Date or
repayment date on exercise of a Survivor's Option will include interest accrued
to but excluding such date. Accrued interest from the Original Issue Date or
from the last date to which interest has been paid is calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued interest
factor is computed by adding the interest factors calculated for each day from
the Original Issue Date, or from the last date to which interest has been paid,
to the date for which accrued interest is being calculated. The interest factor
(expressed as a decimal calculated to seven decimal places without rounding) for
each such day is computed by dividing the interest rate applicable to such day
by 360. The interest rate in effect on each day will be (a) if such day is an
Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to such Interest Reset Date or (b) if such day is
not an Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to the next preceding Interest Reset Date;
provided, however, that (i) the interest rate in effect from the Original Issue
Date to the first Interest Reset Date will be the Initial Interest Rate as
specified on the face hereof and (ii) the interest rate in effect for the ten
calendar days

                                      -5-
<PAGE>

immediately prior to maturity will be that in effect on the tenth calendar day
preceding maturity. Notwithstanding the foregoing, if the rate at which interest
is payable is adjusted daily or weekly, such rate of interest shall be adjusted
until the Interest Reset Date immediately preceding the Maturity Date.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, shown on the face hereof. All percentages resulting from any
calculations will be rounded, if necessary, to the nearest one
hundred-thousandth of a percent, with five one-millionths of a percent being
rounded upwards. In addition, the interest rate hereon shall in no event be
higher than the maximum rate, if any, permitted by applicable law.

            Commencing with the first Interest Reset Date shown on the face
hereof following the Original Issue Date, and thereafter on each succeeding
Interest Reset Date specified on the face hereof, the rate at which interest on
this Note is payable shall be adjusted daily, weekly, monthly, quarterly,
semiannually or annually as specified on the face hereof under "Interest Reset
Date(s)." Each such adjusted rate shall be applicable on and after the Interest
Reset Date to which it relates to but not including the next succeeding Interest
Reset Date or until the Maturity Date or, if applicable, the Redemption Date,
Optional Repayment Date or repayment date on exercise of a Survivor's Option, as
the case may be. Unless otherwise shown on the face hereof, the Interest Reset
Date will be, if this Note resets daily, each Business Day; if this Note resets
weekly, the Wednesday of each week; if this Note resets monthly, the third
Wednesday of each month; if this Note resets quarterly, the third Wednesday of
March, June, September and December; if this Note resets semiannually, the third
Wednesday of the two months specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month specified on the face hereof.
Subject to applicable law and except as specified herein, on each Interest Reset
Date, the rate of interest on this Note shall be the rate determined in
accordance with the provisions applicable below, plus or minus the Spread (as
specified on the face hereof), if any. If any Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding day that is a Business Day. "Business Day"
means with respect to any Note, any day that is not a Saturday or Sunday, and
that is neither a legal holiday nor a day on which banking institutions or trust
companies in New York City are authorized or obligated by law to close.

            The Interest Determination Date pertaining to an Interest Reset Date
will be the fifth Business Day prior to the applicable Interest Payment Date.
Interest payable hereon will be payable monthly, quarterly, semiannually or
annually (the "Interest Payment Period") as specified on the face hereof. Unless
otherwise shown on the face hereof, interest will be payable, if this Note
resets daily, weekly or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December, of each year; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December, of each year; if this Note resets semiannually, on the third Wednesday
of the two months of each year specified on the face hereof; and if this Note
resets annually, on the third Wednesday of the month specified on the face
hereof (each such date being an "Interest Payment Date") and in each case, at
maturity or, if applicable, upon redemption or optional repayment.

                                      -6-
<PAGE>

            Consumer Price Index. The amount of interest payable on the Notes on
each Interest Payment Date will be linked to changes in the Consumer Price
Index. The Consumer Price Index for purposes of the Notes is the non-seasonally
adjusted U.S. City Average All Items Consumer Price Index for All Urban
Consumers ("CPI"), published monthly by the Bureau of Labor Statistics of the
U.S. Department of Labor ("BLS") and reported on Bloomberg CPURNSA or any
successor service. The CPI for a particular month is published during the
following month. The CPI is expressed in relative terms in relation to a time
base reference period for which the level is set at 100.0. The base reference
period for the Notes is the 1982-1984 average.

            If the CPI is not reported on Bloomberg CPURNSA for a particular
month by 3:00 PM on a Interest Reset Date, but has otherwise been published by
the BLS, the Calculation Agent will determine the CPI as published by the BLS
for such month using such other source as it deems appropriate.

            In calculating CPI(subscript: t) and CPI(subscript: t-12) the
Calculation Agent will use the most recently available value of the CPI for any
month, determined as described above on the applicable Interest Reset Date, even
if such value has been adjusted from a prior reported value for the relevant
month. However, if a value of CPI(subscript: t) and CPI(subscript: t-12) used by
the Calculation Agent on any Interest Reset Date to determine the interest rate
on the Notes (an "Initial CPI") is subsequently revised by the BLS, the
Calculation Agent will continue to use the Initial CPI, and the interest rate
determined will not be revised. If the CPI is rebased to a different year or
period, the base reference period for the Notes will continue to be the
1982-1984 reference period as long as the 1982-1984 CPI continues to be
published.

            If, while the Notes are outstanding, the CPI is discontinued or
substantially altered, as determined in the sole discretion of the Calculation
Agent, the applicable substitute index for the Notes will be that chosen by the
Secretary of the Treasury for the Department of Treasury's Inflation-Linked
Treasuries as described at 62 Federal Register 846-874 (January 6, 1997). If no
such securities are outstanding, the Calculation Agent will determine a
substitute index for the Notes in accordance with general market practice at the
time.

            The Calculation Agent for the Notes will be Bear, Stearns & Co. Inc.
All determinations made by the Calculation Agent will be at the sole discretion
of the Calculation Agent and will, in the absence of manifest error, be
conclusive for all purposes and binding on the Holder hereof and the Company.

            Redemption at the option of the Company. If so specified on the face
of this Note, this Note may be redeemed by the Company on and after the date so
indicated on the face hereof. If no such date is set forth on the face hereof,
this Note may not be redeemed prior to maturity. On and after such date, if any,
from which this Note may be redeemed, unless otherwise specified on the face
hereof, this Note may be redeemed in whole or in part in increments of $1,000
(provided, unless a different minimum denomination is set forth on the face
hereof, that any remaining principal amount of this Note shall be at least
$1,000) at the option of the Company, at a redemption price equal to 100% of the
principal amount to be redeemed, together with interest thereon payable to the
Redemption Date, on notice given, unless otherwise specified on the face hereof,
not more than 60 nor less than 30 days prior to the Redemption

                                      -7-
<PAGE>

Date. If less than all the Outstanding Notes having such terms as specified by
the Company are to be redeemed, the particular Notes to be redeemed shall be
selected by the Trustee not more than 60 days prior to the Redemption Date from
the Outstanding Notes having such terms as specified by the Company not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate. The notice of such redemption shall specify which Notes are to
be redeemed. In the event of redemption of this Note, in part only, a new Note
or Notes in authorized denominations for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon the surrender hereof.

            Repayment at the option of the Holder. If so specified on the face
of this Note, this Note will be subject to repayment at the option of the Holder
hereof on the Optional Repayment Date(s). Except as otherwise specified herein,
if no Optional Repayment Date is set forth on the face hereof, this Note may not
be repaid at the option of the Holder prior to maturity. Unless otherwise
specified on the face hereof, on and after the Optional Repayment Date, if any,
from which this Note may be repaid at the option of the Holder, this Note shall
be repayable in whole or in part in increments of $1,000 (provided, unless a
different minimum denomination is set forth on the face hereof, that any
remaining principal amount of this Note shall be at least $1,000) at a repayment
price equal to 100% of the principal amount to be repaid, together with interest
thereon payable to the Optional Repayment Date. For this Note to be repaid in
whole or in part at the option of the Holder hereof, the Trustee must receive
not less than 30 nor more than 60 days prior to the Optional Repayment Date (i)
this Note with the form entitled "Option to Elect Repayment," which appears
below, duly completed or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States of America setting forth the name of the Holder of this Note,
the principal amount of this Note, the certificate number of this Note or a
description of this Note's tenor or terms, the principal amount of this Note to
be repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note with the form entitled "Option to Elect
Repayment," which appears below, duly completed, will be received by the Trustee
no later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter and this Note and such form duly completed are
received by the Trustee by such fifth Business Day. Exercise of the repayment
option shall be irrevocable.

            Repayment upon death of the Beneficial Owner. If so specified on the
face of this Note, unless this Note has been declared due and payable before its
Maturity Date by reason of an Event of Default under the Indenture, or has been
previously redeemed or otherwise repaid, the Authorized Representative (as
defined below) of a deceased Beneficial Owner (as defined below) of this Note
has the right to request repayment before the Maturity Date of all or part of
the deceased Beneficial Owner's interest in this Note, and the Company will be
obligated to repay that portion of this Note (the Survivor's Option"). If the
Survivor's Option is not set forth on the face hereof, this Note may not be
repaid upon death of the Beneficial Owner. The "Beneficial Owner" is a Person
who has the right, immediately prior to such Person's death, to receive the
proceeds from the disposition of this Note, as well as the right to receive
payment of the principal hereof. The "Authorized Representative" of the
Beneficial Owner is a Person who has the right to sell, transfer or otherwise
dispose of an interest in this Note and the right to receive the proceeds
hereof, as well as the interest and principal payable to the Beneficial Owner

                                      -8-
<PAGE>

of this Note, under the laws of the applicable jurisdiction. To validly exercise
the Survivor's Option, this Note must have been acquired by the deceased
Beneficial Owner at least six months prior to the date of the request.

            The Company will not be obligated to repay:

      o     On behalf of any individual deceased Beneficial Owner any interest
            or interests in this Note that in the aggregate exceeds $250,000 in
            any calendar year (the "Individual Limitation"), or

      o     in any calendar year, the greater of $2,000,000 or two percent of
            the outstanding aggregate principal amount of all IncomeNotes(SM)
            outstanding as of December 31 of the immediately preceding calendar
            year (the "Aggregate Limitation").

            If this tendered Note is not accepted in any calendar year due to
the application of either of the limitations set forth above, this Note will be
deemed to be tendered in the following calendar year in the order in which it
was originally tendered. If, despite being tendered through a valid exercise of
the Survivor's Option, this Note is not accepted, the Trustee will deliver a
notice by first-class mail to the Authorized Representative of the deceased
Beneficial Owner that states the reason that this Note has not been accepted for
repayment.

            The Company may, at its option, repay interests of a deceased
Beneficial Owner in excess of the Individual Limitation. Any optional repayment
by the Company of this kind, to the extent it exceeds the Individual Limitation
for any deceased Beneficial Owner, will not be included in the computation of
the Aggregate Limitation for repayment of this Note. The Company may also, at
its option, repay interests of the deceased Beneficial Owner in this Note in an
aggregate principal amount exceeding the Aggregate Limitation. Any optional
repayment by the Company of this kind, to the extent it exceeds the Aggregate
Limitation, will not reduce the Aggregate Limitation for such calendar year.
Upon any determination by the Company to repay this Note in excess of the
Individual Limitation or the Aggregate Limitation, this Note will be repaid in
the order of receipt of the repayment request by the Trustee.

            The Survivor's Option may only be exercised by the Authorized
Representative of the deceased Beneficial Owner. An Authorized Representative of
a deceased Beneficial Owner may initiate a request for repayment at any time,
provided that this Note was acquired by the deceased Beneficial Owner at least
six months prior to the date of the request, and in any principal amount, as
long as the principal amount is in integral multiples of $1,000, unless
otherwise specified on the face hereof. The Authorized Representative must
deliver its request to the Participant (as defined below) through which the
deceased Beneficial Owner owned an interest in this Note. "Participant" means an
institution that has an account with the depositary for this Note, which, unless
otherwise specified on the face hereof, will be The Depository Trust Company.
The request for repayment must be in a form satisfactory to the Participant and
must be accompanied by evidence of the death of the Beneficial Owner, evidence
that this Note was acquired by the deceased Beneficial Owner at least six months
prior to the request, evidence of the authority of the Authorized Representative
satisfactory to the Participant, any waivers, notices or certificates that may
be required under applicable state or federal law and any other evidence of the
right to the repayment that the Participant requires. The request must specify
the principal amount of the interest in this Note to be repaid, which amount
must be in integral multiples of $1,000, unless otherwise specified on the face
hereof. Subject to the rules and

                                      -9-
<PAGE>

arrangements applicable to the depositary, the Participant will then need to
deliver to the depositary a request for repayment substantially in the form
attached hereto as Appendix A.

            On receipt of a valid repayment request, the depositary will need to
forward the request to the Trustee. The Trustee is required to maintain records
with respect to repayment requests received by it, including the date of receipt
and the name of the Participant filing the repayment request. The Trustee will
promptly file with the Company each repayment request it receives. The Company,
the depositary and the Trustee:

      o     may conclusively assume, without independent investigation, that the
            statements contained in each repayment request are true and correct;
            and

      o     will have no responsibility:

            o     for reviewing any documents submitted to the Participant by
                  the Authorized Representative or for determining whether the
                  applicable decedent is in fact the Beneficial Owner of the
                  interest in this Note to be repaid or is in fact deceased; and

            o     for determining whether the Authorized Representative is duly
                  authorized to request repayment on behalf of the applicable
                  Beneficial Owner.

            In addition, the Company and the Trustee have no responsibility for
the actions of the depositary or any Participant, or any other financial
institution through which any interest in this Note may be held, with regard to
repayment requests, including any failure to make, or any delay in making, such
a request on the part of the depositary, any Participant or any such other
institution. Any Authorized Representative wishing to request a repayment of
this Note will need to contact the relevant Participant through which the
Authorized Representative's interests in this Note are held or, if those
interests are held through a Participant indirectly through an account at
another financial institution, instruct that institution to contact the
Participant to make the necessary arrangements to ensure that the request is
made in a proper and timely manner.

            Subject to the Individual Limitation and the Aggregate Limitation,
the Company will, after the death of any Beneficial Owner, repay the interest of
the Beneficial Owner in this Note on the first Interest Payment Date that occurs
30 or more calendar days after its acceptance of a repayment request from the
Trustee, or as otherwise set forth on the face hereof. Subject to the
limitations set forth above, each requested repayment will be accepted in the
order that the requests are received by the Trustee. If repayment requests
exceed the Aggregate Limitation, then excess repayment requests will be applied,
in the order received by the Trustee, to successive subsequent periods,
regardless of the number of subsequent periods required to repay the interests.
The Company may at any time notify the Trustee that it will repay, on a date not
less than 30 nor more than 60 days after the date of the Company's acceptance of
such repayment request, all or any lesser amount of Notes for which repayment
requests have been received but that are not then eligible for repayment by
reason of the Individual Limitation or the Aggregate Limitation. If the Company
does so, Notes will be repaid in the order of receipt of repayment requests by
the Trustee.

            The Company will pay 100% of the principal amount plus any unpaid
interest accrued to (but excluding) the repayment date for the portion of this
Note it repays in accordance with a repayment request by the Authorized
Representative of a deceased Beneficial Owner.

                                      -10-
<PAGE>

Subject to arrangements with the depositary, payment for interests in this Note
to be repaid will be made to the depositary in the aggregate principal amount
specified in the repayment requests submitted to the Trustee by the depositary
that are to be fulfilled in connection with the payment upon presentation of
this Note to the Trustee for repayment. The principal amount of any portion of
this Note redeemed or repaid by the Company other than by repayment at the
option of any Authorized Representative of a deceased Beneficial Owner under the
procedures described in this Note will not be included in the computation of
either the Individual Limitation or the Aggregate Limitation.

            The death of a Person owning this Note in joint tenancy or tenancy
by the entirety with another or others will be deemed the death of the owner of
this Note, and the entire principal amount of this Note so owned will be subject
to repayment. The death of a Person owning this Note by tenancy in common will
be deemed the death of an owner of this Note only with respect to the deceased
owner's interest in this Note. However, if this Note is held by husband and wife
as tenants in common, the death of either spouse will be deemed the death of the
owner of this Note, and the entire principal amount of this Note so owned will
be subject to repayment.

            The death of a Person who, immediately prior to his or her death,
was entitled to substantially all of the rights of a Beneficial Owner of an
interest in this Note will be deemed the death of the Beneficial Owner,
regardless of the recordation of the interest on the records of the Participant,
if the decedent's rights are established to the satisfaction of the Participant.
Rights of this kind will be deemed to exist in typical cases of nominee
ownership, ownership under the Uniform Gifts to Minors Act or the Uniform
Transfers to Minors Act, community property or other similar joint ownership
arrangements, including individual retirement accounts or Keogh H.R. 10 plans
maintained solely by or for the decedent or by or for the decedent and any
spouse, and trust and certain other arrangements where one Person has
substantially all of the rights of a Beneficial Owner during that Person's
lifetime.

            If a repayment request is presented on behalf of a deceased
Beneficial Owner and has not been fulfilled at the time the Company gives notice
of its election to redeem this Note, the portion of this Note that is the
subject of the pending repayment request will be repaid before any other
remaining portion of this Note.

            Any repayment request may be withdrawn by the Authorized
Representative upon delivery of a written request for withdrawal given by the
Participant on behalf of the Person(s) to the depositary and by the depositary
to the Trustee not less than 30 days before the repayment.

            All questions as to the eligibility or validity of any exercise of
the Survivor's Option will be determined by the Company in its sole discretion.
The Company's determination will be final and binding on all parties.

            During any time in which this Note is not represented by a global
security and is issued in definitive form:

            o     all references in this Note to Participants and the
                  depositary, including the depositary's governing rules,
                  regulations and procedures, will be deemed deleted;

            o     all determinations that the Participants are required to make
                  as described in this section will be made by the Company,
                  including, without limitation, determining

                                      -11-
<PAGE>

                  whether the applicable decedent is in fact the Beneficial
                  Owner of the interest in this Note to be repaid or is in fact
                  deceased and whether the Authorized Representative is duly
                  authorized to request repayment on behalf of the applicable
                  Beneficial Owner; and

            o     all repayment requests, to be effective, must

                  o     be delivered by the Authorized Representative to the
                        Trustee, with a copy to the Company;

                  o     if required by the Trustee and the Company, be
                        substantially in the form of the repayment request
                        attached hereto as Appendix A, with appropriate changes
                        mutually agreed to by the Trustee and the Company to
                        reflect the fact that the repayment request is being
                        executed by an Authorized Representative, including
                        provision for signature guarantees; and

                  o     be accompanied by this Note or, if applicable, a
                        properly executed assignment or endorsement, in addition
                        to all documents that are otherwise required to
                        accompany a repayment request. If the record interest in
                        this Note is held by a nominee of the deceased
                        Beneficial Owner, a certificate or letter from the
                        nominee attesting to the deceased's ownership of a
                        beneficial interest in this Note must also be delivered.

                                      * * *

            If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Notes may declare the principal of all the Notes due and
payable in the manner and with the effect provided in the Indenture.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of each series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.

            Holders of Securities may not enforce their rights pursuant to the
Indenture or the Securities except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed.

                                      -12-
<PAGE>

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company, and this Note duly executed by,
the Holder hereof or by his attorney duly authorized in writing and thereupon
one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

            Unless otherwise specified on the face hereof, the Notes are
issuable only in registered form without coupons in denominations of $1,000. As
provided in the Indenture and subject to certain limitations therein set forth,
this Note is exchangeable for a like aggregate principal amount of Notes of
different authorized denomination as requested by the Holder surrendering the
same.

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

            Prior to the due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

            The interest rate payable with respect to this Note shall in no
event be higher than the maximum rate, if any, permitted by applicable law.

            All capitalized terms used in this Note and not otherwise defined
herein shall have the meanings assigned to them in the Indenture.

                                      -13-
<PAGE>

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM     -     as tenants in common

TEN ENT     -     as tenants by the entireties

JT TEN      -     as joint tenants with right of survivorship and not as tenants
                  in common

UNIF GIFT MIN ACT - ________________________ Custodian _________________________
                              (Cust)                             (Minor)
                                 Under Uniform Gifts to Minors Act

                              __________________________________________________
                                                  (State)

Additional abbreviations may also be used though not in the above list.

                                   ----------

                            OPTION TO ELECT REPAYMENT

            The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion thereof specified below) pursuant to its
terms on _____________, 20__ (the "Optional Repayment Date") at a price equal to
the principal amount thereof, together with interest to the Optional Repayment
Date, to the undersigned at

________________________________________________________________________________

________________________________________________________________________________
        (Please print or typewrite name and address of the undersigned.)

            For this Note to be repaid the Trustee must receive at 4 New York
Plaza, New York, New York 10004, Attention: Debt Operations -- 13th Floor, or at
such other place or places of which the Company shall from time to time notify
the Holder of this Note, not more than 60 days nor less than 30 days prior to
the Optional Repayment Date, this Note with this "Option to Elect Repayment"
form duly completed.

                                      -14-
<PAGE>

            If less than the entire principal amount of this Note is to be
repaid, specify the portion thereof (which shall be increments of $1,000) which
the Holder elects to have repaid: $______________; and specify the denomination
or denominations (which, unless a different minimum denomination is set forth on
the face hereof, shall be $1,000) of the Notes to be issued to the Holder for
the portion of this Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid):
$________________.

Date:____________________     ________________________________________________
                              Note: The signature to this Option to Elect
                              Repayment must correspond with the same as written
                              upon the face of this Note in every particular
                              without alteration or enlargement.

                                   ----------

                                   ASSIGNMENT
                                   ----------

                   FOR VALUE RECEIVED, the undersigned hereby
                     sell(s), assign(s) and transfer(s) unto

________________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

________________________________________________________________________________

________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

_____________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.

Dated: _____________________________

                                        ________________________________________

_______________________________________
         (Signature Guarantee)

                                      -15-
<PAGE>

                                                                      Appendix A

                            Form of Repayment Request

                         THE BEAR STEARNS COMPANIES INC.

                  Consumer Price Index-Linked Notes due ______

                              CUSIP NO. __________

            The undersigned, [_______________________] (the "Participant"), does
hereby certify, pursuant to the provisions of the Indenture dated as of May 31,
1991, as amended, modified or supplemented from time to time (the "Indenture")
by and between The Bear Stearns Companies Inc. (the "Issuer") and JPMorgan Chase
Bank (formerly, The Chase Manhattan Bank), as trustee (the "Trustee"), to The
Depository Trust Company (the "Depositary"), to the Issuer and to the Trustee
that:

1.    [Name of deceased Beneficial Owner] is deceased.

2.    [Name of deceased Beneficial Owner] had a $[_____] interest in the
      above-referenced Notes.

3.    [Name of Authorized Representative] is [Beneficial Owner's personal
      representative/other Person authorized to represent the estate of the
      Beneficial Owner/surviving joint tenant/surviving tenant by the
      entirety/trustee of a trust] of [Name of deceased Beneficial Owner] and
      has delivered to the undersigned a request for repayment in form
      satisfactory to the undersigned, requesting that $ [_____] principal
      amount of said Notes be repaid in accordance with the Indenture. The
      documents accompanying such request, all of which are in proper form, are
      in all respects satisfactory to the undersigned and [Name of Authorized
      Representative] is entitled to have the Notes to which this repayment
      request relates repaid.

4.    The Participant holds the interest in the Notes with respect to which this
      repayment request is being made on behalf of [Name of deceased Beneficial
      Owner].

5.    The Participant hereby certifies that it will indemnify and hold harmless
      the Depositary, the Trustee and the Issuer (including their respective
      officers, directors, agents, attorneys and employees), against all
      damages, loss, cost, expense (including reasonable attorneys' and
      accountants' fees), obligations, claims or liability incurred by the
      indemnified party or parties as a result of or in connection with the
      repayment of Notes to which this repayment request relates. The
      Participant will, at the request of the Issuer, forward to the Issuer a
      copy of the documents submitted by [name of Authorized Representative] in
      support of the request for repayment.

            IN WITNESS WHEREOF, the undersigned has executed this repayment
request as of [___ _, 20__].

            [Participant Name]

By:____________________________________
   Name:
   Title:Exhibit 4.1

==============================================================================

                         MID-STATE CAPITAL CORPORATION,
                                  as Depositor

                             MID-STATE HOMES, INC.,
                                  as a Servicer

                            WALTER MORTGAGE COMPANY,

                                  as a Servicer

                                       and

                              [------------------],
                                   as Trustee

                         POOLING AND SERVICING AGREEMENT

                            Dated as of [_______], 20

                              MSCC 20__ -[__] Trust

                MSCC Pass-Through Certificates, Series 20__ -[__]

==============================================================================

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01  Defined Terms .................................................  2
Section 1.02  Accounting ....................................................  5

                                   ARTICLE II

                         CONVEYANCE OF MORTGAGE AssetS;

                        ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01  Conveyance of Mortgage Assets .................................  5
Section 2.02  Acceptance by Trustee .........................................  5
Section 2.03  Repurchase or Substitution of Mortgage Assets by the
               Depositor ....................................................  5
Section 2.04  Representations, Warranties and Covenants of the
               Depositor with Respect to the Mortgage Assets.................  5
Section 2.05  Representations, Warranties and Covenants of
               the Servicers ................................................  5
Section 2.06  Representations and Warranties of the Depositor ...............  5
Section 2.07  Issuance of Certificates and the Uncertificated
               Regular Interests ............................................  5
Section 2.08  Additional Transfers ..........................................  5

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING

                                OF THE TRUST FUND

Section 3.01  Servicers to Act as Servicers .................................  5
Section 3.02  Collection of Mortgage Asset Payments .........................  5
Section 3.03  Realization Upon Defaulted Mortgage Assets ....................  5
Section 3.04  Collection Account and Distribution Account ...................  5
Section 3.05  Permitted Withdrawals From the Collection Account .............  5
Section 3.06  Establishment of Escrow Accounts; Deposits in
                Escrow Accounts .............................................  5
Section 3.07  Permitted Withdrawals From Escrow Account......................  5
Section 3.08  Payment of Taxes, Insurance and Other Charges;
                Collections Thereunder.......................................  5
Section 3.09  Transfer of Accounts...........................................  5
Section 3.10  Maintenance of Hazard Insurance................................  5
Section 3.11  Maintenance of Mortgage Impairment Insurance Policy............  5
Section 3.12  Fidelity Bond, Errors and Omissions Insurance..................  5
Section 3.13  Title, Management and Disposition of REO Property..............  5

                                      -i-
<PAGE>

Section 3.14  Due-on-Sale Clauses; Assumption and Substitution Agreements....  5
Section 3.15  Notification of Adjustments....................................  5
Section 3.16  Optional Purchases of Mortgage Assets by a Servicer............  5
Section 3.17  Trustee to Cooperate; Release of Files ........................  5
Section 3.18  Servicing Compensation ........................................  5
Section 3.19  Annual Statement as to Compliance .............................  5
Section 3.20  Annual Independent Certified Public Accountants' Reports ......  5
Section 3.21  Access to Certain Documentation and Information
                Regarding the Mortgage Assets................................  5
Section 3.22  Capitalized Interest Account and Pre-Funding Account...........  5
Section 3.23  [RESERVED].....................................................  5
Section 3.24  Obligations of the Servicers in Respect of Coupon Rates
                and Monthly Payments.........................................  5
Section 3.25  Investment of Funds in the Collection Account and the
                Distribution Account.........................................  5
Section 3.26  Liability of Servicers; Indemnification........................  5
Section 3.27  Reports of Foreclosure and Abandonment of Mortgaged
                Properties...................................................  5
Section 3.28  Protection of Assets...........................................  5
Section 3.29  [RESERVED].....................................................  5
Section 3.30  No Personal Solicitation.......................................  5
Section 3.31  Periodic Filings...............................................  5

                                   ARTICLE IV

                                  FLOW OF FUNDS

Section 4.01  Interest Distributions.........................................  5
Section 4.02  Distributions of Principal and Monthly
                Excess Cashflow Amounts......................................  5
Section 4.03  Allocation of Losses...........................................  5
Section 4.04  Method of Distribution.........................................  5
Section 4.05  Distributions on Book-Entry Certificates.......................  5
Section 4.06  Statements.....................................................  5
Section 4.07  Remittance Reports; Servicing Advances.........................  5
Section 4.08  REMIC Distributions............................................  5

                                    ARTICLE V

                                THE CERTIFICATES

Section 5.01  The Certificates...............................................  5
Section 5.02  Registration of Transfer and Exchange of Certificates..........  5
Section 5.03  Mutilated, Destroyed, Lost or Stolen Certificates..............  5
Section 5.04  Persons Deemed Owners..........................................  5
Section 5.05  Appointment of Paying Agent....................................  5

                                      -ii-

<PAGE>

                                   ARTICLE VI

                         THE SERVICERS AND THE DEPOSITOR

Section 6.01  Liability of the Servicers and the Depositor ..................  5
Section 6.02  Merger or Consolidation of, or Assumption of the
                Obligations of, a Servicer or the Depositor..................  5
Section 6.03  Limitation on Liability of the Servicers and Others............  5
Section 6.04  Servicers Not to Resign........................................  5
Section 6.05  Delegation of Duties...........................................  5

                                   ARTICLE VII

                                     DEFAULT

Section 7.01  Servicer Events of Termination.................................  5
Section 7.02  Trustee to Act; Appointment of Successor.......................  5
Section 7.03  Waiver of Defaults.............................................  5
Section 7.04  Notification to Certificateholders.............................  5
Section 7.05  Survivability of Servicer Liabilities..........................  5

                                  ARTICLE VIII

                                   THE TRUSTEE

Section 8.01  Duties of Trustee..............................................  5
Section 8.02  Certain Matters Affecting the Trustee..........................  5
Section 8.03  Trustee Not Liable for Certificates or Mortgage Assets.........  5
Section 8.04  Trustee May Own Certificates...................................  5
Section 8.05  Trustee Fees and Expenses......................................  5
Section 8.06  Eligibility Requirements for Trustee...........................  5
Section 8.07  Resignation or Removal of Trustee..............................  5
Section 8.08  Successor Trustee..............................................  5
Section 8.09  Merger or Consolidation of Trustee.............................  5
Section 8.10  Appointment of Co-Trustee or Separate Trustee..................  5
Section 8.11  Limitation of Liability........................................  5
Section 8.12  Trustee May Enforce Claims Without Possession of Certificates..  5
Section 8.13  Suits for Enforcement..........................................  5
Section 8.14  Waiver of Bond Requirement.....................................  5
Section 8.15  Waiver of Inventory, Accounting and Appraisal Requirement......  5

                                   ARTICLE IX

                              REMIC ADMINISTRATION

Section 9.01  REMIC Administration...........................................  5

                                     -iii-

<PAGE>

Section 9.02  Prohibited Transactions and Activities.........................  5
Section 9.03  Indemnification with Respect to Certain Taxes .................  5
                and Loss of REMIC Status.....................................  5
Section 9.04  REO Property...................................................  5

                                    ARTICLE X

                                   TERMINATION

Section 10.01 Termination....................................................  5
Section 10.02 Additional Termination Requirements............................  5

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01 Amendment......................................................  5
Section 11.02 Recordation of Agreement; Counterparts ........................  5
Section 11.03 Limitation on Rights of Certificateholders ....................  5
Section 11.04 Governing Law; Jurisdiction ...................................  5
Section 11.05 Notices .......................................................  5
Section 11.06 Severability of Provisions ....................................  5
Section 11.07 Article and Section References ................................  5
Section 11.08 Notice to the Rating Agencies .................................  5
Section 11.09 Further Assurances ............................................  5
Section 11.10 Benefits of Agreement .........................................  5
Section 11.11 Acts of Certificateholders ....................................  5

                                      -iv-
<PAGE>

                                    EXHIBITS:

Exhibit A-1  Form of Class A-1 Certificates
Exhibit A-2  Form of Class A-2 Certificates
Exhibit B-1  Form of Class M-1 Certificates
Exhibit B-2  Form of Class M-2 Certificates
Exhibit B-3  Form of Class B Certificates
Exhibit C-1  Form of Class CE Certificates
Exhibit C-2  Form of Class R Certificates
Exhibit D    Schedule of Mortgage Assets
Exhibit E    Form of Request for Release
Exhibit F    Form of Lost Note Affidavit
Exhibit G    Form of ERISA Representation
Exhibit H    Form of Investment Letter
Exhibit I    Form of Class R Certificate Transfer Affidavit
Exhibit J    Form of Transferor Certificate
Exhibit K    Form of Certification
Exhibit L    Form of Certification of the Trustee to be Provided to Depositor
Exhibit M    Form of Certification of the Servicers to be Provided to Depositor
Exhibit N    Form of Additional Transfer Agreement

                                      -v-
<PAGE>

            This Pooling and Servicing Agreement is dated as of [____], 20__
(the "Agreement"), among MID-STATE CAPITAL CORPORATION, as depositor (the
"Depositor"), MID-STATE HOMES, INC., as a servicer ("Mid-State"), WALTER
MORTGAGE COMPANY, as a servicer ("Walter Mortgage" and, together with Mid-State,
the "Servicers"), and [_______________], as trustee (the "Trustee").

                              PRELIMINARY STATEMENT

            The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple Classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund created hereunder. The Certificates will consist of seven Classes
of Certificates, designated as (i) the Class A-1 and Class A-2 Certificates,
(ii) the Class M-1, Class M-2 and Class B Certificates, (iii) the Class CE
Certificates and (iv) the Class R Certificate.

            As provided herein, the Trustee shall elect that the Trust Fund
(other than the Pre-Funding Account and Capitalized Interest Account) be treated
for federal income tax purposes as four separate real estate mortgage investment
conduits (each a "REMIC" or, in the alternative, "REMIC 1," "REMIC 2," "REMIC 3"
and "REMIC 4," respectively). The Class T4-A1IO, Class T4-A2IO, Class T4-M1IO,
Class T4-M2IO, Class T4-BIO, Class T4-4, Class T4-11, Class T4-12 and Class
T4-13 Interests (such interests, the "REMIC 4 Components"), the Class T4-A1,
Class T4-A2, Class T4-M1, Class T4-M2 and Class T4-B Interests represent all of
the "regular interests" in REMIC 4. Each Class of Offered Certificates
represents beneficial ownership of the corresponding REMIC 4 Regular Interest.
The Class CE Certificates represent beneficial ownership of the REMIC 4
Components. Each of the Class R-1, Class R-2, Class R-3 and Class R-4 Interests,
represented collectively by the Class R Certificate, represents the sole Class
of "residual interest" in REMIC 1, REMIC 2, REMIC 3 and REMIC 4, respectively,
for purposes of the REMIC Provisions. There are four Classes of uncertificated
REMIC 1 Regular Interests (the Class T1-1, Class T1-2, Class T1-3 and Class T1-4
Interests), seven Classes of uncertificated REMIC 2 Regular Interests (the Class
T2-1, Class T2-2, Class T2-3, Class T2-4, Class T2-11, Class T2-12 and Class
T2-13 Interests) and nine Classes of uncertificated REMIC 3 Regular Interest
(the Class T3-1, Class T3-2, Class T3-M1, Class T3-M2, Class T3-4, Class T3-11,
Class T3-11, Class T3-12 and Class T3-13 Interests). Each Class of REMIC 1
Regular Interests, REMIC 2 Regular Interest, REMIC 3 Regular Interests and REMIC
4 Regular Interests and Lower-Tier REMIC Regular Interests are "REMIC Regular
Interests." The REMIC 1 Regular Interests will be held as assets of REMIC 2, the
REMIC 2 Regular Interests will be held as assets of REMIC 3 and the REMIC 3
Regular Interests will be held as assets of REMIC 4. The "latest possible
maturity date" for federal income tax purposes of all interests created hereby
will be the Distribution Date in [___________] 20__.

<PAGE>

            The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates comprising the interests in the Trust Fund created
hereunder:

===============================================================================

                       Original Class
                        Certificate       Pass-Through        Assumed Final
       Class         Principal Balance        Rate           Maturity Dates
-------------------------------------------------------------------------------
A-1                                $           %
-------------------------------------------------------------------------------
A-2                                $           %
-------------------------------------------------------------------------------
M-1                                $           %
-------------------------------------------------------------------------------
M-2                                $           %
-------------------------------------------------------------------------------
B                                  $           %
-------------------------------------------------------------------------------
CE                          (1)               N/A                  N/A
-------------------------------------------------------------------------------
R                           N/A               N/A                  N/A
-------------------------------------------------------------------------------
Total                              $
===============================================================================
(1)   The Class CE Certificates represent the beneficial ownership of the REMIC
      4 Components in the aggregate.

                                   ARTICLE I

                                   DEFINITIONS

            Section 1.01 Defined Terms.

            Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.

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

            "60+ Day Delinquent Mortgage Asset": Each Mortgage Asset (including
each Mortgage Asset in foreclosure and each Mortgage Asset for which the Obligor
has filed for bankruptcy after the Closing Date) with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Collection
Period, two months or more past due and each Mortgage Asset relating to an REO
Property. Any Mortgage Asset which, on a 3-month rolling average basis, has made
its scheduled Monthly Payments will not be considered to be a 60+ Day Delinquent
Mortgage Asset.

            "Account": Each building contract or instalment sale contract,
together with the related Note and Mortgage, transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03 hereof or pursuant to an
Additional Transfer Agreement, as from time to time held as a part of the Trust
Fund, the Accounts so held being identified in the Schedule of Mortgage Assets.

                                      -2-
<PAGE>

            "Account Note": The original promissory note or, with respect to
Mortgage Assets originated in Texas, the retail instalment contract executed by
an Obligor that evidences the indebtedness of such Obligor under an Account.

            "Accrued Certificate Interest": With respect to each Distribution
Date and Class of Certificates, an amount equal to the interest accrued at the
Pass-Through Rate set forth opposite such Class in the table in the Preliminary
Statement during the related Interest Accrual Period on the Certificate
Principal Balance of such Class of Certificates, reduced by such Class' Interest
Percentage of Relief Act Interest Shortfalls for such Distribution Date.

            "Addition Notice": A notice (which may be verbal or written)
provided to the Trustee pursuant to Section 2.08 hereof.

            "Additional Mortgage Asset": Any of the Mortgage Assets purchased by
the Trust using funds in the Pre-Funding Account pursuant to Section 2.08, such
Mortgage Assets being identified on the Schedule of Mortgage Assets attached to
the Additional Transfer Agreement.

            "Additional Transfer Agreement": Each Additional Transfer Agreement
executed by the Trustee and the Depositor substantially in the form of Exhibit N
hereto, by which Additional Mortgage Assets are purchased by the Trust.

            "Additional Transfer Date": The date specified in each Additional
Transfer Agreement.

            "Adjustable-Rate Mortgage Asset": A Mortgage Asset which has a rate
at which interest accrues that adjusts based on the Index plus a related Gross
Margin, as set forth and subject to the limitations in the related Note.

            "Adjustment Date": With respect to each Adjustable-Rate Mortgage
Asset, each adjustment date on which the Mortgage Interest Rate of an
Adjustable-Rate Mortgage Asset changes pursuant to the related Note. The first
Adjustment Date following the Cut-off Date as to each Adjustable-Rate Mortgage
Asset is set forth in the Schedule of Mortgage Assets.

            "Adverse REMIC Event": As defined in Section 9.01(f) hereof.

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

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

            "Applicable  Regulations":  As to any Mortgage Asset, all federal,
state and local laws, statutes, rules and regulations applicable thereto.

                                      -3-
<PAGE>

            "Applied Realized Loss Amount": With respect to each Distribution
Date, the allocation to the Certificates of the excess, if any, of (a) the
aggregate of the Certificate Principal Balances of the Certificates (after
giving effect to all distributions on such Distribution Date) over (b) the Pool
Balance as of the end of the related Collection Period.

            "Assumed Final Maturity Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.

            "Available Funds": As to any Distribution Date, an amount equal to
the excess of (i) the sum of (1) collections on the related Mortgage Assets
during the Collection Period immediately preceding such Distribution Date that
are on deposit in the Collection Account as of the close of business on the last
business day of such Collection Period, (2) any net reinvestment income earned
on funds described in clause (1) above, from the date two business days prior to
the preceding Distribution Date (in the case of the first Distribution Date,
from the closing date) to the date two business days prior to such Distribution
Date, (3) Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds,
Principal Prepayments, Substitution Adjustment Amounts, the Purchase Price for
any repurchased Mortgage Asset, the Termination Price with respect to the
termination of the Trust pursuant to Section 10.01 hereof and other unscheduled
recoveries of principal and interest (excluding Prepayment Charges) in respect
of the Mortgage Assets during the related Prepayment Period, (4) the aggregate
of any amounts received in respect of an REO Property deposited in the
Collection Account for such Distribution Date, (5) any Reimbursement Amount
deposited into the Collection Account during the related Prepayment Period, (6)
any deposits made by the trustee into the Collection Account on such
Distribution Date from the Capitalized Interest Account to cover any Capitalized
Interest Shortfalls, (7) any Pre-Funding Earnings and (8) with respect to the
first Distribution Date following the end of the Pre-Funding Period, any amounts
deposited into the Collection Account from the Pre-Funding Account (exclusive of
any Pre-Funding Earnings) over (ii) the sum of (1) amounts reimbursable or
payable to the Servicers pursuant to Sections 3.05 or 6.03, (2) amounts
reimbursable or payable to the Trustee pursuant to Section 8.05 (other than
Trustee Fees) or Section 9.01(c), (3) Stayed Funds, (4) the Servicing Fee and
(5) amounts deposited in the Collection Account or the Distribution Account, as
the case may be, in error.

            "Bankruptcy  Code":   Title 11  of  the  United  States  Code,  as
amended.

            "Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant," or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates
shall be Book-Entry Certificates.

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

                                      -4-
<PAGE>

            "Capitalized  Interest  Account":   The  account  established  and
maintained pursuant to Section 3.22.

            "Capitalized  Interest  Amount":  The  amount  to be  paid  by the
Depositor to the Trustee for deposit into the Capitalized  Interest Account on
the Closing Date pursuant to Section 3.22, which amount is $[____________].

            "Capitalized Interest Shortfall": With respect to any Distribution
Date through and including the Distribution Date immediately following the end
of the Pre-Funding Period, (A) the product of (a) a fraction, the numerator of
which is the balance of the Pre-Funding Account as of such Distribution Date and
the denominator of which is the sum of (i) the aggregate Principal Balance of
the Initial Mortgage Assets as of the Cut-Off Date, (ii) the Aggregate Principal
Balance of any Additional Mortgage Assets purchased by the Trust from the
Depositor on the Closing Date with funds from the Pre-Funding Account and (iii)
the amount of any funds on deposit in the Pre-Funding Account on the Closing
Date after the purchase of any Additional Mortgage Assets and (b) the aggregate
Interest Accrual Amount for the Certificates for the related Interest Accrual
Period plus the Servicing Fee and Trustee Fee, minus (B) any Pre-Funding
Earnings for such Collection Period.

            "Certificate":  Any Regular Certificate or Class R Certificate.

            "Certificate Custodian": Initially,  [______________];  thereafter

any other Certificate  Custodian  acceptable to the Depository and selected by
the Trustee.

            "Certificate    Owner":    With   respect   to   each   Book-Entry
Certificate, any beneficial owner thereof.

            "Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class CE and Class R Certificates) and any
Distribution Date, the Original Class Certificate Principal Balance reduced by
the sum of (i) all amounts actually distributed in respect of principal of such
Class on all prior Distribution Dates and (ii) Applied Realized Loss Amounts
allocated thereto. The Class CE and Class R Certificates do not have a
Certificate Principal Balance. With respect to any Certificate (other than a
Class CE or Class R Certificate) of a Class and any Distribution Date, the
portion of the Certificate Principal Balance of such Class represented by such
Certificate equal to the product of the Percentage Interest evidenced by such
Certificate and the Certificate Principal Balance of such Class.

            "Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.

            "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of the Class
R Certificate for any purpose hereof.

            "Certification":  As defined in Section 3.31(b) hereof.

                                      -5-
<PAGE>

            "Class": Collectively, Certificates or REMIC Regular Interests which
have the same priority of payment and bear the same class designation and the
form of which is identical except for variation in the Percentage Interest
evidenced thereby.

            "Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof substantially in the form annexed hereto as
Exhibits A-1 and A-2, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.

            "Class A  Certificateholders":  Collectively,  the  Holders of the
Class A Certificates.

            "Class CE Certificates": Any one of the Class CE Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-1, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.

            "Class CE Distributable Amount": With respect to any Distribution
Date, the amounts distributable on the REMIC 4 Components for such Distribution
Date remaining after the distributions in Section 4.02(b)(i)-(xii).

            "Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1 and Exhibit B-2, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.

            "Class M  Certificateholders":  Collectively,  the  Holders of the
Class M Certificates.

            "Class M-1 Applied Realized Loss Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-1 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class M-2 Applied Realized
Loss Amount and the Class B Applied Realized Loss Amount, in each case as of
such Distribution Date.

            "Class M-1 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Senior
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) [____]% and
(ii) the Pool Balance as of the last day of the related Collection Period and
(B) the Pool Balance as of the last day of the related Collection Period minus
the product of [___]% and the Cut-off Date Aggregate Principal Balance.

                                      -6-
<PAGE>

            "Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (iv) hereof, in each case
for such Distribution Date.

            "Class M-2 Applied Realized Loss Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-2 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the related Applied Realized Loss
Amount as of such Distribution Date over (ii) the Class B Applied Realized Loss
Amount as of such Distribution Date.

            "Class M-2 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Senior
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) [___]% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of [___]% and the Cut-off Date
Aggregate Principal Balance.

            "Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (vii) hereof, in each
case for such Distribution Date.

            "Class B Applied Realized Loss Amount": As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class B Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the related Applied Realized Loss Amount as of such
Distribution Date.

            "Class B Principal Distribution Amount": As of any Distribution Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect,
the excess of (x) the sum of (i) the sum of the Certificate Principal Balances
of the Class A Certificates (after taking into account the payment of the Senior
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

                                      -7-
<PAGE>

Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) [____]% and
(ii) the Pool Balance as of the last day of the related Collection Period and
(B) the Pool Balance as of the last day of the related Collection Period minus
the product of [___]% and the Cut-off Date Aggregate Principal Balance.

            "Class B Realized Loss Amortization Amount": As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (x) hereof, in each case
for such Distribution Date.

            "Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit C-2
and evidencing the ownership of the Residual Interest in each of Upper-Tier
REMIC and Lower-Tier REMIC. The Class R Certificate represents the ownership of
the Class R-1 Interest and Class R-2 Interest.

                  "Class R-1 Interest": The uncertificated residual interest in
                  REMIC 1.

                  "Class R-2 Interest": The uncertificated residual interest in
                  REMIC 2.

                  "Class R-3 Interest": The uncertificated residual interest in
                  REMIC 3.

                  "Class R-4 Interest": The uncertificated residual interest in
                  REMIC 4.

            "Class T1-1 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the Pool Cap.

            "Class T1-1 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 98% of the Pool Balance minus the Remaining Initial
Overcollateralization Amount.

            "Class T1-2 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the Pool Cap.

            "Class T1-2 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the excess of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount over (b) the Subsequent
Overcollateralization Amount.

            "Class T1-3 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the Pool Cap.

                                      -8-
<PAGE>

            "Class T1-3 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the sum of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount and (b) the Subsequent
Overcollateralization Amount.

            "Class T1-4 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Pool Cap.

            "Class T1-4 Principal Amount": As of any Distribution Date, an
amount equal to (a) the Initial Overcollateralization Amount minus (b) any
principal payments and Realized Losses and accreted interest allocated to the
Class T1-4 Interest as set forth in Section 4.08(d).

            "Class T2-1 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-2 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-3 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-4 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Pool Cap.

            "Class T2-11 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-1
Principal Amount and bears interest at (a) the Pool Cap minus (b) the REMIC 2
Pass-Through Rate.

            "Class T2-12 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-2
Principal Amount and bears interest at (a) the Pool Cap minus (b) the REMIC 2
Pass-Through Rate.

            "Class T2-13 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-3
Principal Amount and bears interest at (a) the Pool Cap minus (b) the REMIC 2
Pass-Through Rate.

            "Class T3-A1 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to (a) the Certificate
Principal Balance of the Class A-1 Certificates minus (b) the principal balance
of the Class T3-101 Interest and bears interest at the Pool Cap.

            "Class T3-A2 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to (a) the Certificate
Principal Balance of the

                                      -9-
<PAGE>

Class A-2 Certificates minus (b) the principal balance of the Class T3-102
Interest and bears interest at the Pool Cap.

            "Class T3-M1 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-1 Certificates and bears interest at the Pool
Cap.

            "Class T3-M2 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-2 Certificates and bears interest at the Pool
Cap.

            "Class T3-B Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class B Certificates and bears interest at the Pool
Cap.

            "Class T3-4 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Pool Cap.

            "Class T3-11 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-1
Principal Amount and is entitled to all interest distributions on the Class
T2-11 Interest.

            "Class T3-12 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-2
Principal Amount and is entitled to all interest distributions on the Class
T2-12 Interest.

            "Class T3-13 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-3
Principal Amount and is entitled to all interest distributions on the Class
T2-13 Interest.

            "Class T4-A1 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-1 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-1
Certificates and bears interest at the Class A-1 REMIC Pass-Through Rate.

            "Class T4-A1IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class A-1
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class A-1 REMIC Pass-Through Rate.

            "Class T4-A2 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-2 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-2
Certificates and bears interest at the Class A-2 REMIC Pass-Through Rate.

            "Class T4-A2IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class A-2
Certificates and bears interest

                                      -10-
<PAGE>

at a rate equal to the excess, if any, of (i) the Pool Cap over (ii) the Class
A-2 REMIC Pass-Through Rate.

            "Class T4-M1 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-1 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-1
Certificates and bears interest at the Class M-1 REMIC Pass-Through Rate.

            "Class T4-M1IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-1
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-1 REMIC Pass-Through Rate.

            "Class T4-M2 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-2 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-2
Certificates and bears interest at the Class M-2 REMIC Pass-Through Rate.

            "Class T4-M2IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-2
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-2 REMIC Pass-Through Rate.

            "Class T4-B Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class B Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class B
Certificates and bears interest at the Class B REMIC Pass-Through Rate.

            "Class T4-BIO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class B
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class B REMIC Pass-Through Rate.

            "Class T4-4 Interest": A regular interest in REMIC 4 that has a
principal balance equal to the Class TA-4 Principal Amount and bears interest at
the Pool Cap.

            "Class T4-11 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-1 Principal Amount and is entitled to all
interest distributions on the Class T3-11 Interest.

            "Class T4-12 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-2 Principal Amount and is entitled to all
interest distributions on the Class T3-12 Interest.

            "Class T4-13 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-3 Principal Amount and is entitled to all
interest distributions on the Class T3-13 Interest.

                                      -11-
<PAGE>

            "Closing Date":  [___________], 20__.

            "Code":  The Internal  Revenue Code of 1986,  as it may be amended
from time to time.

            "Collection Account": The account or accounts created and maintained
by the Servicers pursuant to Section 3.04, which shall be entitled "Collection
Account, Mid-State Homes, Inc. and Walter Mortgage Company, as Servicers for the
Trust under the Pooling and Servicing Agreement dated as of [________], 20 among
Mid-State Capital Corporation, as Depositor, Mid-State Homes, Inc., as a
Servicer, Walter Mortgage Company, as a Servicer, and [________________], as
Trustee, in trust for registered Holders of MSCC 20__-[___] Trust, MSCC
Pass-Through Certificates, Series 20__-[__]," and which must be an Eligible
Account.

            "Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar month preceding the month in which
such Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.

            "Condemnation Proceeds": All awards or settlements in respect of a
taking of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.

            "Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at [________________________] or
at such other address as the Trustee may designate from time to time by notice
to the Certificateholders, the Depositor and the Servicers.

            "Corresponding Classes": With respect to REMIC 3 and REMIC 4, the
following Classes shall be Corresponding Classes:

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

Corresponding REMIC 3 Classes            Corresponding REMIC 4 Classes
-------------------------------------------------------------------------------

T3-A1                                    T4-A1 and T4-A1IO, in the aggregate
-------------------------------------------------------------------------------

T3-A2                                    T4-A2 and T4-A2IO, in the aggregate
-------------------------------------------------------------------------------

T3-M1                                    T4-M1 and T4-M1IO, in the aggregate
-------------------------------------------------------------------------------

T3-M2                                    T4-M2 and T4-M2IO, in the aggregate
-------------------------------------------------------------------------------

T3-B                                     T4-B and T4-BIO, in the aggregate
-------------------------------------------------------------------------------

T3-4                                     T4-4
-------------------------------------------------------------------------------

            "Coupon Rate": With respect to each Mortgage Asset, the annual rate
at which finance charges accrue on such Mortgage Asset from time to time in
accordance with the provisions of the related Note, which rate (i) in the case
of each Fixed-Rate Mortgage Asset shall remain constant at the rate set forth in
the Schedule of Mortgage Assets as the Coupon Rate in

                                      -12-
<PAGE>

effect immediately following the Cut-off Date and (ii) in the case of each
Adjustable-Rate Mortgage Asset (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 Schedule of Mortgage Assets as the Coupon 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, to equal the
sum, rounded as provided in the Note, of the Index, determined as set forth in
the related Note, plus the related Gross Margin subject to the limitations set
forth in the related Note. With respect to each Mortgage Asset 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
Asset became an REO Property.

            "Cut-off Date":  [_________], 20  .

            "Cut-off Date Aggregate Principal  Balance":  The aggregate of the
Cut-off Date Principal Balances of the Mortgage Assets.

            "Cut-off Date Principal Balance": With respect to any Mortgage
Asset, the unpaid principal balance thereof as of the Cut-off Date after
application of funds received on or before such date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Asset).

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

            "Defective Mortgage Asset": A Mortgage Asset replaced or to be
replaced by one or more Eligible Substitute Mortgage Assets.

            "Deficient Valuation": With respect to any Mortgage Asset, 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
Asset, which valuation results from a proceeding initiated under the Bankruptcy
Code.

            "Definitive Certificates":  As defined in Section 5.02(c) hereof.

            "Delinquent": Any Mortgage Asset with respect to which the Monthly
Payment due on a Due Date is not made by the close of business on the next
scheduled Due Date for such Mortgage Asset.

            "Depositor":    Mid-State   Capital   Corporation,    a   Delaware
corporation, or any successor in interest.

            "Depository": The initial depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act. The Depository
shall initially be the registered Holder of the Book-Entry Certificates. The
Depository shall at all times be a "clearing

                                      -13-
<PAGE>

corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.

            "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 any 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 the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicers
under this Agreement) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicers under this Agreement)
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": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any possession of the United
States, any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided by nationally recognized counsel to
the Trustee that the holding of an ownership interest in the Class R Certificate
by such Person may cause the Trust Fund or any Person having an ownership
interest in any Class of Certificates (other than such Person) to incur
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in the Class R Certificate
to such Person. A corporation will not be treated as an instrumentality of the
United States or of any state or political subdivision thereof if all of its
activities are subject to tax and a majority of its board of directors is not
selected by a governmental unit. The term "United States," "state" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.

            "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, [______________], as Trustee, in trust for the registered
Holders of MSCC 20__-[___] Trust, MSCC Pass-Through Certificates, Series 20__
-[___]" and which must be an Eligible Account.

            "Distribution  Date":  The 25th day of any calendar  month,  or if
such 25th day is not a Business  Day, the Business Day  immediately  following
such 25th day, commencing in [_______] 20  .

                                      -15-
<PAGE>

            "Distribution  Date  Statement":  As defined  in  Section  4.06(a)
hereof.

            "Due Date": With respect to each Mortgage Asset and any Distribution
Date, the day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Asset was due, exclusive of any
grace period.

            "Eligible Account": Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "[___]" by [___] and "[___]" by [___] (or comparable ratings if [___] and
[___] are not the Rating Agencies) by each of the Rating Agencies at the time
any amounts are held on deposit therein, (ii) an account or accounts the
deposits in which are fully insured by the FDIC, (iii) a trust account or
accounts maintained with the trust department of a federal or state chartered
depository institution, national banking association or trust company acting in
its fiduciary capacity or (iv) an account otherwise acceptable to each Rating
Agency without reduction or withdrawal of their then current ratings of the
Certificates as evidenced by a letter from each Rating Agency to the Trustee.
Eligible Accounts may bear interest.

            "Eligible 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 or managed by the Depositor, the Servicers, the Trustee or any
of their respective Affiliates or for which an Affiliate of the Trustee serves
as an advisor:

            (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)  (A) demand and time deposits in, certificates of deposit of,
                  bankers' acceptances issued by or federal funds sold by any
                  depository institution or trust company (including the Trustee
                  or its agents acting in their respective commercial
                  capacities) incorporated under the laws of the United States
                  of America or any state thereof and subject to supervision and
                  examination by federal and/or state authorities, so long as,
                  at the time of such investment or contractual commitment
                  providing for such investment, such depository institution or
                  trust company or its ultimate parent has a short-term
                  uninsured debt rating in one of the two highest available
                  rating categories of [___] and [___] and provided that each
                  such investment has an original maturity of no more than 365
                  days and (B) any other demand or time deposit or deposit which
                  is fully insured by the FDIC;

            (iii) repurchase obligations with a term not to exceed 30 days with
                  respect to any security described in clause (i) above and
                  entered into with a depository institution or trust company
                  (acting as principal) rated [__] or higher by [__] and [___],
                  provided, however, that collateral transferred pursuant to
                  such repurchase obligation must be of the type described in
                  clause (i) above and must (A) be valued daily at current
                  market prices plus accrued interest or (B) pursuant to such
                  valuation, be equal, at all times, to 105% of the cash
                  transferred by the Trustee in exchange for such collateral and
                  (C) be delivered to

                                      -15-
<PAGE>

                  the Trustee or, if the Trustee is supplying the collateral, an
                  agent for the Trustee, in such a manner as to accomplish
                  perfection of a security interest in the collateral by
                  possession of certificated securities;

            (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 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 in
                  its highest short-term unsecured debt rating available at the
                  time of such investment;

            (vi)  units of money market funds registered under the Investment
                  Company Act of 1940 (including funds managed or advised by the
                  Trustee or affiliates thereof) that, if rated by each Rating
                  Agency, are rated in its highest rating category; and

            (vii) if previously confirmed in writing to the Trustee, any other
                  demand, money market or time deposit, or any other obligation,
                  security or investment, as may be acceptable to the Rating
                  Agencies in writing as an eligible investment of funds backing
                  securities having ratings equivalent to its highest initial
                  rating of the Senior Certificates;

provided, 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.

            "Eligible Substitute Mortgage Asset": A mortgage asset substituted
for a Defective Mortgage Asset 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 due during or prior to the
month of substitution, not in excess of, and not more than 5% less than, the
outstanding principal balance of the Defective Mortgage Asset as of the Due Date
in the calendar month during which the substitution occurs, (ii) have a Coupon
Rate, with respect to a Fixed-Rate Mortgage Asset, not less than the Coupon Rate
of the Defective Mortgage Asset and not more than 1% in excess of the Coupon
Rate of such Defective Mortgage Asset, (iii) have the same Due Date as the
Defective Mortgage Asset; (iv) if an Adjustable-Rate Mortgage Asset, have a
Maximum Coupon Rate not less than the Maximum Coupon Rate for the Defective
Mortgage Asset, (v) if an Adjustable-Rate Mortgage Asset, have a Minimum Coupon
Rate not less than the Minimum Coupon Rate of the Defective Mortgage Asset, (vi)
if an Adjustable-Rate Mortgage Asset, have a Gross Margin equal to or greater
than the Gross Margin of the Defective Mortgage Asset, (vii) if an
Adjustable-Rate Mortgage Asset, have the same Index as the Defective Mortgage
Asset, (viii) if an Adjustable-Rate Mortgage Asset, have a next Adjustment Date
not more than two months later than the next Adjustment Date on the Defective
Mortgage Asset, an Eligible Substitute Mortgage Asset must have all Adjustment
Dates

                                      -16-
<PAGE>

occurring during the same Interest Accrual Period during which Adjustment Dates
occur with respect to the substituted Mortgage Asset, (ix) have a remaining term
to maturity not greater than (and not more than one year less than) that of the
Defective Mortgage Asset, (x) be current as of the date of substitution, (xi) in
the case of a Defective Mortgage Asset that is a Mortgage Loan, have a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Defective Mortgage Asset as of such date, (xii) have
been underwritten or reunderwritten in accordance with the same underwriting
criteria and guidelines as the Defective Mortgage Asset, (xiii) have the same
lien priority as the Defective Mortgage Asset and (xiv) conform to each
representation and warranty set forth in Section 2.04 hereof. In the event that
one or more mortgage assets are substituted for one or more Defective Mortgage
Assets, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Coupon Rates described in clause (ii)
hereof shall be determined on the basis of weighted average Coupon Rates, the
terms described in clause (ix) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios for
Defective Mortgage Assets that are Mortgage Loans described in clause (xi)
hereof shall be satisfied as to each such mortgage asset and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (xiv) hereof must be satisfied as to each Eligible
Substitute Mortgage Asset or in the aggregate, as the case may be. Any Defective
Mortgage Asset that is a Mortgage Loan or Account must be replaced by an
Eligible Substitute Mortgage Asset that will be a Mortgage Loan or Account, as
applicable.

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

      "ERISA-Restricted Certificates": Any of the Class CE and Class R
Certificates.

      "Escrow Account": The Eligible Account or Eligible Accounts created and
maintained pursuant to Section 3.06.

      "Escrow Payments": The amounts constituting taxes, assessments, mortgage
insurance premiums, fire, flood and hazard insurance premiums and other payments
required to be escrowed by the Obligor pursuant to any Mortgage Asset.

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

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

      "Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii) the
Servicing Fee Rate.

      "Extended Period": As defined in Section 9.04(b).

      "Extra Principal Distribution Amount": As of any Distribution Date, the
lesser of (x) the Monthly Excess Interest Amount for such Distribution Date and
(y) the Overcollateralization Deficiency for such Distribution Date.

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

      "Fidelity Bond": Shall have the meaning assigned thereto in Section 3.12.

                                      -17-
<PAGE>

      "Final Recovery Determination": With respect to any defaulted Mortgage
Asset or any REO Property (other than a Mortgage Asset or REO Property (i)
purchased by the Seller pursuant to or as contemplated by Section 2.03, (ii)
purchased by a Servicer pursuant to Section 3.16 or (iii) purchased by the
Servicers pursuant to Section 10.01), a determination made by the applicable
Servicer that all Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds and other payments or recoveries which such Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicers shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.

      "Fixed-Rate Mortgage Asset": A Mortgage Asset which has a constant annual
rate at which interest accrues in accordance with the provisions of the related
Note.

      "Foreclosure Price": The amount reasonably expected to be received from
the sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.

      "Form 10-K": As defined in Section 3.31(a) hereof.

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

      "Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, the Servicers and their
respective Affiliates, (ii) does not have any direct financial interest in or
any material indirect financial interest in the Depositor or the Servicers or
any Affiliate thereof, and (iii) is not connected with the Depositor or the
Servicers or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor or the Servicers 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 or the Servicers or any Affiliate thereof, as the case may be.

      "Independent Contractor": Either (i) any Person (other than the Servicers)
that would be an "independent contractor" with respect to the Trust Fund within
the meaning of Section 856(d)(3) of the Code if the Trust Fund 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 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund 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 Servicers) if the Trustee has received an Opinion of
Counsel, which Opinion of Counsel shall be an expense of the Trust Fund, 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

                                      -18-
<PAGE>

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.

      "Index": With respect to each Adjustable-Rate Mortgage Asset and with
respect to each related Adjustment Date, the index as specified in the related
Note.

      "Initial Certificate Principal Balance": With respect to any Certificate
of a Class other than a Class CE or Class R Certificate, the amount designated
"Initial Certificate Principal Balance" on the face thereof.

      "Initial Mortgage Asset": Any of the Mortgage Assets transferred and
assigned to the Trustee pursuant to Section 2.01 or substituted pursuant to
Section 2.03 and held as a part of the Trust Fund, the Mortgage Assets so held
being identified in the Schedule of Mortgage Assets.

      "Initial Overcollateralization Amount": $[________].

      "Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Asset, to the extent such proceeds are not
to be applied to the restoration of the related Mortgaged Property or released
to the Obligor in accordance with the Servicers' procedures, subject to the
terms and conditions of the related Note and Mortgage.

      "Interest Accrual Period": With respect to any Distribution Date and the
Offered Certificates, the period from and including the first day of each month,
commencing [_______] 1, 20__, to and including the last day of such month.

      "Interest Carry Forward Amount": For any Class of Certificates (other than
the Class CE and Class R Certificates) and any Distribution Date, the sum of (a)
the excess, if any, of the Accrued Certificate Interest and any Interest Carry
Forward Amount for the prior Distribution Date, over the amount in respect of
interest actually distributed on such Class on such prior Distribution Date and
(b) interest on such excess at the applicable Pass-Through Rate on the basis of
360-day year consisting of twelve 30-day months.

      "Interest Percentage": With respect to any Class of Certificates and any
Distribution Date, the ratio (expressed as a decimal carried to six places) of
the Accrued Certificate Interest for such Class to the sum of the Accrued
Certificate Interest for all Classes, in each case with respect to such
Distribution Date, without regard to Relief Act Interest Shortfalls.

      "Interest Remittance Amount": As of any Distribution Date, the sum,
without duplication, of (i) all finance charges due and collected with respect
to the related Collection Period on the Mortgage Assets received by the
Servicers on or prior to the Determination Date for such Distribution Date (less
the Servicing Fee, amounts available for reimbursement of Servicing Advances
pursuant to Section 3.05 and expenses reimbursable pursuant to Section 6.03),
(ii) the portion of any payment in connection with any Principal Prepayment,
substitution, Purchase Price, Termination Price, Insurance Proceeds or Net
Liquidation Proceeds relating to finance charges with respect to such Mortgage
Assets received during the related Prepayment Period and (iii) the portion of
any Reimbursement Amount relating to such Mortgage Assets received during the
related Prepayment Period.

                                      -19-
<PAGE>

      "Late Collections": With respect to any Mortgage Asset, all amounts
received subsequent to the Determination Date immediately following any related
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Condemnation 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 Note) but
delinquent on a contractual basis for such Collection Period and not previously
recovered.

      "Liquidated Mortgage Asset": As to any Distribution Date, any defaulted
Mortgage Asset in respect of which the applicable Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of the
related Prepayment Period, that all Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds which it expects to recover with respect to the
liquidation of the Mortgage Asset or disposition of the related REO Property
have been recovered.

            "Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the applicable 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 or
(ii) the liquidation of a defaulted Mortgage Asset by means of a trustee's sale,
foreclosure sale or otherwise.

      "Liquidation Report": The report with respect to a Liquidated Mortgage
Asset in such form as is agreed to by the Servicers and the Trustee listing (i)
the sale price of the related Mortgaged Property or amount of the REO
Disposition, (ii) the amount of any Realized Loss (or gain) with respect to such
Liquidated Mortgage Asset, (iii) the expenses relating to the liquidation of
such Liquidated Mortgage Asset and (iv) such other information as is agreed to
by the Servicers and the Trustee.

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

      "Losses": As defined in Section 9.03.

      "Lost Note Affidavit": With respect to any Mortgage Asset as to which the
original Note has been permanently lost or destroyed and has not been replaced,
an affidavit from the Seller certifying that the original Note has been lost,
misplaced or destroyed (together with a copy of the related Note and
indemnifying the Trust against any loss, cost or liability resulting from the
failure to deliver the original Note) in the form of Exhibit F hereto.

      "Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.

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

                                      -20-
<PAGE>

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

      "Monthly Excess Cashflow Amount": The sum of the Monthly Excess Interest
Amount, the Overcollateralization Release Amount and (without duplication) any
portion of the Principal Distribution Amount remaining after principal
distributions on the Offered Certificates.

      "Monthly Excess Interest Amount": With respect to each Distribution Date,
the amount, if any, by which the Interest Remittance Amount for such
Distribution Date exceeds the aggregate amount distributed on such Distribution
Date pursuant to paragraphs (i) through (vi) under Section 4.01.

      "Monthly Form 8-K": As defined in Section 3.31(a) hereof.

      "Monthly Payment": With respect to any Mortgage Asset, the scheduled
monthly payment of principal and accrued finance charges on such Mortgage Asset
which is payable by the related Obligor from time to time under the related
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Asset and (ii) any
reduction in the amount of interest collectible from the related Obligor
pursuant to the Relief Act or similar state laws; (b) without giving effect to
any extension granted or agreed to by a Servicer pursuant to Section 3.01; and
(c) on the assumption that all other amounts, if any, due under such Mortgage
Asset are paid when due.

      "Mortgage": With respect to (i) an Account, the original mortgage, deed of
trust, mechanic's lien contract or other security instrument executed by an
Obligor which creates a lien on real property and improvements thereon securing
a Note and (ii) a Mortgage Loan, the mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Note.

      "Mortgage Asset": The Accounts and Mortgage Loans. "Mortgage Assets" shall
include both Initial Mortgage Assets and Additional Mortgage Assets.

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

      "Mortgage Asset Pool": The pool of Mortgage Assets, identified on Exhibit
D from time to time, and any REO Properties acquired in respect thereof.

      "Mortgage Asset Purchase Agreement": The agreement between the Seller and
the Depositor, dated as of [_______], 20__, regarding the transfer of the
Mortgage Assets by the Seller to or at the direction of the Depositor.

      "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03 hereof or pursuant to an
Additional Transfer Agreement as from time to time held as a part of the Trust
Fund, the Mortgage Loans so held being identified in the Schedule of Mortgage
Assets.

                                      -21-
<PAGE>

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

      "Net Liquidation Proceeds": With respect to any Liquidated Mortgage Asset
or any other disposition of related Mortgaged Property (including REO Property)
the related Liquidation Proceeds net of unreimbursed Servicing Advances,
Servicing Fees and any other accrued and unpaid servicing fees received and
retained in connection with the liquidation of such Mortgage Asset or Mortgaged
Property.

      "Net Maximum Coupon Rate": With respect to any Adjustable-Rate Mortgage
Asset, the applicable Maximum Coupon Rate minus the Expense Fee Rate.

      "Net Coupon Rate": With respect to any Mortgage Asset, the Coupon Rate
borne by such Mortgage Asset minus the Expense Fee Rate.

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

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

      "Note": The original executed note or, with respect to an Account
originated in Texas, the retail instalment contract, or other evidence of
indebtedness evidencing the indebtedness of an Obligor under a Mortgage Asset.

      "Obligor": The obligor on a Note.

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

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

      "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicers except that
any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.

      "Optional Termination Date": The first Distribution Date on which the
Servicers may opt to terminate the Mortgage Asset Pool pursuant to Section
10.01.

                                      -22-
<PAGE>

      "Original Class Certificate Principal Balance": With respect to each Class
of Certificates, the Certificate Principal Balance thereof on the Closing Date,
as set forth opposite such Class in the Preliminary Statement, except with
respect to the Class CE and Class R Certificates, which have an Original Class
Certificate Principal Balance of zero.

      "Overcollateralization Amount": As of any Distribution Date, the excess,
if any, of (x) the Pool Balance as of the last day of the related Collection
Period over (y) the aggregate Certificate Principal Balances of all Classes of
Offered Certificates (after taking into account all distributions of principal
on such Distribution Date).

      "Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of Offered Certificates resulting from the distribution of the Principal
Distribution Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on such Distribution Date.

      "Overcollateralization Release Amount": With respect to any Distribution
Date after the Stepdown Date on which a Trigger Event is not in effect, the
excess, if any, of (i) the Overcollateralization Amount for such Distribution
Date, assuming that 100% of the Principal Remittance Amount is applied as a
principal payment on the Offered Certificates on such Distribution Date, over
(ii) the Targeted Overcollateralization Amount for such Distribution Date. With
respect to any Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.

      "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 each Distribution Date and Class of
Certificates, the per annum rate set forth opposite such Class in the table in
the Preliminary Statement during the related Interest Accrual Period on the
Certificate Principal Balance. With respect to each Distribution Date and any
Regular Interest, the Pass-Through Rate set forth in the definition thereof.

            "Paying   Agent":   Any  paying   agent   appointed   pursuant  to
Section 5.05.

      "Percentage Interest": With respect to any Certificate (other than a Class
CE or Class R Certificate), a fraction, expressed as a percentage, the numerator
of which is the Initial Certificate Principal Balance, as the case may be,
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance of the related Class. With respect to a
Class CE Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate; provided, however, that
the sum of all such percentages for such Class totals 100%. With respect to the
Class R Certificate, 100%.

      "Periodic Rate Cap": With respect to each Adjustable-Rate Mortgage Asset
and any Adjustment Date therefor, the fixed percentage set forth in the related
Note, which is the

                                      -23-
<PAGE>

maximum amount by which the Coupon Rate for such Mortgage Asset may increase or
decrease (without regard to the Maximum Coupon Rate or the Minimum Coupon Rate)
on such Adjustment Date from the Coupon Rate in effect immediately prior to such
Adjustment Date.

      "Permitted Transferee": Any transferee of a Class R Certificate other than
a Disqualified Organization, a non-U.S. Person or a U.S. Person with respect to
whom income on the Class R Certificate is attributable to a foreign permanent
establishment or fixed base, within the meaning of an applicable income tax
treaty, of such Person or any other U.S. Person.

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

      "Pool Balance": As of any date of determination, the aggregate Principal
Balance of the Mortgage Assets.

      "Pool Cap": The Weighted Average Net Coupon Rate.

      "Pre-Funded Amount": With respect to any date, the amount on deposit in
the Pre-Funding Account as of such date (net of any reinvestment earnings
thereon).

      "Pre-Funding Account": The account established and maintained pursuant to
Section 3.22.

      "Pre-Funding Earnings": With respect to each Distribution Date, the actual
investment earnings earned on amounts on deposit in the Pre-Funding Account
during the period from the preceding Distribution Date (or the Closing Date, in
the case of the first Distribution Date) to the current Distribution Date.

      "Pre-Funding Period": The period beginning on the Closing Date and ending
on the earlier of (a) the date on which the amount on deposit in the Pre-Funding
Account is less than $100,000 or (b) the close of business on [________], 20__.

      "Prepayment Charge": With respect to any Prepayment Period, any prepayment
premium, penalty or charge collected by the Servicers from an Obligor in
connection with any voluntary Principal Prepayment in full pursuant to the terms
of the related Note.

      "Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Asset that was during the related Prepayment Period the
subject of a Principal Prepayment in full that was applied by the Servicers to
reduce the outstanding Principal Balance of such Mortgage Asset on a date
preceding the related Due Date, an amount equal to interest at the applicable
Coupon Rate (net of the Servicing Fee 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.

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

                                      -24-
<PAGE>

      "Principal Balance": As to any Mortgage Asset and any day, other than a
Liquidated Mortgage Asset, the related Cut-off Date Principal Balance, minus the
sum of (i) all collections and other amounts credited against the principal
balance of any such Mortgage Asset, (ii) any Deficient Valuation and (iii) any
principal reduction resulting from a Servicer Modification. For purposes of this
definition, a Liquidated Mortgage Asset shall be deemed to have a Principal
Balance equal to the Principal Balance of the related Mortgage Asset as of the
final recovery of related Liquidation Proceeds and a Principal Balance of zero
thereafter. As to any REO Property and any day, the Principal Balance of the
related Mortgage Asset immediately prior to such Mortgage Asset becoming REO
Property minus any REO Principal Amortization received with respect thereto on
or prior to such day.

      "Principal Distribution Amount": As to any Distribution Date, the sum of
(i) the Principal Remittance Amount minus, for Distribution Dates occurring on
and after the Stepdown Date and for which a Trigger Event is not in effect, the
Overcollateralization Release Amount, if any, and (ii) the Extra Principal
Distribution Amount, if any.

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

      "Principal Remittance Amount": With respect to any Distribution Date, to
the extent of funds available therefor, the sum (less amounts available for
reimbursement of Servicing Advances pursuant to Section 3.05 and expenses
reimbursable pursuant to Section 6.03) of: (i) each payment of principal on a
Mortgage Asset due during the related Collection Period and received by the
Servicers on or prior to the related Determination Date, (ii) all full and
partial Principal Prepayments received by the Servicers during the related
Prepayment Period, (iii) Insurance Proceeds and Net Liquidation Proceeds
allocable to principal actually collected by the Servicers during the related
Prepayment Period, (iv) with respect to Defective Mortgage Assets repurchased
with respect to such Prepayment Period, the portion of the Purchase Price
allocable to principal, (v) any Substitution Adjustment Amounts received during
the related Prepayment Period and (vi) on the Distribution Date on which the
Trust is to be terminated in accordance with Section 10.01 hereof, that portion
of the Termination Price in respect of principal.

      "Private Certificates": Any of the Class CE and Class R Certificates.

      "Prospectus Supplement": That certain Prospectus Supplement
dated  [________], 20__ relating  to  the  public  offering  of  the  Offered
Certificates.

      "Purchase Price": With respect to any Mortgage Asset or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, an amount
equal to the sum of (i) 100% of the Principal Balance thereof as of the date of
purchase (or such other price as provided in Section 10.01), (ii) in the case of
(x) a Mortgage Asset, accrued finance charges on such Principal Balance at the
applicable Coupon Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Obligor, which payment had as of
the date of purchase been distributed pursuant to Section 4.01, through the end
of the calendar

                                      -25-
<PAGE>

month in which the purchase is to be effected, and (y) an REO Property, its fair
market value, determined in good faith by the Servicers, (iii) any unreimbursed
Servicing Advances and any unpaid Servicing Fees allocable to such Mortgage
Asset or REO Property, (iv) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Asset or REO Property pursuant to Section
3.13, (v) in the case of a Mortgage Asset required to be purchased pursuant to
Section 2.03, expenses reasonably incurred or to be incurred by the Servicers or
the Trustee in respect of the breach or defect giving rise to the purchase
obligation and (vi) in the case of a Mortgage Asset required to be purchased by
the Depositor in accordance with Section 2.03 due to a breach of the Depositor's
representation in Section 2.04(xiii) hereof, all costs and damages reasonably
incurred by the Trust in connection with any violation of such Mortgage Asset of
any predatory or abusive lending law.

      "Rating Agency or Rating Agencies": [___] and [___], or their respective
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
organizations as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Depositor, notice of which designation shall be given to the Trustee and the
Servicers.

      "Realized Loss": With respect to a Liquidated Mortgage Asset, the amount
by which the remaining unpaid principal balance of the Mortgage Asset exceeds
the amount of Net Liquidation Proceeds applied to the principal balance of the
related Mortgage Asset. With respect to any Mortgage Asset, a Deficient
Valuation or a reduction in the Principal Balance thereof resulting from a
Servicer Modification.

      "Realized Loss Amortization Amount": Any of the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount and the
Class B Realized Loss Amortization Amount.

      "Record Date": With respect to all of the Certificates, the last Business
Day of the month immediately preceding the month in which the related
Distribution Date occurs.

      "Regular Certificate": Any of the Offered Certificates and the Class CE
Certificates.

      "Reimbursement Amount": As defined in Section 2.03.

      "Related Documents": With respect to any Mortgage Asset, the related
Notes, Mortgages and other related documents.

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

      "Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Asset with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Collection
Period as a result of the application of the Relief Act or similar state laws,
the amount by which (i) interest collectible on such Mortgage Asset during such
Collection Period is less than (ii) one month's interest on the Principal
Balance of such Mortgage Asset at the Coupon Rate for such Mortgage Asset before
giving effect to the application of the Relief Act or similar state laws.

                                      -26-
<PAGE>

      "Remaining Initial Overcollateralization Amount": As of any Distribution
Date, an amount equal to (a) the Initial Overcollateralization Amount minus (b)
the sum of (i) any Overcollateralization Release Amounts distributed and (ii)
Realized Losses allocated to the Class T1-4 Interest.

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

      "REMIC 1 Regular Interests": Class T1-1 Interest, Class T1-2 Interest,
Class T1-3 Interest and Class T1-4 Interest.

      "REMIC 2 Pass-Through Rate": With respect to any Distribution Date, a rate
obtained by dividing (A) the product of (i) 2 times (ii) the Pool Cap times
(iii) the Class T1-2 Principal Amount by (B) the sum of (x) the Class T1-2
Principal Amount and (y) the Class T1-3 Principal Amount, such principal
balances being determined before any reductions of principal balance or
allocation of Realized Losses made on such Distribution Date.

      "REMIC 2 Regular Interests": Class T2-1 Interest, Class T2-2 Interest,
Class T2-3 Interest, Class T2-4 Interest, Class T2-11 Interest, Class T2-12
Interest and Class T2-13 Interest.

      "REMIC 3 Regular Interests": The Class T3-A1 Interest, Class T3-A2
Interest, Class T3-M1 Interest, Class T3-M2 Interest, Class T3-B Interest, Class
T3-4 Interest, Class T3-11 Interest, Class T3-12 Interest and Class T3-13
Interest.

      "REMIC 4 Components": The Class T4-4, Class T4-11, Class T4-12, Class
T4-13, Class T4-A1IO, Class T4-A2IO, Class T4-M1IO, Class T4-M2IO and Class
T4-BIO. Each of the REMIC 4 Components represents a regular interest in REMIC 4.

      "REMIC 4 Regular Interests": The Class T4-A1 Interest, Class T4-A2
Interest, Class T4-M1 Interest, Class T4-M2 Interest, Class T4-B Interest and
the REMIC 4 Components.

      "REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.

      "REMIC Regular Interest": As defined in the Preliminary Statement.

      "Remittance Report": A report prepared by the Servicers and delivered to
the Trustee pursuant to Section 4.07, containing the information agreed upon by
the Servicers and the Trustee.

      "Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.

      "REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust.

                                      -27-
<PAGE>

      "REO Principal Amortization": With respect to any REO Property, for any
calendar month, 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 Assets and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicers pursuant to Section
3.13 for unpaid Servicing Fees in respect of the related Mortgage Asset and
unreimbursed Servicing Advances in respect of such REO Property or the related
Mortgage Asset.

      "REO Property": A Mortgaged Property acquired by a Servicer on behalf of
the Trust through foreclosure or deed-in-lieu of foreclosure, as described in
Section 3.13.

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

      "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
manufactured home, or (iv) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.

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

      "Responsible Officer": When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and in each case having direct responsibility for the administration of
this Agreement.

      "Schedule of Mortgage Assets": As of any date with respect to the Mortgage
Assets, the lists of such Mortgage Assets included in the Trust Fund on such
date attached hereto as Exhibit D. The Schedule of Mortgage Assets shall set
forth the following information with respect to each Mortgage Asset:

            (1)   the Mortgage Asset identifying number;

            (2)   the zip code of the Mortgaged Property;

            (3)   the first payment date;

            (4)   the stated maturity date;

            (5)   the stated remaining months to maturity;

            (6)   the original principal amount of the Mortgage Asset;

                                      -28-
<PAGE>

            (7)   the Principal Balance of each Mortgage Asset as of the Cut-off
                  Date;

            (8)   the Coupon Rate of the Mortgage Asset as of the Cut-off Date;

            (9)   the Monthly Payment of the Mortgage Asset as of the Cut-off
                  Date;

            (10)  with respect to each Mortgage Loan, the Loan-to-Value Ratio at
                  origination;

            (11)  a code indicating the performance status of the Mortgage Asset
                  as of the Cut-off Date;

            (12)  a code indicating the Index that is associated with any
                  Adjustable-Rate Mortgage Asset;

            (13)  the Gross Margin of any Adjustable-Rate Mortgage Asset;

            (14)  the Periodic Rate Cap of any Adjustable-Rate Mortgage Asset;

            (15)  the Minimum Coupon Rate of any Adjustable-Rate Mortgage Asset;

            (16)  the Maximum Coupon Rate of any Adjustable-Rate Mortgage Asset;

            (17) the first Adjustment Date of any Adjustable-Rate Mortgage Asset
immediately following the Cut-off Date;

            (18) the rate adjustment frequency of any Adjustable-Rate Mortgage
Asset; and

            (19) the payment adjustment frequency of any Adjustable-Rate
Mortgage Asset.

      The Schedule of Mortgage Assets shall set forth the following information,
as of the Cut-off Date, with respect to the Mortgage Assets in the aggregate,
for the Fixed-Rate Mortgage Assets and for the Adjustable-Rate Mortgage Assets:
(1) the number of Mortgage Assets; (2) the current Principal Balance of the
Mortgage Assets; (3) the weighted average Coupon Rate of the Mortgage Assets;
and (4) the weighted average maturity of the Mortgage Assets. The Schedule of
Mortgage Assets shall be amended from time to time in accordance with the
provisions of this Agreement. With respect to any Eligible Substitute Mortgage
Asset or Additional Mortgage Asset, Cut-off Date shall refer to the applicable
date of substitution or purchase.

      "Seller": Mid-State Trust IX, or its successor in interest, in its
capacity as seller under the Mortgage Asset Purchase Agreement.

      "Senior Certificates": The Class A-1 and Class A-2 Certificates.

      "Senior Enhancement Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balances of the Subordinated Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date by (y) the Pool Balance as of the
last day of the related Collection Period.

                                      -29-
<PAGE>

      "Senior Principal Distribution Amount": For any Distribution Date (i)
before the Stepdown Date or as to which a Trigger Event is in effect, the lesser
of (x) the Principal Distribution Amount and (y) the sum of the Certificate
Principal Balances of the Class A Certificates immediately prior to such
Distribution Date and (ii) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of the Certificate
Principal Balances of the Class A Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) [___]% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
amount by which the Pool Balance as of the last day of the related Collection
Period exceeds the product of (i) [___]% and (ii) the Cut-off Date Aggregate
Principal Balance.

      "Senior Specified Enhancement Percentage": On any date of determination
thereof, [___]%.

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

      "Servicer Modification": A modification to the terms of a Mortgage Asset,
in accordance with the terms of Section 3.01, as to which the Obligor is in
default or as to which, in the judgment of a Servicer, default is reasonably
foreseeable.

      "Servicer Remittance Date": With respect to any Distribution Date, one
Business Day prior to such Distribution Date.

      "Servicers": Mid-State Homes, Inc., a Florida corporation, and Walter
Mortgage Company, a Delaware corporation, or any successor servicer appointed as
herein provided, in their capacities as Servicers hereunder.

      "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Servicers (including reasonable
attorneys' fees and disbursements) in the performance of their servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration, inspection and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.01, 3.08 and 3.10.

      "Servicing Fee": With respect to each Mortgage Asset (including each REO
Property) and for any calendar month, an amount equal to one month's finance
charges (or in the event of any payment of finance charges which accompanies a
Principal Prepayment in full made by the Obligor during such calendar month,
finance charges for the number of days covered by such payment of finance
charges) at the Servicing Fee Rate on the same principal amount on which finance
charges on such Mortgage Asset accrue for such calendar month.

      "Servicing Fee Rate": With respect to each Mortgage Asset, [___]% per
annum.

      "Servicing Officer": Any officer of a Servicer involved in, or responsible
for, the administration and servicing of Mortgage Asset, whose name and specimen
signature appear on

                                      -30-
<PAGE>

a list of servicing officers furnished by the Servicer to the Trustee and the
Depositor on the Closing Date, as such list may from time to time be amended.

      "Servicing Standard": The standards set forth in Section 3.01.

      "Startup Day": As defined in Section 9.01(b) hereof.

      "Stayed Funds": Any payment required to be made under the terms of the
Certificates and this Agreement but which is not remitted by a Servicer because
such Servicer is the subject of a proceeding under the Bankruptcy Code and the
making of such remittance is prohibited by Section 362 of the Bankruptcy Code.

      "Stepdown Date": The earlier to occur of (i) the Distribution Date on
which the aggregate Certificate Principal Balance of the Class A Certificates is
reduced to zero and (ii) the later to occur of (x) the Distribution Date in
[______] 20 and (y) the Distribution Date on which the Senior Enhancement
Percentage (after taking into account distributions of principal on such
Distribution Date) is greater than or equal to the Senior Specified Enhancement
Percentage.

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

      "Subsequent Overcollateralization Amount": As of any Distribution Date,
after the application of principal payments and Applied Realized Loss Amounts,
an amount equal to the excess, if any, of (a) the Pool Balance over (b) the sum
of (i) the Certificate Principal Balance of each Class of Offered Certificates
and (ii) the Remaining Initial Overcollateralization Amount.

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

      "Targeted Overcollateralization Amount": As of any Distribution Date, (x)
prior to the Stepdown Date, [___]% of the Cut-off Date Aggregate Principal
Balance and (y) on and after the Stepdown Date, (i) if a Trigger Event has not
occurred, the greater of (A) [___]% of the Pool Balance as of the last day of
the related Collection Period and (B) [___]% of the Cut-off Date Aggregate
Principal Balance and (ii) if a Trigger Event has occurred, the Targeted
Overcollateralization Amount for the immediately preceding Distribution Date.

      "Tax Matters Person": The tax matters person appointed pursuant to Section
9.01(e) hereof.

      "Tax Returns": The federal income tax returns 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
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of the Trust for each of the two REMICs created pursuant to this
Agreement 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 with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

                                      -31-
<PAGE>

      "Termination Price": As defined in Section 10.01(a) hereof.

      "Trigger Event": With respect to any Distribution Date, if (i) the
three-month rolling average of 60+ Day Delinquent Mortgage Assets equals or
exceeds [___]% of the Senior Enhancement Percentage or (ii) the aggregate amount
of Realized Losses incurred since the Cut-off Date through the last day of the
related Collection Period divided by the Cut-off Date Aggregate Principal
Balance exceeds the applicable percentages set forth below with respect to such
Distribution Date:

           Distribution Date Occurring        In Percentage

            [_______] through [_______]              %
            [_______] through [_______]              %
            [_______] through [_______]              %
            [_______] and thereafter                 %

      "Trust": MSCC 20__ -[___] Trust, the trust created hereunder.

      "Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to a portion of which two REMIC elections are to be made, such entire Trust Fund
consisting of: (i) such Mortgage Assets as from time to time are subject to this
Agreement, together with the Mortgage Asset 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 Assets under all insurance policies required
to be maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Asset Purchase Agreement (including any
security interest created thereby) and (v) the Collection Account and the
Distribution 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, the
Pre-Funding Account and the Capitalized Interest Account will not be assets of
any of the two REMICs, but will be beneficially owned by the Depositor for
federal income tax purposes.

      "Trustee": [______________], a [______________], or any successor Trustee
appointed as herein provided.

      "Trustee Fee": With respect to any Distribution Date, the product of (x)
one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Assets as of the opening of business on the first day
of the related Collection Period.

      "Trustee Fee Rate": With respect to any Distribution Date, [___]% per
annum.

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

                                      -32-
<PAGE>

United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain Trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be a U.S.
Person; provided, that for purposes of the definition of a "Permitted
Transferee," a U.S. Person shall not include any person whose income is
attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of such Person or any other Person.

      "Unpaid Realized Loss Amount": For any Class M-1, Class M-2 and Class B
Certificates and as to any Distribution Date, the excess of (x) the aggregate
Applied Realized Loss Amounts applied with respect to such Class for all prior
Distribution Dates over (y) the aggregate Realized Loss Amortization Amounts
with respect to such Class for all prior Distribution Dates.

      "Value": With respect to any Mortgaged Property, the lesser of (a) the
valuation prepared by a field representative of the originator or an independent
appraiser at origination or acquisition of such loan and (b) the sales price for
such property.

      "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Offered Certificates shall be 99%, and shall be allocated
among each such Class according to the fraction, expressed as a percentage, the
numerator of which is the aggregate Certificate Principal Balance of all the
Certificates of such Class then outstanding and the denominator of which is the
aggregate Certificate Principal Balance of all the Offered Certificates then
outstanding. The Voting Rights allocated to each such Class of Certificates
shall be allocated among all holders of each such Class in proportion to the
outstanding Certificate Principal Balance of such Certificates; provided,
however, that any Certificate registered in the name of a Servicer, the
Depositor or the Trustee or any of their respective affiliates shall not be
included in the calculation of Voting Rights; provided that only such
Certificates as are known by a Responsible Officer of the Trustee to be so
registered will be so excluded. 1% of all the Voting Rights will be allocated to
the Holders of the Class CE Certificates. The Class R Certificates shall have no
Voting Rights.

      "Weighted Average Net Coupon Rate": The weighted average (based on
Principal Balance as of the first day of the related Collection Period or, in
the case of the first Distribution Date, the Cut-Off Date) of the Net Coupon
Rates of the Mortgage Assets, expressed for each such Mortgage Asset as an
annual rate and calculated on the basis of twelve months consisting of 30 days
each and a 360-day year.

      "Written Order to Authenticate": A written order by which the Depositor
directs the Trustee to execute, authenticate and deliver the Certificates.

Section 1.02  Accounting.

      Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken

                                      -33-
<PAGE>

into account such definition or calculation and any related definitions or
calculations shall be determined without duplication of such functions.

                                   ARTICLE II

                         CONVEYANCE OF MORTGAGE AssetS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01  Conveyance of Mortgage Assets.

            The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee, on
behalf of the Trust, 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 (i) each Initial
Mortgage Asset listed in the Schedule of Mortgage Assets, including the related
Cut-off Date Principal Balance, all finance charges accruing thereon after the
Cut-off Date and all collections in respect of finance charges and principal due
after the Cut-off Date, (ii) all Additional Mortgage Assets added to the
Schedule of Mortgage Assets as delivered from time to time, including the
related Principal Balance as of the applicable Additional Transfer Date, all
finance charges accruing thereon after the applicable Additional Transfer Date
and all collections in respect of finance charges and principal due after the
applicable Additional Transfer Date; (iii) property which secured each such
Mortgage Asset and which has been acquired by foreclosure or deed in lieu of
foreclosure; (iv) its interest in any insurance policies in respect of the
Mortgage Assets; (v) all other assets included or to be included in the Trust
Fund; (vi) all proceeds of any of the foregoing; and (vii) the rights of the
Depositor under the Mortgage Asset Purchase Agreement. Such assignment includes
all finance charges and principal due to the Depositor or the Servicers after
the Cut-off Date or Additional Transfer Date, as applicable, with respect to the
Mortgage Assets.

            In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with the Trustee, or its designated agent, the
following documents or instruments with respect to each Mortgage Asset (a
"Mortgage Asset File") so transferred and assigned:

            (i)   the original Note, endorsed either (A) in blank or (B) in the
                  following form: "Pay to the order of [______________________],
                  as Trustee under the Pooling and Servicing Agreement, dated as
                  of [______], 20__, among Mid-State Capital Corporation,
                  Mid-State Homes, Inc., Walter Mortgage Company and
                  [_______________________], MSCC Pass-Through Certificates,
                  Series 20 -[___], without recourse," or with respect to any
                  lost Note, an original Lost Note Affidavit, together with a
                  copy of the related Note;

            (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 or, if such Mortgage or power of attorney
                  has been submitted for recording but has not been returned
                  from the applicable public recording office, has been lost or
                  is not otherwise available, a

                                      -34-
<PAGE>

                  copy of such Mortgage or power of attorney, as the case may
                  be, certified to be a true and complete copy of the original
                  submitted for recording;

            (iii) an original Assignment of Mortgage, in form and substance
                  acceptable for recording. The Mortgage shall be assigned
                  either (A) in blank or (B) to "[______________________], as
                  Trustee under the Pooling and Servicing Agreement, dated as of
                  [______], 20__, among Mid-State Capital Corporation, Mid-State
                  Homes, Inc., Walter Mortgage Company and
                  [_______________________], MSCC Pass-Through Certificates,
                  Series 20 -[___], without recourse";

            (iv)  an original copy of any intervening assignment of Mortgage
                  showing a complete chain of assignments;

            (v)   in the case of each Account, the building or instalment sale
                  contract relating to such Account; and

            (vi)  the original or copies of each assumption, modification,
                  written assurance or substitution agreement, if any.

            If any of the documents referred to in Section 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 Trustee no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording 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 Seller, delivery to the
Trustee, 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. The Depositor shall deliver or cause to be
delivered to the Trustee promptly upon receipt thereof any other documents
constituting a part of a Mortgage Asset File received with respect to any
Mortgage Asset, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Asset.

            Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Depositor
shall have 120 days to cure such defect or 150 days following the Closing Date,
in the case of missing Mortgages or Assignments or deliver such missing document
to the Trustee. If the Depositor does not cure such defect or deliver such
missing document within such time period, the Depositor shall either repurchase
or substitute for such Mortgage Asset in accordance with Section 2.03.

            The Depositor shall cause the Assignments of Mortgage which were
delivered in blank to be completed. In the event that any Note is endorsed in
blank as of the Closing Date, promptly following the Closing Date the Depositor
shall cause to be completed such endorsements "Pay to the order of
[______________________], as Trustee under the Pooling and Servicing Agreement,
dated as of [______], 20__, among Mid-State Capital Corporation,

                                      -35-
<PAGE>

Mid-State Homes, Inc., Walter Mortgage Company and [_______________________],
MSCC Pass-Through Certificates, Series 20__-[___], without recourse."

            The Depositor herewith delivers to the Trustee an executed copy of
the Mortgage Asset Purchase Agreement.

            Section 2.02   Acceptance by Trustee.

            The Trustee acknowledges the receipt of, subject to the provisions
of Section 2.01, the documents referred to in Section 2.01 above and all other
assets included in the definition of "Trust Fund" and declares that it holds and
will hold such documents and the other documents delivered to it constituting a
Mortgage Asset File, and that it holds or will hold all such assets and such
other assets included in the definition of "Trust Fund" in trust for the
exclusive use and benefit of all present and future Certificateholders.

            Upon the discovery by the Depositor, the Trustee or the Servicers
(or upon receipt by the Trustee of written notification of such breach) of a
breach of any of the representations and warranties made by the Depositor in
Section 2.04 below in respect of any Mortgage Asset which materially adversely
affects such Mortgage Asset or the interests of the related Certificateholders
in such Mortgage Asset, the party discovering such breach shall give prompt
written notice to the other parties.

            The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Assets and the
Related Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Assets and the
Related Documents, and that this Agreement shall constitute a security agreement
under applicable law.

            Section 2.03 Repurchase or Substitution of Mortgage Assets by the
Depositor.

            (a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage Asset File
or of the breach by the Depositor of any representation or warranty in Section
2.04 below in respect of any Mortgage Asset which materially adversely affects
the value of such Mortgage Asset or the interest therein of the
Certificateholders, the Trustee shall promptly notify the Depositor and the
Servicers of such defect, missing document or breach and request that, in the
case of a defective or missing document, the Depositor cure such defect or
deliver such missing document within 120 days from the date the Depositor was
notified of such missing document or defect or, in the case of a beach of a
representation or warranty, request the Depositor cure such breach within 90
days from the date the Depositor was notified of such breach. If the Depositor
does not deliver such missing document or cure such defect or such breach in all
material respects during such period,

                                      -36-
<PAGE>

the Trustee shall enforce the Depositor's obligation and cause the Depositor to
repurchase such Mortgage Asset from the Trust Fund at the Purchase Price on or
prior to the Determination Date following the expiration of such period (subject
to Section 2.03(d)). The Purchase Price for the repurchased Mortgage Asset shall
be deposited in the Collection Account, and the Trustee, upon receipt of written
notice from the applicable Servicer of such deposit, shall release to the
Depositor the related Mortgage Asset File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Depositor shall furnish to it and as shall be necessary to vest in the Depositor
any Mortgage Asset released pursuant hereto and the Trustee shall have no
further responsibility with regard to such Mortgage Asset File. In lieu of
repurchasing any such Mortgage Asset as provided above, the Depositor may cause
such Mortgage Asset to be removed from the Trust Fund (in which case it shall
become a Defective Mortgage Asset) and substitute one or more Eligible
Substitute Mortgage Assets in the manner and subject to the limitations set
forth in Section 2.03(c). In addition to the foregoing, if the Purchase Price
for a repurchased Mortgage Asset does not fully compensate the Trust for any
costs or damages incurred by the Trust in connection with a breach of the
Depositor's representation set forth in Section 2.04(xiii) below with respect to
such repurchased Mortgage Asset, the Depositor shall reimburse the Trust the
amount necessary to fully compensate the Trust (the "Reimbursement Amount"). The
Reimbursement Amount shall be delivered to the applicable Servicer for deposit
into the Collection Account within 10 days from the date the Depositor was
notified by the Trustee of the Reimbursement Amount.

            With respect to the representations and warranties set forth in
Section 2.04 below that are made to the best of the Depositor's knowledge or as
to which the Depositor has no knowledge, if it is discovered by the Depositor,
the Servicers or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Asset or the interest therein of the
Certificateholders then, notwithstanding the Depositor's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.

            It is understood and agreed that the representations and warranties
set forth in Section 2.04 below shall survive delivery of the Mortgage Asset
Files to the Trustee and shall inure to the benefit of the Certificateholders
notwithstanding any restrictive or qualified endorsement or assignment. It is
understood and agreed that the obligations of the Depositor set forth in this
Section 2.03(a) to cure, substitute for or repurchase a Mortgage Asset and to
pay the Reimbursement Amount constitute the sole remedies available to the
Certificateholders and to the Trustee on their behalf respecting a breach of the
representations and warranties set forth in Section 2.04 below.

            (b) Within 90 days of the earlier of discovery by the Servicers or
receipt of notice by the Servicers of the breach of any representation, warranty
or covenant of the Servicers set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Asset,
the applicable Servicer shall cure such breach in all material respects.

            (c) Any substitution of Eligible Substitute Mortgage Assets for
Defective Mortgage Assets made pursuant to Section 2.03(a) must be effected
prior to the last Business

                                      -37-
<PAGE>

Day that is within two years after the Closing Date. As to any Defective
Mortgage Asset for which the Depositor substitutes an Eligible Substitute
Mortgage Asset or Assets, such substitution shall be effected by the Depositor
delivering to the Trustee for such Eligible Substitute Mortgage Asset or Assets,
the 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
Eligible Substitute Mortgage Asset satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. Monthly Payments due with respect to Eligible
Substitute Mortgage Assets in the month of substitution are not part of the
Trust Fund and will be retained by the Depositor. For the month of substitution,
distributions to Certificateholders will reflect the collections and recoveries
in respect of such Defective Mortgage Asset in the Collection Period or
Prepayment Period, as applicable, preceding the date of substitution and the
Depositor shall thereafter be entitled to retain all amounts subsequently
received in respect of such Defective Mortgage Asset. The Depositor shall amend
the Schedule of Mortgage Assets to reflect the removal of such Defective
Mortgage Asset from the terms of this Agreement and the substitution of the
Eligible Substitute Mortgage Asset or Assets and shall deliver a copy of such
amended Schedule of Mortgage Assets to the Trustee. Upon such substitution, such
Eligible Substitute Mortgage Asset or Assets shall constitute part of the
Mortgage Asset Pool and shall be subject in all respects to the terms of this
Agreement including all applicable representations and warranties hereof as of
the date of substitution.

            For any month in which the Depositor substitutes one or more
Eligible Substitute Mortgage Assets for one or more Defective Mortgage Assets,
the applicable Servicer or Servicers will determine the amount (the
"Substitution Adjustment Amount"), if any, by which the aggregate Purchase Price
of all such Defective Mortgage Assets exceeds the aggregate, as to each such
Eligible Substitute Mortgage Asset, of the principal balance thereof as of the
date of substitution, together with one month's finance charges on such
principal balance at the applicable Net Coupon Rate. On the date of such
substitution, the Depositor will deliver or cause to be delivered to the
applicable Servicer or Servicers for deposit in the Collection Account an amount
equal to the Substitution Adjustment Amount, if any, and the Trustee, upon
receipt of the related Eligible Substitute Mortgage Asset or Assets and notice
by the applicable Servicer or Servicers of such deposit, shall release to the
Depositor the related Mortgage Asset File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Depositor shall deliver to it and as shall be necessary to vest therein any
Defective Mortgage Asset released pursuant hereto.

            (d) Upon discovery by the Depositor, the Servicers or the Trustee
that any Mortgage Asset 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 Depositor shall repurchase or, subject to the
limitations set forth in Section 2.03(c), substitute one or more Eligible
Substitute Mortgage Assets for the affected Mortgage Asset within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Asset. In addition, upon discovery that a Mortgage Asset is defective
in a manner that would cause it to be a "defective obligation" within the
meaning of Treasury regulations relating to REMICs, the Depositor shall cure the
defect or make the required purchase or substitution no later than 90

                                      -38-
<PAGE>

days after the discovery of the defect. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.03(a). The Trustee
shall reconvey to the Depositor the Mortgage Asset to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Asset repurchased for breach of a representation or warranty.

            Section 2.04 Representations, Warranties and Covenants of the
Depositor with Respect to the Mortgage Assets.

            The Depositor hereby represents and warrants to the Trustee for the
benefit of the Certificateholders that as of the Closing Date, the Additional
Transfer Date or as of such other date specifically provided herein:

            (i) the information set forth with respect to such Mortgage Asset in
      the Schedule of Mortgage Assets attached hereto as Exhibit D, or attached
      to the applicable Additional Transfer Agreement, as applicable, is true
      and correct as of the date as of which such information is given;

            (ii) in the case of each Account, the related building or instalment
      sale contract, as the case may be, has been duly executed by the parties
      thereto and the duties to be performed thereunder prior to the date the
      first payment in connection with such contract is due have been performed;

            (iii) the mortgage asset documents have been duly executed by the
      related Obligor and the Mortgage has been duly executed by the Obligor
      and, to the extent required under local law for recordation or
      enforcement, properly acknowledged;

            (iv) the Mortgage has been properly recorded as required by law. The
      Mortgage constitutes a valid first priority lien upon and secures title to
      the real property and improvements thereon described therein, which
      include a single family detached dwelling, and such Mortgage and the Note
      secured thereby are fully enforceable in accordance with their terms
      except as enforceability thereof may be limited by bankruptcy, insolvency,
      moratorium and other laws affecting creditors' rights generally and by
      general principles of equity (whether applied in a proceeding in law or at
      equity);

            (v) Immediately prior to the transfer and assignment contemplated
      herein, the Depositor was the sole owner and holder of the Mortgage Assets
      and has good and marketable title to each Mortgage Asset, free and clear
      of any and all liens, pledges, charges, claims, participation interests,
      mortgages, security interests or encumbrances or other interests of any
      nature and has full right and authority to sell and assign the same;

            (vi) all costs, fees, intangible, documentary and recording taxes
      and expenses incurred in making, closing, and recording each Mortgage
      Asset have been paid;

            (vii) no part of the Mortgaged Property purporting to secure any
      Note has been, or shall have been, released from the lien or security
      interest of the Mortgage securing such Note, except for a Mortgaged
      Property securing a Note which has been prepaid in full between the
      Cut-Off Date and the Closing Date, the amount of such prepayment

                                      -39-
<PAGE>

      received more than five days prior to the Closing Date to be deposited in
      the Collection Account on or before the Closing Date;

            (viii) the terms of the Note and the Mortgage have not been
      impaired, waived, altered or modified in any respect, except by written
      instruments, recorded in the applicable public recording office if
      necessary to maintain the lien priority of the Mortgage and the interests
      of the Certificateholders, and which have been delivered to the Trustee;
      the substance of any such waiver, alteration or modification has been
      approved by the title insurer, to the extent required by the related
      policy, and is reflected on the Schedule of Mortgage Assets. No instrument
      of waiver, alteration or modification has been executed, and no Obligor
      has been released, in whole or in part, except, in connection with an
      assumption agreement approved by the title insurer, to the extent required
      by the policy, and which assumption agreement has been delivered to the
      Trustee and the terms of which are reflected in the Schedule of Mortgage
      Assets;

            (ix) Mid-State Homes, Inc., Mid-State Trust IX and the Depositor
      acquired title to the Mortgage Assets in good faith, for value and without
      notice of any adverse claim;

            (x) the Notes evidence obligations bearing a fixed or adjustable
      Coupon Rate and fully amortizing level monthly payments. Each Note has an
      original term to maturity not in excess of 30 years;

            (xi) as of the Closing Date, or as of the related Additional
      Transfer Date, as applicable, there is no right of rescission, setoff,
      defense or counterclaim to any Note or Mortgage, including both the
      obligation of the Obligor to pay the unpaid cash price or finance charge
      on such Note and the defense of usury; furthermore, neither the operation
      of any of the terms of the Note and the Mortgage nor the exercise of any
      right thereunder will render the Note or the Mortgage unenforceable, in
      whole or in part, or subject such Note or Mortgage to any right of
      rescission, setoff, counterclaim or defense, including the defense of
      usury, and no such right of rescission, setoff, counterclaim or defense
      has been asserted with respect thereto;

            (xii) there are no mechanics' liens or claims for work, labor or
      material (and to the best of the Depositor's knowledge, no rights or
      claims are outstanding that under law could give rise to such lien)
      affecting any Mortgaged Property which are or may be a lien prior to, or
      equal with, the lien of such Mortgage;

            (xiii) any and all requirements of any federal, state or local law
      with respect to the origination and servicing of the Mortgage Assets
      including, without limitation, usury, truth in lending, real estate
      settlement procedures, consumer credit protection, equal credit
      opportunity, predatory and abusive lending laws or disclosure laws
      applicable to the Mortgage Assets have been complied with, and
      consummation of the transactions contemplated hereby will not violate any
      such laws;

            (xiv) no Mortgage Asset is a "high cost" Mortgage Asset as defined
      under any federal, state or local laws applicable to such Mortgage Asset
      at the time of its origination

                                      -40-
<PAGE>

      and no Mortgage Asset originated in the State of Georgia is subject to the
      Georgia Fair Lending Act as in effect from October 1, 2002 through March
      6, 2003;

            (xv) with respect to each Mortgage constituting a deed of trust, a
      trustee, duly qualified under applicable law to serve as such, is properly
      designated, serving and named in such Mortgage;

            (xvi) there has been no fraud, dishonesty, misrepresentation or
      negligence on the part of the originator in connection with the
      origination of any Note or in connection with the sale of the related
      Mortgage Asset;

            (xvii) to the best knowledge of the Depositor, except Mortgaged
      Properties for which Insurance Proceeds are available, each Mortgaged
      Property is in good condition and free of damage which materially and
      adversely affects the value thereof;

            (xviii) to the best knowledge of the Depositor, there is no
      proceeding pending for the total or partial condemnation and no eminent
      domain proceedings pending affecting any Mortgaged Property;

            (xix) each Mortgage Asset obligates the Obligor thereunder to
      maintain a hazard insurance policy in an amount at least equal to the
      unpaid Principal Balance of the Mortgage Asset at the Obligor's cost and
      expense;

            (xx) no Mortgage Asset contains provisions pursuant to which monthly
      payments are (1) paid or partially paid with funds deposited in any
      separate account established by a Servicer, the Obligor, or anyone on
      behalf of the Obligor, (2) paid by any source other than the Obligor or
      (3) contains any other similar provisions which may constitute a "buydown"
      provision. No Mortgage Asset is a graduated payment Mortgage Asset and no
      Mortgage Asset has a shared appreciation or other contingent interest
      feature;

            (xxi) the Depositor used no selection procedures that identified the
      Mortgage Assets as being less desirable or valuable than other comparable
      Mortgage Assets acquired by the Depositor;

            (xxii) the Mortgage Assets comply in all material respects to the
      description set forth under the heading "The Trust Fund-Total Mortgage
      Assets Comprising the Mortgage Collateral" in the Depositor's Prospectus
      Supplement, dated [________], 20__;

            (xxiii) each Mortgage Asset, at the time of its origination,
      conformed to the applicable originator's underwriting guidelines;

            (xxiv) the related Mortgage Asset File contains each of the
      documents and instruments specified;

            (xxv) each Mortgage Asset is being serviced in accordance with the
      applicable Servicer's servicing procedures; and

                                      -41-
<PAGE>

            (xxvi) other than the Mortgage Assets identified in the Depositor's
      Prospectus Supplement, dated [________], 20__, as 31-60 days past due,
      there is no default, breach, violation or event of acceleration existing
      under the Note or Mortgage and no event which, with the passage of time or
      with notice and the expiration of any grace or cure period, would
      constitute a default, breach, violation or event of acceleration.

            Section 2.05   Representations, Warranties and Covenants of the
Servicers.

            Each Servicer severally represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee and the Certificateholders and
to the Depositor that as of the Closing Date or as of such date specifically
provided herein:

            (i) Each Servicer (i) is a corporation, validly existing and in good
      standing under the laws of the State of its incorporation, (ii) has
      qualified to do business as a foreign corporation and is in good standing
      in each jurisdiction where the character of its properties or the nature
      of its activities makes such qualification necessary, and (iii) has full
      power, authority and legal right to own its property, to carry on its
      business as presently conducted, and to enter into and perform its
      obligations under this Agreement. (ii) The execution and delivery by each
      Servicer of this Agreement are within the corporate power of each Servicer
      and have been duly authorized by all necessary corporate action on the
      part of each Servicer. Neither the execution and delivery of this
      Agreement, nor the consummation of the transactions herein contemplated,
      nor compliance with the provisions hereof, will conflict with or result in
      a breach of, or constitute a default under, any of the provisions of any
      law, governmental rule, regulation, judgment, decree or order binding on
      each Servicer or its properties or the charter or by-laws of each
      Servicer, or any of the provisions of any indenture, mortgage, contract or
      other instrument to which each Servicer is a party or by which it is bound
      or result in the creation or imposition of any lien, charge or encumbrance
      upon any of its property pursuant to the terms of any such indenture,
      mortgage, contract or other instrument (or if such conflict with, breach
      of or default under any such indenture, mortgage, contract or other
      instrument exists or will exist, any remedies in respect thereof and in
      respect of any such related lien, charge or encumbrance have been stayed
      under the Bankruptcy Code).

            (iii) The execution, delivery and performance by each Servicer of
      this Agreement and the consummation of the transactions contemplated
      hereby do not require the consent or approval of, the giving of notice to,
      the registration with, or the taking of any other action in respect of,
      any state, federal or other governmental authority or agency, except as
      has been previously obtained and are in effect.

            (iv) This Agreement has been duly executed and delivered by each
      Servicer and constitutes a legal, valid and binding instrument enforceable
      against each Servicer in accordance with its terms, except as enforcement
      may be limited by bankruptcy, insolvency or similar laws affecting the
      enforcement of creditors' rights generally.

                                      -42-
<PAGE>

            (v) There are no actions, suits or proceedings pending or, to the
      knowledge of each Servicer, threatened or likely to be asserted against or
      affecting each Servicer, before or by any court, administrative agency,
      arbitrator or governmental body with respect to any of the transactions
      contemplated by this Agreement or the Indenture, or which will, if
      determined adversely to each Servicer, materially and adversely affect it
      or its business, assets, operations or condition, financial or otherwise,
      or adversely affect each Servicer's ability to perform its obligations
      under this Agreement. Each Servicer is not in default with respect to any
      order of any court, administrative agency, arbitrator or governmental body
      so as to materially and adversely affect the transactions contemplated by
      the above-mentioned documents.

            (vi) Each Servicer has obtained or made all necessary consents,
      approvals, waivers and notifications of stockholders, creditors, lessors
      and other nongovernmental persons, in each case, in connection with the
      execution, delivery and performance 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
Asset Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicers 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 Asset 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 other parties hereto.

            Section 2.06   Representations and Warranties of the Depositor.

            The Depositor represents and warrants to the Trust and the Trustee
on behalf of the Certificateholders and to the Servicers as follows:

            (i) This agreement constitutes a legal, valid and binding obligation
      of the Depositor, enforceable against the Depositor in accordance with its
      terms, except as enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium or other similar laws now or
      hereafter in effect affecting the enforcement of creditors' rights in
      general and except as such enforceability may be limited by general
      principles of equity (whether considered in a proceeding at law or in
      equity);

            (ii) The Depositor has not transferred the Mortgage Assets to the
      Trustee on behalf of the Trust with any intent to hinder, delay or defraud
      any of its creditors;

            (iii) The Depositor has been duly incorporated and is validly
      existing as a corporation in good standing under the laws of the State of
      Delaware, with full corporate power and authority to own its assets and
      conduct its business as presently being conducted;

            (iv) The Depositor is not in violation of its certificate of
      incorporation or by-laws or in default in the performance or observance of
      any material obligation, agreement, covenant or condition contained in any
      contract, indenture, mortgage, loan

                                      -43-
<PAGE>

      agreement, note, lease or other instrument to which the Depositor is a
      party or by which it or its properties may be bound, which default might
      result in any material adverse changes in the financial condition,
      earnings, affairs or business of the Depositor or which might materially
      and adversely affect the properties or assets, taken as a whole, of the
      Depositor;

            (v) The execution, delivery and performance of this Agreement by the
      Depositor, and the consummation of the transactions contemplated thereby,
      do not and will not result in a material breach or violation of any of the
      terms or provisions of, or, to the knowledge of the Depositor, constitute
      a default under, any indenture, mortgage, deed of trust, loan agreement or
      other agreement or instrument to which the Depositor is a party or by
      which the Depositor is bound or to which any of the property or assets of
      the Depositor is subject, nor will such actions result in any violation of
      the provisions of the certificate of incorporation or by-laws of the
      Depositor or, to the best of the Depositor's knowledge without independent
      investigation, any statute or any order, rule or regulation of any court
      or governmental agency or body having jurisdiction over the Depositor or
      any of its properties or assets (except for such conflicts, breaches,
      violations and defaults as would not have a material adverse effect on the
      ability of the Depositor to perform its obligations under this Agreement);

            (vi) To the best of the Depositor's knowledge without any
      independent investigation, no consent, approval, authorization, order,
      registration or qualification of or with any court or governmental agency
      or body of the United States or any other jurisdiction is required for the
      issuance of the Certificates, or the consummation by the Depositor of the
      other transactions contemplated by this Agreement, except such consents,
      approvals, authorizations, registrations or qualifications as (a) may be
      required under State securities or Blue Sky laws, (b) have been previously
      obtained or (c) the failure of which to obtain would not have a material
      adverse effect on the performance by the Depositor of its obligations
      under, or the validity or enforceability of, this Agreement; and

            (vii) There are no actions, proceedings or investigations pending
      before or, to the Depositor's knowledge, threatened by any court,
      administrative agency or other tribunal to which the Depositor is a party
      or of which any of its properties is the subject: (a) which if determined
      adversely to the Depositor would have a material adverse effect on the
      business, results of operations or financial condition of the Depositor;
      (b) asserting the invalidity of this Agreement or the Certificates; (c)
      seeking to prevent the issuance of the Certificates or the consummation by
      the Depositor of any of the transactions contemplated by this Agreement,
      as the case may be; (d) which might materially and adversely affect the
      performance by the Depositor of its obligations under, or the validity or
      enforceability of, this Agreement.

            Section 2.07   Issuance of Certificates and the Uncertificated
Regular Interests.

            The Trustee  acknowledges  the  assignment  to it of the  Mortgage
Assets and the  delivery to it of the  Mortgage  Asset  Files,  subject to the
provisions  of  Sections 2.01  and  2.02,

                                      -44-
<PAGE>

and the Trustee acknowledges the assignment to it of all other assets included
in the Trust Fund, receipt of which is hereby acknowledged. Concurrently with
such assignment and delivery and in exchange therefor, the Trustee, pursuant to
the Written Order to Authenticate executed by an officer of the Depositor, has
executed, and the Certificate Registrar has authenticated and delivered to or
upon the order of the Depositor, the Certificates (other than the Class CE and
Class R Certificates) in minimum dollar denominations or $25,000 and integral
dollar multiples of $1 in excess. The Class CE Certificates are issuable only in
minimum Percentage Interests of 10%. The Class R Certificate is issuable only as
a single certificate. The Trustee acknowledges the issuance of the
uncertificated REMIC 1 Regular Interests, the uncertificated REMIC 2 Regular
Interests and the uncertificated REMIC 3 Regular Interests and declares that it
hold such regular interests as assets of REMIC 2, REMIC 3 and REMIC 4,
respectively. The Trustee acknowledges the issuance of (i) the uncertificated
REMIC 4 Components, represented by the Class CE Certificates and (ii) the
uncertificated Class T4-A1, Class T4-A2, Class T4-M1, Class T4-M2 and Class T4-B
Interests. The interests evidenced by the Certificates constitute the entire
beneficial ownership interest in the Trust Fund.

            Section 2.08 Additional Transfers.

           (a) Subject to the satisfaction of the conditions set forth in
Article II hereof and paragraph (b) below and pursuant to the terms of the
related Additional Transfer Agreement, in consideration of the Trustee's
delivery on each Additional Transfer Date to or upon the order of the Depositor
of all or a portion of the balance of funds in the related Pre-Funding Account,
the Depositor shall on such Additional Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse to the Trustee, all of the
Depositor's right, title and interest in and to each related Additional Mortgage
Asset listed in the Schedule of Mortgage Assets delivered by the Depositor on
such Additional Transfer Date, including (i) the related Principal Balance, all
finance charges due after the related Additional Transfer Date and all
collections in respect of principal received after such Additional Transfer
Date; (ii) any real property that secured such Additional Mortgage Asset and
that has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of such Additional Mortgage Asset;
and (iv) all proceeds of the foregoing to the Trustee. The transfer by the
Depositor to the Trustee of the Additional Mortgage Assets set forth in the
Schedule of Mortgage Assets shall be absolute and shall be intended by all
parties hereto to be treated as a sale by the Depositor to the Trust. If the
assignment and transfer of the Additional Mortgage Assets and the other property
specified in this Section 2.08 from the Depositor to the Trust pursuant to this
Agreement is held or deemed not to be a sale or is held or deemed to be a pledge
of security for a loan, the Depositor intends that the rights and obligations of
the parties shall be established pursuant to the terms of this Agreement and
that, in such event, (i) the Depositor shall be deemed to have granted and does
hereby grant to the Trustee as of each Additional Transfer Date a perfected,
first priority security interest in the entire right, title and interest of the
Depositor in and to the related Additional Mortgage Assets and all other
property conveyed to the Trustee pursuant to this Section 2.08 and all proceeds
thereof, and (ii) this Agreement shall constitute a security agreement under
applicable law.

            (b) The Trustee shall withdraw from the Pre-Funding Account funds in
an amount equal to the purchase price for the Additional Mortgage Assets so
transferred to the Trust and use such cash to purchase the Additional Mortgage
Assets on behalf of the Trust, along with

                                      -45-
<PAGE>

the other property and rights related thereto described in paragraph (a) above
only upon the satisfaction of each of the following conditions on or prior to
each Additional Transfer Date:

            (i) the Depositor shall have provided the Trustee with an Addition
      Notice, which notice shall be given not less than two Business Days prior
      to such Additional Transfer Date and shall designate the Additional
      Mortgage Assets to be sold to the Trust and the aggregate Principal
      Balance of such Mortgage Assets as of the Additional Transfer Date;

            (ii) the Depositor shall have deposited in the Collection Account
      all principal collected after such Additional Transfer Date and finance
      charges due after such Additional Transfer Date but collected on or before
      such Additional Transfer Date in respect of each Additional Mortgage
      Asset;

            (iii) the Depositor shall have delivered an Officer's Certificate to
      the Trustee confirming that, as of each Additional Transfer Date, the
      Depositor was not insolvent, nor would it be made insolvent by such
      transfer, nor was it aware of any pending insolvency of the Depositor;

            (iv) the Pre-Funding Period shall not have ended;

            (v) the Depositor shall have delivered to the Trustee an Officer's
      Certificate confirming the satisfaction of each condition precedent
      specified in this paragraph (b) and in the related Additional Transfer
      Agreement;

            (vi) At the end of the Pre-Funding Period, the addition of the
      Additional Mortgage Assets to the Trust will not cause the Mortgage Assets
      in the aggregate to fail to meet the following requirements: (i) no more
      than [___]% of the Mortgage Assets may have obligors in bankruptcy or
      similar proceedings; (ii) none of the Mortgage Assets may be over 60 days
      delinquent; (iii) no Mortgage Asset may have a remaining term to maturity
      less than 120 months or greater than 360 months; (iv) no Mortgage Asset
      may have a Coupon Rate greater than [___]% or less than [___]% and the
      weighted average Coupon Rate for the Mortgage Assets must be at least
      [___]%; (v) no more than [___]% of the Mortgage Assets may be secured by
      homes that have been repossessed and resold; (vi) no State may account for
      more than [___]% of the Mortgage Assets; (vii) units that are at least
      "90% complete" must account for at least [___]% of the Accounts; and
      (viii) no more than [___]% of the Mortgage Assets may be subject, at the
      time of purchase by the Issuer, to the interest rate limitations and other
      provisions of the Soldiers' and Sailors' Civil Relief Act of 1940, as
      amended;

            (vii) the Depositor shall have delivered an Officer's Certificate to
      the Trustee confirming that the representations and warranties of the
      Depositor pursuant to Section 2.04 hereof and Section 2.06 hereof are true
      and correct with respect to the Depositor and the Additional Mortgage
      Assets, as applicable, as of the Additional Transfer Date; and

            (viii) in connection with the transfer and assignment of the
      Additional Mortgage Assets, the Depositor shall satisfy the document
      delivery requirements set forth in Section 2.01 hereof.

                                      -46-
<PAGE>

            (c) In connection with each Additional Transfer Date and on the
related Distribution Date, the Trustee shall determine (i) the amount and
correct dispositions of the Capitalized Interest Requirement and Pre-Funding
Earnings for such Distribution Date in accordance with the provisions of this
Agreement and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and Capitalized Interest Account. In
the event that any amounts are released by the Trustee from the Pre-Funding
Account or from the Capitalized Interest Account as a result of calculation
error, the Trustee shall not be liable therefor, and the Depositor shall
immediately repay such amounts to the Trustee.

            (d) The Trustee shall acknowledge receipt on each Additional
Transfer Date of the Additional Mortgage Assets delivered to it on such date.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

            Section 3.01   Servicers to Act as Servicers.

            The Servicers, as independent contract servicers, shall service and
administer the Mortgage Assets in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers servicing similar
mortgage assets and, to the extent consistent with such terms, in the same
manner in which they service and administer similar mortgage assets for their
own portfolios, and shall have full power and authority to do or cause to be
done any and all things in connection with such servicing and administration
which the Servicers may deem necessary or desirable and consistent with the
terms of this Agreement (the "Servicing Standard").

            Consistent with the terms of this Agreement, the Servicers may
waive, modify or vary any term of any Mortgage Asset or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Obligor if in a Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Certificateholders; provided, however, that the
Servicers shall not make future advances and, except as set forth in the
following sentence or Section 3.03, the Servicers shall not permit any
modification with respect to any Mortgage Asset that would (i) change the Coupon
Rate, defer or forgive the payment thereof of any principal payments or finance
charges, reduce the outstanding principal amount (except for actual payments of
principal) or extend the final maturity date with respect to such Mortgage
Asset, (ii) affect adversely the status of any REMIC constituting part of the
Trust Fund as a REMIC or (iii) cause any such REMIC to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
In the event that the Obligor is in default with respect to the Mortgage Asset
or such default is, in the judgment of a Servicer, reasonably foreseeable, a
Servicer may permit a modification of such Mortgage Asset to reduce the
Principal Balance thereof and/or extend the term, but not beyond the latest
maturity date of any other Mortgage Asset. Notwithstanding the foregoing, a
Servicer shall not permit any modification with respect to any Mortgage Asset
that would both (x) effect an exchange or reissuance of such Mortgage Asset
under Section 1.860G-2(b) of the Treasury Regulations and (y) cause any REMIC
constituting part of the Trust Fund to

                                      -47-
<PAGE>

fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions. Without limiting the generality of the foregoing, a Servicer
shall continue, and is hereby authorized and empowered to execute and deliver on
behalf of itself, and the Trustee, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Assets and with respect to the
Mortgaged Property. The Servicers shall make all required Servicing Advances and
shall service and administer the Mortgage Assets in accordance with Applicable
Regulations, and shall provide to the Obligors any reports required to be
provided to them thereby. The Trustee shall execute and deliver to a Servicer
within at least fifteen (15) Business Days of receipt, upon request, any powers
of attorney furnished to it by such Servicer empowering such Servicer to execute
and deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate any Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Assets or the Mortgaged Properties, in accordance with this Agreement,
and the Trustee shall execute and deliver such other documents as such Servicer
may request, necessary or appropriate to enable such Servicer to service and
administer the Mortgage Assets and carry out its duties hereunder, in each case
in accordance with the Servicing Standard (and the Trustee shall have no
liability for misuse of any such powers of attorney by such Servicer).
Notwithstanding anything contained herein to the contrary, a Servicer shall not
without the Trustee's written consent: (i) initiate any action, suit or
proceeding solely under the Trustee's name without indicating such Servicer's
representative capacity, or (ii) take any action with the intent to cause, and
which results in, the Trustee being registered to do business in any state.

            In servicing and administering the Mortgage Assets, the Servicers
shall employ procedures including collection procedures and exercise the same
care that they customarily employ and exercise in servicing and administering
mortgage assets for their own account giving due consideration to accepted
mortgage servicing practices of prudent mortgage servicing institutions and the
Certificateholders' reliance on the Servicers.

            A Servicer shall give prompt notice to the Trustee of any action, of
which a Servicer has actual knowledge, to (i) assert a claim against the Trust
Fund or (ii) assert jurisdiction over the Trust Fund.

            Section 3.02   Collection of Mortgage Asset Payments.

            Continuously from the date hereof until the principal and finance
charges on all Mortgage Assets are paid in full or as long as the Mortgage
Assets remain subject to this Agreement, the Servicers will diligently collect
all payments due under each Mortgage Asset when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement and Applicable Regulations, follow such collection procedures as they
follow with respect to mortgage assets comparable to the Mortgage Assets and
held for their own accounts. Further, the Servicers will take special care in
ascertaining and estimating on escrowed Mortgage Assets annual ground rents,
taxes, assessments, water rates, fire and hazard insurance premiums, mortgage
insurance premiums, and all other charges that, as provided in the Mortgage,
will become due and payable to that end that the installments payable by the
Obligors will be sufficient to pay such charges as and when they become due and
payable.

                                      -48-
<PAGE>

            Section 3.03   Realization Upon Defaulted Mortgage Assets.

            In the event that any payment due under any Mortgage Asset is not
paid when the same becomes due and payable, or in the event the Obligor fails to
perform any other covenant or obligation under the Mortgage Asset and such
failure continues beyond any applicable grace period, a Servicer shall take such
action as it shall deem to be in the best interest of the Certificateholders.
With respect to any defaulted Mortgage Asset, a Servicer shall have the right to
review the status of the related forbearance plan and, subject to the second
paragraph of Section 3.01, may modify such forbearance plan; including extending
the Mortgage Asset repayment date for a period of one year or reducing the
Coupon Rate up to 50 basis points.

            In connection with a foreclosure or other conversion, a Servicer
shall exercise such rights and powers vested in it hereunder and use the same
degree of care and skill in its exercise as prudent mortgage servicers would
exercise or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the Servicing Standards, including,
without limitation, advancing funds for the payment of taxes and insurance
premiums.

            Notwithstanding the foregoing provisions of this Section 3.03, with
respect to any Mortgage Asset as to which a Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, a Servicer shall not 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
Trust 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 a Servicer has
also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:

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

            B.    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 Certificateholders to take such
actions with respect to the affected Mortgaged Property.

            The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the applicable Servicer, subject to such
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.05(iii).

                                      -49-
<PAGE>

            If a Servicer determines, as described above, that it is in the best
economic interest of the Certificateholders 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
such Servicer shall take such action as it deems to be in the best economic
interest of the Certificateholders. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by such Servicer, subject
to such Servicer's right to be reimbursed therefor from the Collection Account
as provided in Section 3.05(iii).

            Section 3.04   Collection Account and Distribution Account.

            (a) The Servicers shall segregate and hold all funds collected and
received pursuant to each Mortgage Asset separate and apart from any of their
own funds and general assets and shall establish and maintain one or more
Collection Accounts. Each Collection Account shall be an Eligible Account.

      The Servicers shall deposit in the Collection Account on a daily basis
within two business days of receipt, and retain therein, the following payments
and collections received after the Cut-off Date, Additional Transfer Date or
date of substitution (with respect to any Eligible Substitute Mortgage Asset)
with respect to the Mortgage Assets:

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

            (ii) all payments on account of finance charges on the Mortgage
      Assets, net of the Servicing Fee;

            (iii) all Liquidation Proceeds;

            (iv) all Insurance Proceeds;

            (v) all Condemnation Proceeds affecting any Mortgaged Property which
      are not released to the Obligor in accordance with the Servicers' normal
      servicing procedures, the mortgage asset documents or applicable law; and

            (vi) any amounts required to be deposited by the Servicers in
      connection with any REO Property pursuant to Section 3.13.

            Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to the benefit of the Servicers and each
Servicer shall be entitled to retain and withdraw its share of such interest
from the Collection Account pursuant to Section 3.05(iv). The foregoing
requirements for deposit from the Collection Account shall be exclusive, it
being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of late payment charges, bad check fees,
Prepayment Charges, assumption fees and other similar fees need not be deposited
by the Servicers in the Collection Account. Amounts deposited in the Collection
Account in error may be withdrawn by the applicable Servicer at any time.

                                      -50-
<PAGE>

            (b) On behalf of the Trust Fund, 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 Certificateholders. On behalf of
the Trust Fund, the Servicers shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by 1:00 p.m. New York
time on the Servicer Remittance Date, that portion of the Available Funds
(calculated without regard to the references in the definition thereof to
amounts that may be deposited to the Distribution Account from a different
source as provided herein) then on deposit in the Collection Account. Amounts in
the Distribution Account shall be deemed to be held on behalf of the related
REMICs in accordance with the REMIC distributions set forth in Section 4.08. The
Trustee shall be entitled to withdraw from the Distribution Account any amounts
owing to it pursuant to Section 8.05 and Section 9.01(c) prior to the
distribution of any amounts on deposit to the Certificateholders; provided,
however, in the case of amounts owing to it other than the Trustee Fee, the
Trustee shall provide the Depositor and the Servicers with a written account of
such amounts five Business Days prior to withdrawing such funds.

            (c) Funds in the Collection Account and the Distribution Account may
be invested in Eligible Investments in accordance with the provisions set forth
in Section 3.25. The Servicers shall give notice to the Trustee of the location
of the Collection Account or Collection Accounts maintained by them when
established and prior to any change thereof. The Trustee shall give notice to
the Servicers and the Depositor of the location of the Distribution Account when
established and prior to any change thereof.

            (d) In the event a Servicer shall deliver to the Trustee for deposit
in the Distribution Account any amount not required to be deposited therein, it
may at any time request that the Trustee withdraw such amount from the
Distribution Account and remit to such Servicer any such amount, any provision
herein to the contrary notwithstanding. In addition, the Servicers shall deliver
to the Trustee from time to time for deposit, and the Trustee shall so deposit,
in the Distribution Account in respect of REMIC 1:

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

                  (ii) any amounts required to be deposited in the Distribution
            Account by the Servicers pursuant to Sections 2.03, 3.04, 3.13,
            3.15, 3.16, 3.23, 3.24, 4.07 or 10.01; and

                  (iii) any amounts required to be deposited by a Servicer
            pursuant to Section 3.11 in connection with the deductible clause in
            any blanket hazard insurance policy, such deposit being made from
            such Servicer's own funds, without reimbursement therefor.

            (e) Promptly upon receipt of any Stayed Funds, whether from a
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall notify the applicable Servicer of such receipt and deposit
such funds in the Distribution Account, subject to withdrawal thereof as
permitted hereunder. In addition, the Trustee shall deposit in the Distribution
Account any amounts required to be deposited pursuant to Section 3.25(b) in
connection with losses realized on Eligible Investments with respect to funds
held in the Distribution Account.

                                      -51-
<PAGE>

            Section 3.05   Permitted Withdrawals From the Collection Account.

            A Servicer may, from time to time, withdraw from the Collection
Account for the following purposes:

            (i) to remit to the Trustee for deposit in the Distribution Account
      the amounts required to be so remitted pursuant to Section 3.04(b) or
      permitted to be so remitted pursuant to the first sentence of Section
      3.04(d);

            (ii) to reimburse itself for Servicing Advances to the extent of
      amounts received on the related Mortgage Asset which represent payments of
      Condemnation Proceeds, Insurance Proceeds or Liquidation Proceeds
      respecting which any such Servicing Advance was made;

            (iii) to reimburse itself for unreimbursed Servicing Advances to the
      extent that such amounts are deemed to be Nonrecoverable Advances and any
      unpaid Servicing Fees to the extent that such amounts are nonrecoverable
      from the disposition of REO Property pursuant to Section 3.13 hereof;

            (iv) to reimburse itself for any amounts paid or expenses incurred
      pursuant to Section 3.03 (and not otherwise previously reimbursed);

            (v) to pay to itself as servicing compensation (a) its share of any
      interest earned on funds in the Collection Account (all such interest to
      be withdrawn monthly not later than each Servicer Remittance Date) and (b)
      the Servicing Fee from that portion of any payment or recovery as to
      interest to a particular Mortgage Asset to the extent not retained
      pursuant to Section 3.04(ii);

            (vi) to pay or reimburse itself for any amounts payable or paid
      pursuant to Section 6.03 (and not otherwise previously reimbursed); and
      (vii) to clear and terminate the Collection Account upon the termination
      of this Agreement.

            The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event a 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.

            Section 3.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.

            The Servicers shall segregate and hold all funds collected and
received pursuant to each Mortgage Asset which constitute Escrow Payments
separate and apart from any of their own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. A copy of such letter agreement shall be furnished to the
Trustee upon request. The Escrow Account shall be an Eligible Account.

                                      -52-
<PAGE>

            The Servicers shall deposit in the Escrow Account or Accounts on a
daily basis within two Business Days of receipt, and retain therein all Escrow
Payments collected on account of the Mortgage Assets, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement. The Servicers shall make withdrawals therefrom only to effect such
payments as are required under this Agreement, and for such other purposes as
shall be set forth in, or in accordance with, Section 3.07. The Servicers shall
be entitled to retain any interest paid on funds deposited in the Escrow Account
by the depository institution other than interest on escrowed funds required by
law to be paid to the Obligor and, to the extent required by the related
Mortgage Asset or Applicable Regulations, the Servicers shall pay interest on
escrowed funds to the Obligor notwithstanding that the Escrow Account is
non-interest bearing or that interest paid thereon is insufficient for such
purposes.

            Section 3.07   Permitted Withdrawals From Escrow Account.

            Withdrawals from the Escrow Account may be made by the Servicers (i)
to effect timely payments of ground rents, taxes, assessments, water rates,
mortgage insurance premiums, fire, flood and hazard insurance premiums and
comparable items in a manner and at a time that assures that the lien priority
of the Mortgage is not jeopardized (or, with respect to the payment of taxes, in
a manner and at a time that avoids the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien), (ii) to reimburse a
Servicer for any Servicing Advance made by such Servicer with respect to a
related Mortgage Loan but only from amounts received on the related Mortgage
Asset which represent late payments or Late Collections of Escrow Payments
thereunder with respect to taxes and assessments and with respect to hazard
insurance, (iii) to refund to the Obligor any funds as may be determined to be
overages, (iv) for transfer to the Collection Account in accordance with the
terms of this Agreement, (v) to pay to a Servicer, or to the Obligor to the
extent required by the related Mortgage Asset or Applicable Regulations, any
interest paid on the funds deposited in the Escrow Account or (vi) to clear and
terminate the Escrow Account on the termination of this Agreement.

            In the event a Servicer shall deposit in the Escrow Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Escrow Account, any provision herein to the contrary
notwithstanding.

            Section 3.08   Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.

            The Servicers  shall  maintain  accurate  records  reflecting  the
status of taxes,  assessments and other charges which are or may become a lien
upon  the  Mortgaged  Property  and the  status  of  fire,  flood  and  hazard
insurance  coverage  and shall  obtain,  from time to time,  all bills for the
payment of such charges  (including renewal premiums) and shall use their best
efforts to  determine  that any such  payments  are made by the Obligor at the
time  they  first  become  due.  If any such  payment  has not been made and a
Servicer  receives  notice of a tax lien with  respect to the  Mortgage  being
imposed,  such  Servicer  will,  promptly and to the extent  required to avoid
loss  of the  Mortgaged  Property,  advance  or  cause  to be  advanced  funds
necessary to discharge such lien on the Mortgaged Property.

                                      -53-
<PAGE>

            Section 3.09   Transfer of Accounts.

            The Servicers may transfer the  Collection  Account to a different
depository  institution  from time to time. Upon such transfer,  the Servicers
shall  deliver to the Trustee and the  Depositor,  a  certification  or letter
agreement, as the case may be, as required pursuant to Sections 3.04 and 3.06.

            Section 3.10 Maintenance of Hazard Insurance.

            The Servicers shall cause to be maintained for each Mortgage Asset
fire and hazard insurance with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount which is at least equal to
the lesser of (i) the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on an actual cash
value basis or (ii) the Principal Balance of the Mortgage Asset, in each case in
an amount not less than such amount as is necessary to prevent the Obligor
and/or the Trust Fund from becoming a co-insurer. The Servicers shall also
maintain on the REO Property for the benefit of the Certificateholders, (x) fire
and hazard insurance with extended coverage in an amount which is at least equal
to the lesser of (i) 100% of the actual cash value of the improvements securing
the Mortgage Asset and (ii) the outstanding Principal Balance of the Mortgage
Asset at the time it became an REO Property and (y) public liability insurance.
Any Insurance Proceeds collected by the Servicers under any such policies shall
be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.05. It is understood and agreed that no earthquake or other additional
insurance is required to be maintained by the Servicers or the Obligor or
maintained on property acquired in respect of the Mortgage Asset, other than
pursuant to such Applicable Regulations as shall at any time be in force and as
shall require such additional insurance. All such policies shall be endorsed
with standard mortgagee clauses with loss payable to the applicable Servicer and
shall provide for at least thirty days prior written notice of any cancellation,
reduction in the amount of or material change in coverage to such Servicer.

            Section 3.11   Maintenance of Mortgage Impairment Insurance
Policy.

            In the event that a Servicer shall obtain and maintain a blanket
policy issued by an insurer that has a general policy rating of B:III or better
in Best's Key Rating Guide, or is an affiliate of such Servicer, insuring
against hazard losses on all of the Mortgage Assets serviced by such Servicer,
then, to the extent such policy provides coverage in an amount equal to the
amount required pursuant to Section 3.10 and otherwise complies with all other
requirements of Section 3.10 (other than the requirement of a general policy
rating of B:III or better in Best's Key Rating Guide), it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 3.10, it being
understood and agreed that such policy may contain a deductible clause, in which
case such Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property or REO Property a policy complying with
Section 3.10, and there shall have been a loss which would have been covered by
such policy, deliver to the Trustee for deposit in the Distribution Account the
amount not otherwise payable under the blanket policy because of such deductible
clause, which amount shall not be reimbursable to such Servicer from the Trust
Fund. In connection with their activities as servicers of the Mortgage Assets,
the Servicers agree to prepare and present, on behalf of the Trustee, claims
under any such blanket

                                      -54-
<PAGE>

policy in a timely fashion in accordance with the terms of such policy. Upon
request of the Trustee, the Servicers shall cause to be delivered to the Trustee
a certified true copy of such policy and a statement from the insurer thereunder
that such policy shall in no event be terminated or materially modified without
thirty days prior written notice to the Trustee.

            Section 3.12   Fidelity Bond, Errors and Omissions Insurance.

            Each Servicer shall maintain, at its own expense, a blanket fidelity
bond (the "Fidelity Bond") and an errors and omissions insurance policy, with
broad coverage with financially responsible companies on all officers, employees
or other persons acting in any capacity with regard to the Mortgage Assets to
handle funds, money, documents and papers relating to the Mortgage Assets. The
Fidelity Bond and errors and omissions insurance shall protect and insure such
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such Fidelity Bond shall also
protect and insure such Servicer against losses in connection with the failure
to maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Asset without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 3.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Servicers from their duties and obligations as set forth in this
Agreement. Upon request of the Trustee, a Servicer shall cause to be delivered
to the requesting party a certified true copy of the Fidelity Bond and errors
and omissions insurance policy and a statement from the surety and the insurer
that such Fidelity Bond and errors and omissions insurance policy shall in no
event be terminated or materially modified without thirty days' prior written
notice to the Trustee.

            Section 3.13   Title, Management and Disposition of REO Property.

            (a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to a Servicer) in the name of the Trustee or its nominee, on behalf of
the Certificateholders, or in the event the Trustee is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of an affiliate of the Servicers. Such affiliate holding such
title shall acknowledge in writing that such title is being held as nominee for
the benefit of the Trustee.

            (b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Asset, the applicable Servicer shall dispose of such REO Property
before the end of the third taxable year beginning after the year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code
unless such Servicer has received a grant of extension from the Internal Revenue
Service of the above-mentioned grace period such that the holding by the Trust
Fund of such REO Property subsequent to such period will not: (i) result in the
imposition of any tax on "prohibited transactions" as defined in Section 860F of
the Code; or (ii) cause any REMIC constituting any part of the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such REO Property.

                                      -55-
<PAGE>

            Subject to compliance with applicable laws and regulations as shall
at any time be in force, and notwithstanding any other provisions of this
Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would: (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code; or (ii) subject any REMIC constituting part of
the Trust Fund to the imposition of any federal income taxes on the income
earned from such REO Property, including any taxes imposed by reason of Sections
860F or 860G(c) of the Code, unless the applicable Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.

            Each Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Trust Fund 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 the related REMIC 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. Each Servicer shall cause
each REO Property to be inspected promptly upon the acquisition of title thereto
and shall cause each REO Property to be inspected at least annually thereafter.
Each Servicer shall make or cause to be made a written or electronic report of
each such inspection. Such reports shall be retained in the Mortgage Asset File
or kept by the applicable Servicer electronically and copies thereof shall be
forwarded by the applicable Servicer to the Trustee upon request. A Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as such Servicer deems to be in the best interest of the
Certificateholders and the Trust Fund.

            With respect to each REO Property, each Servicer shall account
separately for each REO Property with respect to all funds collected and
received in connection with the operation of such REO Property.

            Each Servicer shall deposit or cause to be deposited, on a daily
basis, within two business days of receipt, in the Collection Account, all
revenues received with respect to each REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of the
related REO Property, including the cost of maintaining any hazard insurance
pursuant to Section 3.10 hereof.

            [Each Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating statement
shall be accompanied by such other information as the Trustee shall reasonably
request.]

            Each Servicer shall use its best efforts to dispose of the REO
Property as promptly as is practically consistent with protecting the
Certificateholders' interests.

            Each REO Disposition shall be carried out by a Servicer at such
price and upon such terms and conditions as such Servicer deems to be in the
best interest of the Certificateholders. If as of the date title to any REO
Property was acquired by a Servicer there

                                      -56-
<PAGE>

were outstanding unreimbursed Servicing Advances and Servicing Fees with respect
to the REO Property, such Servicer, upon an REO Disposition of such REO
Property, shall be entitled to reimbursement for any related unreimbursed
Servicing Advances and Servicing Fees from proceeds received in connection with
such REO Disposition. The proceeds from the REO Disposition, net of any payment
to such Servicer as provided above, shall be deposited in the Collection Account
for transfer to the Distribution Account on the succeeding Servicer Remittance
Date in accordance with Section 3.04(a)(vi).

            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).

            Section 3.14   Due-on-Sale Clauses; Assumption and Substitution
Agreements.

            When a Mortgaged Property has been or is about to be conveyed by the
Obligor, a Servicer may, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Asset under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that a Servicer shall not exercise any such
right if the "due-on-sale" clause, in the reasonable belief of such Servicer, is
not enforceable under applicable law. In such event, a Servicer shall make
reasonable efforts to enter into an assumption and modification agreement with
the Person to whom such property has been or is about to be conveyed, pursuant
to which such Person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage, the Obligor remains liable thereon. If the
foregoing is not permitted under applicable law, a Servicer is authorized to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Obligor is released from liability and such Person is
substituted as Obligor and becomes liable under the Note; provided that no such
substitution will be permitted unless such person satisfies the underwriting
criteria of such Servicer. The Mortgage Asset, as assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
A Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable under the circumstances)
it shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy. A Servicer shall notify the Trustee
that any such assumption or substitution agreement has been completed by
forwarding to the Trustee the original copy of such assumption or substitution
agreement (indicating the Mortgage Asset File to which it relates) which copy
shall be added by the Trustee to the related Mortgage Asset File and which
shall, for all purposes, be considered a part of such Mortgage Asset File to the
same extent as all other documents and instruments constituting a part thereof.
The Servicers shall be responsible for recording any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the Monthly Payment on the related Mortgage Asset shall not be
changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Asset shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by a Servicer
for consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to such Servicer as
additional servicing compensation.

                                      -57-
<PAGE>

            Notwithstanding the foregoing paragraph or any other provision of
this Agreement, a 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 Asset by operation of law or any assumption which such Servicer may be
restricted by law from preventing, for any reason whatsoever.

            Section 3.15   Notification of Adjustments.

            On each Adjustment Date, each Servicer shall make Coupon Rate
adjustments for each Adjustable-Rate Mortgage Asset in compliance with the
requirements of the related Mortgage and Note and Applicable Regulations. The
Servicers shall execute and deliver the notices required by each Mortgage and
Note and Applicable Regulations regarding Coupon Rate adjustments. Upon the
discovery by a Servicer or the Trustee that a Servicer has failed to adjust or
has incorrectly adjusted a Coupon Rate or a Monthly Payment pursuant to the
terms of the related Note and Mortgage, such Servicer shall deliver to the
Trustee for deposit in the Distribution Account from its own funds the amount of
any interest loss caused thereby without reimbursement therefor; provided,
however, such Servicer shall be held harmless with respect to any Mortgage
Interest Rate adjustments made by any servicer prior to the such Servicer.

            Section 3.16   Optional Purchases of Mortgage Assets by a
Servicer.

            A Servicer may, at its option, purchase a Mortgage Asset or REO
Property which becomes 90 or more days Delinquent or for which such Servicer has
accepted a deed in lieu of foreclosure. The Servicers shall not use any
procedure in selecting Mortgage Assets to be purchased which is materially
adverse to the interests of the Certificateholders. A Servicer shall purchase
such Delinquent Mortgage Asset or REO Property at a price equal to the Purchase
Price. A Servicer will not be entitled to any Servicing Fee with respect to any
such purchased Mortgage Asset. Any such purchase of a Mortgage Asset or REO
Property pursuant to this Section 3.16 shall be accomplished by delivery to the
Trustee for deposit in the Distribution Account of the amount of the Purchase
Price. The Trustee shall immediately effectuate the conveyance of such
delinquent Mortgage Asset or REO Property to the applicable Servicer to the
extent necessary, including the prompt delivery of all documentation to the such
Servicer.

            Section 3.17   Trustee to Cooperate; Release of Files.

            (a) Upon the payment in full of any Mortgage Asset (including any
liquidation of such Mortgage Asset through foreclosure or otherwise), a Servicer
shall deliver to the Trustee, in written form (with two executed copies) or
electronic form, of a completed "Request for Release" in the form of Exhibit E.
Upon receipt of such Request for Release of documents, the Trustee shall
promptly release the related Mortgage Asset File within three (3) Business Days
via overnight mail delivery (at the expense of the requesting Servicer), in
trust, to (i) such Servicer, or (ii) such other party identified in the related
Request for Release. The Trustee agrees to indemnify the applicable Servicer,
out of its own funds, for any loss, liability or expense (other than special,
indirect, punitive or consequential damages which will not be paid by the
Trustee) incurred by the such Servicer as a direct result of the negligence or
willful misconduct by the Trustee in releasing the Mortgage Asset File as
provided above. Upon any such payment in full, or the receipt of such
notification that such funds have been placed in

                                      -58-
<PAGE>

escrow, the Trustee hereby authorizes and empowers the applicable Servicer to
execute an instrument of satisfaction (or assignment of Mortgage without
recourse) regarding the Mortgaged Property relating to such Mortgage, which
instrument of satisfaction or assignment shall be delivered to the Person or
Persons entitled thereto against receipt therefor of payment in full.

            (b) From time to time and as appropriate in the servicing of any
Mortgage Asset, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Asset or collection under any insurance policy relating
to a Mortgage Asset, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage Asset File is released to an
escrow agent or an employee, agent or attorney of the Trustee), upon written
request of a Servicer and delivery to the Trustee, in written form (with two
executed copies) or electronic form, of a "Request for Release" in the form of
Exhibit E signed by a Servicing Officer, release the related Mortgage Asset File
to the requesting Servicer within three (3) Business Days and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to such Servicer. Such receipt shall obligate such Servicer to return
the Mortgage Asset File to the Trustee when the need therefor by such Servicer
no longer exists unless the Mortgage Asset shall be liquidated, in which case,
upon receipt of a Request for Release evidencing such liquidation, the receipt
shall be released by the Trustee to such Servicer.

            (c) Subject to Section 3.01, a Servicer shall have the right to
accept applications of Obligors for consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of properties
subject to Mortgages, (iv) modifications, and (v) second mortgage subordination
agreements. No application for approval shall be considered by a Servicer
unless: (w) it has received an Opinion of Counsel, addressed to the Trustee
(which opinion shall not be an expense of the Trustee or the Trust Fund) that
such sale, disposition, substitution, acquisition or contribution will not
affect adversely the status of any REMIC constituting part of the Trust Fund as
a REMIC or cause any REMIC constituting part of the Trust Fund to be subject to
a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions; (x) the provisions of the related Note and Mortgage have been
complied with; (y) the Loan-to-Value Ratio (in the case of a Mortgage Loan) and
debt-to-income ratio after any release does not exceed the maximum Loan-to-Value
Ratio (in the case of a Mortgage Loan) and debt-to-income ratio established in
accordance with the underwriting standards of the Mortgage Assets; and (z) the
lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of a Servicing Officer's certificate setting forth the action proposed
to be taken in respect of a particular Mortgage Asset and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to a Servicer the consent or partial
release so requested by such Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Servicing Officer's certificate
delivered by a Servicer pursuant to this paragraph.

            Section 3.18   Servicing Compensation.

            As compensation for their activities hereunder, each Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Asset (including REO Properties) serviced by it. Each Servicer shall be
entitled to retain additional servicing

                                      -59-
<PAGE>

compensation in the form of release fees, bad check charges, assumption fees,
modification or extension fees, late payment charges, Prepayment Charges or any
other service-related fees and similar items, to the extent collected from
Obligors.

            Section 3.19   Annual Statement as to Compliance.

            (a) Each Servicer, at its own expense, will deliver to the Trustee
and the Depositor, not later than 60 days following the end of each calendar
year, a Servicing Officer's certificate stating, as to each signer thereof, that
(i) a review of the activities of such Servicer during such preceding fiscal
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, such Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by such Servicer to remedy
such default.

            (b) Delivery of such reports, information and documents to the

Trustee is for informational purposes only and their receipt of such shall not
constitute constructive notice of any information contained therein or
determinable, from information contained therein, including a Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

            Section 3.20   Annual Independent Certified Public Accountants'
Reports.

            (a) Not later than 60 days following the end of each calendar year,
each Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Trustee, the
Depositor and each Rating Agency, a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of such
Servicer which includes an assertion that such Servicer has complied with
certain minimum residential mortgage asset servicing standards, identified in
either the Uniform Single Attestation Program for Mortgage Bankers established
by the Mortgage Bankers Association of America or the Audit Program for
Mortgages serviced by Freddie Mac, with respect to the servicing of residential
mortgage assets 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. Copies of such
statements shall be provided by the Trustee to any Certificateholder upon
request, provided that such statement is delivered by the applicable Servicer to
the Trustee.

            (b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and their receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including a Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

                                      -60-
<PAGE>

            Section 3.21   Access to Certain Documentation and Information
Regarding the Mortgage Assets.

            Each Servicer shall provide to the Trustee, Certificateholders that
are federally insured savings and loan associations, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the available
documentation regarding the Mortgage Assets, such access being afforded without
charge but only upon reasonable advance request and during normal business hours
at the offices of such Servicer.

            Section 3.22   Capitalized Interest Account and Pre-Funding
Account.

      (a) On or before the Closing Date, the Trustee shall open at the Corporate
Trust Office, a segregated trust account (the "Pre-Funding Account") in the name
of the Trustee on behalf of the Certificateholders, which account shall be an
Eligible Account.

      (b) On or before the Closing Date, the Trustee shall open at the Corporate
Trust Office, a segregated trust account (the "Capitalized Interest Account") in
the name of the Trustee on behalf of the Certificateholders, which account shall
be an Eligible Account.

      (c) The amounts on deposit in the Pre-Funding Account and the Capitalized
Interest Account shall be invested in Eligible Investments in the same manner as
amounts in the Collection Account as set forth in Section 3.25 hereof.

      (d) On the before the Closing Date, the Depositor shall cause to be
deposited in the Pre-Funding Account the amount of $[_________] and shall cause
to be deposited in the Capitalized Interest Account the amount of
$[________].

      (e) On each Additional Transfer Date, upon satisfaction of the conditions
set forth in Section 2.08 hereof and the related Additional Transfer Agreement,
the Trustee shall withdraw from the Pre-Funding Account an amount equal to the
purchase price for the Additional Mortgage Assets purchased by the Trust on such
Additional Transfer Date and pay such amount upon the order of the Depositor.

      (f) On the Business Day prior to the Distribution Date immediately
following the Collection Period in which the Pre-Funding Period ends, the
Trustee shall withdraw the unutilized Pre-Funded Amount, if any, from the
Pre-Funding Account and promptly deposit such amount in the Collection Account
net of Pre-Funding Earnings.

      (g) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Collection Period in which the
Pre-Funding Period ends, the Trustee shall transfer from the Capitalized
Interest Account to the Collection Account the amount of the Capitalized
Interest Shortfall, if any, applicable to such Distribution Date and promptly
deposit such amount in the Collection Account.

      (h) All interest and any other earnings from Eligible Investments of
amounts on deposit in the Capitalized Interest Account will be retained in the
Capitalized Interest

                                      -61-
<PAGE>

Account. Any amounts remaining in the Capitalized Interest Account not needed to
cover any Capitalized Interest Shortfalls on the Distribution Date following the
end of the Pre-Funding Period will be withdrawn therefrom by the Trustee and
remitted to the Depositor.

      (i) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre Funding
Period ends, the Trustee shall transfer from the Pre-Funding Account to the
Distribution Account the Pre-Funding Earnings, if any, applicable to such
Distribution Date and shall distribute such amount to the REMIC 4 Regular
Interests on such Distribution Date pursuant to Section 4.02 hereof.

      (j) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre Funding
Period ends, the Trustee shall transfer from each Capitalized Interest Account
to the Distribution Account the related Capitalized Interest Shortfall, if any,
for such Distribution Date and shall distribute such amount to the REMIC 4
Regular Interests on such Distribution Date pursuant to Section 4.01 hereof.

            Section 3.23 [RESERVED].

            Section 3.24   Obligations of the Servicers in Respect of Coupon
Rates and Monthly Payments.

            In the event that a shortfall in any collection on or liability with
respect to any Mortgage Asset results from or is attributable to adjustments to
Coupon Rates, Monthly Payments or Principal Balances that were made by a
Servicer in a manner not consistent with the terms of the related Note and this
Agreement, such Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee 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 Trustee, the Depositor, the other Servicer and any
successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement. Notwithstanding the
foregoing, this Section 3.24 shall not limit the ability of a Servicer to seek
recovery of any such amounts from the related Obligor under the terms of the
related Note, as permitted by law.

            Section 3.25   Investment of Funds in the Collection Account and
the Distribution Account.

            (a) The Servicers may direct any depository institution maintaining
the Collection Account and the Trustee may direct any depository institution
maintaining the Distribution Account (for purposes of this Section 3.25, each an
"Investment Account"), to invest the funds in such Investment Account in one or
more Eligible 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 Trustee 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
Trustee is the obligor thereon or if such investment is managed or advised by
the Trustee of an Affiliate. All such Eligible Investments shall be held to
maturity,

                                      -62-
<PAGE>

unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee or the Servicers, as applicable (in their
capacity as such) or in the name of a nominee of the Trustee. The Trustee shall
be entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account) over each such investment and the income
thereon, and any certificate or other instrument evidencing any such investment
shall be delivered directly to the Trustee or its agent, together with any
document of transfer necessary to transfer title to such investment to the
Trustee or its nominee. In the event amounts on deposit in an Investment Account
are at any time invested in an Eligible Investment payable on demand, the
Trustee shall at the direction of the Servicers:

                  (x)   consistent with any notice required to be given
                        thereunder, demand that payment thereon be made on the
                        last day such Eligible 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
                        Trustee that such Eligible Investment would not
                        constitute an Eligible Investment in respect of funds
                        thereafter on deposit in the Investment Account.

            (b) Each Servicer's share of all income and gain realized from the
investment of funds in the Collection Account shall be for the benefit of such
Servicer. Each Servicer shall deposit in the Collection Account its share of the
amount of any loss incurred in respect of any such Eligible Investment made with
funds in such account immediately upon realization of such loss. All income and
gain realized from the investment of funds in the Distribution Account shall be
for the benefit of the Trustee. The Trustee shall deposit in the Distribution
Account the amount of any loss incurred on Eligible Investments in the
Distribution Account.

            (c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Eligible Investment, or
if a default occurs in any other performance required under any Eligible
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Holders of Certificates representing more than 51% 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 3.26 Liability of Servicers; Indemnification.

            (a) Subject to clause (b) below and Section 6.03, each Servicer
(except the Trustee if it is required to succeed a Servicer hereunder) severally
indemnifies and holds the Trustee, the Depositor and the Trust Fund harmless
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee, the Depositor and the Trust Fund may sustain in any way
related to the failure of such Servicer to perform its duties and service the
Mortgage Assets in compliance with the Servicing Standard. Each Servicer shall
immediately notify the Trustee and the Depositor if a claim is made that may
result in such claims, losses, penalties, fines,

                                      -63-
<PAGE>

forfeitures, legal fees or related costs, judgments, or any other costs, fees
and expenses, and such Servicer shall assume (with the consent of the Trustee)
the defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against such Servicer, the Trustee, the
Depositor and/or the Trust Fund in respect of such claim. The provisions of this
Section 3.26 shall survive the termination of this Agreement and the payment of
the outstanding Certificates.

            (b) None of the Depositor, a Servicer, or any of the directors,
officers, employees or agents of the Depositor or a 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 or a Servicer or any such Person against any
breach of warranties or representations made by such party herein, or against
any specific liability imposed on a Servicer for a breach of the Servicing
Standard and/or this Agreement, or against any liability which would otherwise
be imposed by reason of its respective willful misfeasance, bad faith, fraud or
negligence in the performance of its duties or by reasons of negligent disregard
of its respective obligations or duties hereunder.

            The Depositor, a Servicer and any director, officer, employee or
agent of the Depositor or a Servicer, may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any
appropriate Person with respect to any matters arising hereunder. The Depositor,
a Servicer and any director, officer, employee or agent of the Depositor or a
Servicer shall be indemnified and held harmless by the Trust 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
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty made by such party hereunder or (in the case of a
Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. None of the Depositor or a 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 expose it to any expense or liability; provided, however, that
the Depositor or a Servicer may in their discretion undertake any action related
to their obligations hereunder which they 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. A Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of such Servicer pursuant to Section 6.04 or 7.01
with respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination).

            Section 3.27  Reports of Foreclosure and Abandonment of Mortgaged
Properties.

            Beginning  in  20__,  each  Servicer  shall  file  the  reports  of
foreclosure  and  abandonment  of any Mortgaged  Property  required by Section
6050J of the Code with the Internal  Revenue Service on or before the due date
for  any  such  report.  Not  later  than 90  days  following

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<PAGE>

the end of each calendar year, beginning in 20__, each Servicer will deliver an
Officer's Certificate to the Trustee certifying its compliance with this Section
3.27. The reports from each Servicer shall be in form and substance sufficient
to meet the reporting requirements imposed by such Section 6050J.

            Section 3.28  Protection of Assets.

            (a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:

            (1)   borrow money or issue debt;

            (2)   merge with  another  entity,  reorganize,  liquidate or sell
assets; or

            (3)   engage in any business or activities.

            (b) Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.

            Section 3.29 [RESERVED].

            Section 3.30   No Personal Solicitation.

            From and after the Closing Date, each Servicer agrees that it will
not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on such Servicer's behalf, to personally, by telephone, mail
or electronic mail, solicit the Obligor under any Mortgage Asset for the purpose
of refinancing such Mortgage Asset; provided, that such Servicer may solicit any
Obligor for whom such Servicer has received a request for verification of
mortgage, a request for demand for payoff, an Obligor initiated written or
verbal communication indicating a desire to prepay the related Mortgage Asset,
or the Obligor initiates a title search; provided further, it is understood and
agreed that promotions undertaken by each Servicer or any of its Affiliates
which (i) concern optional insurance products or other additional products or
(ii) are directed to the general public at large, including, without limitation,
mass mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this Section,
nor is such Servicer prohibited from responding to unsolicited requests or
inquiries made by an Obligor or an agent of an Obligor.

            Section 3.31   Periodic Filings.

            (a) The Trustee and the Servicers shall reasonably cooperate with
the Depositor in connection with the Trust's satisfying its reporting
requirements under the Exchange Act. Without limiting the generality of the
foregoing, the Trustee shall prepare on behalf of the Trust any monthly Current
Reports on Form 8-K (each, a "Monthly Form 8-K") and Annual Reports on Form 10-K
(each, a "Form 10-K") customary for similar securities as required by the
Exchange Act and the rules and regulations of the Securities and Exchange

                                      -65-
<PAGE>

Commission thereunder, and the Trustee shall sign (other than any Form 10-K) and
file (via the Securities and Exchange Commission's Electronic Data Gathering and
Retrieval System) such Forms on behalf of the Trust. The Depositor shall sign
any Form 10-K.

            (b) Each Monthly Form 8-K shall be filed by the Trustee within 15
days after each Distribution Date, including a copy of the Distribution Date
Statement for such Distribution Date as an exhibit thereto. Prior to March 30th
of each year (or such earlier date as may be required by the Exchange Act and
the rules and regulations of the Securities and Exchange Commission), the
Trustee shall file a Form 10-K, in substance as required by applicable law or
applicable Securities and Exchange Commission staff's interpretations. Such Form
10-K shall include as exhibits the Servicers' annual statements of compliance
described under Section 3.19 and the accountant's reports described under
Section 3.20, in each case, to the extent they have been timely delivered to the
Trustee. If they are not so timely delivered, the Trustee shall file an amended
Form 10-K including such documents as exhibits reasonably promptly after they
are delivered to the Trustee. The Trustee shall have no liability with respect
to any failure to properly prepare or file such periodic reports resulting from
or relating to the Trustee's inability or failure to obtain any information not
resulting from its own negligence, willful misconduct or bad faith. The Form
10-K shall also include a certification in the form attached hereto as Exhibit K
(the "Certification"), which shall be signed by a senior officer of the
Depositor in charge of securitization. The Depositor shall deliver the
Certification to the Trustee three (3) Business Days prior to the latest date on
which the Form 10-K may be timely filed. The Trustee, the Depositor and the
Servicers shall reasonably cooperate to enable the Securities and Exchange
Commission requirements with respect to the Trust to be met in the event that
the Securities and Exchange Commission issues additional interpretive guidelines
or promulgates rules or regulations, or in the event of any other change of law
that would require reporting arrangements or the allocation of responsibilities
with respect thereto, as described in this Section 3.31, to be conducted or
allocated in a different manner.

            (c) Prior to the latest date on which the Form 10-K may be timely
filed each year, (i) the Trustee shall sign and deliver to the Depositor a
certification (in the form attached hereto as Exhibit L) for the benefit of the
Depositor and its officers, directors and Affiliates (provided, however, that
the Trustee shall not undertake an analysis of the accountant's report attached
as an exhibit to the Form 10-K) and (ii) the Servicers shall each sign and
deliver to the Depositor a certification (in the form attached hereto as Exhibit
M) for the benefit of the Depositor and its officers, directors and Affiliates.
In addition, (i) the Trustee shall also indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon any inaccuracy in the certification provided by the Trustee pursuant
to this Section 3.31(c), any breach of the Trustee's obligations under this
Section 3.31(c) or the Trustee's negligence, bad faith or willful misconduct in
connection therewith and (ii) each Servicer, severally, shall indemnify and hold
harmless the Depositor and its officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any inaccuracy in the certification provided by
such Servicer pursuant to this Section 3.31(c), any breach of such Servicer's
obligations under this Section 3.31(c) or such Servicer's negligence, bad faith
or willful misconduct in connection therewith. If the indemnification provided
for

                                      -66-
<PAGE>

herein is unavailable or insufficient to hold harmless the Depositor and its
officers, directors and Affiliates, then (i) the Trustee agrees that it shall
contribute to the amount paid or payable by the Depositor, its officers,
directors or Affiliates as a result of the losses, claims, damages or
liabilities of the Depositor, its officers, directors or Affiliates in such
proportion as is appropriate to reflect the relative fault of the Depositor and
its officers, directors and Affiliates on the one hand and the Trustee on the
other in connection with a breach of the Trustee's obligations under this
Section 3.31(c) or the Trustee's negligence, bad faith or willful misconduct in
connection therewith and (ii) each Servicer, severally, agrees that it shall
contribute to the amount paid or payable by the Depositor, its officers,
directors or Affiliates as a result of the losses, claims, damages or
liabilities of the Depositor, its officers, directors or Affiliates in such
proportion as is appropriate to reflect the relative fault of the Depositor and
its officers, directors and Affiliates on the one hand and such Servicer on the
other in connection with a breach of such Servicer's obligations under this
Section 3.31(c) or such Servicer's negligence, bad faith or willful misconduct
in connection therewith. Each Servicer hereby acknowledges and agrees that the
Depositor and the Trustee are relying on each Servicer's performance of its
obligations under Sections 3.19 and 3.20 in order to perform their respective
obligations under this Section 3.31.

            (d) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.

            (e) The obligations set forth in paragraphs (a) through (d) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file reports on Form 8-K or 10-K pursuant to paragraph (b) of this
Section. Upon request of the Depositor, the Trustee shall prepare, execute and
file with the Securities and Exchange Commission a Form 15 Suspension
Notification with respect to the Trust, and thereafter there shall be no further
obligations under paragraphs (a) through (d) of this Section commencing with the
fiscal year in which the Form 15 is filed (other than the obligations to be
performed in such fiscal year that relate back to the prior fiscal year).

                                   ARTICLE IV

                                  FLOW OF FUNDS

            Section 4.01   Interest Distributions.

            On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Interest Remittance Amount and apply it in the
following order of priority (based upon the Mortgage Asset information provided
to it in the Remittance Report, upon which the Trustee may conclusively rely),
and the calculations required to be made by the Trustee, to the extent
available:

            (i) to the Trustee, the Trustee Fee for such Distribution Date;

            (ii) concurrently, to the Class A-1 and Class A-2 Certificates, pro
      rata, the applicable Accrued Certificate Interest thereon for such
      Distribution Date;

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<PAGE>

            (iii) concurrently, to the Class A-1 and Class A-2 Certificates, pro
      rata, the applicable Interest Carry Forward Amount thereon for such
      Distribution Date;

            (iv) to the Class M-1 Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date;

            (v) to the Class M-2 Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date;

            (vi) to the Class B Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date; and

            (vii) the amount, if any, of the Interest Remittance Amount
      remaining after application with respect to the priorities set forth above
      will be applied as described under Section 4.02(b) hereof.

            Section 4.02   Distributions of Principal and Monthly Excess
Cashflow Amounts.

            (a) On each Distribution Date, the Trustee shall make the following
distributions in the following order of priority (based upon the Mortgage Asset
information provided to it in the Remittance Report and the calculations
required to be made by the Trustee), to the extent of the Principal Distribution
Amount:

            (i) before the Stepdown Date or with respect to which a Trigger
      Event is in effect, sequentially, as follows:

                  first, concurrently, the Senior Principal Distribution Amount
            to the Class A-1 and Class A-2 Certificates, pro rata, until the
            Certificate Principal Balances thereof have been reduced to zero;

                  second, to the Class M-1 Certificates, until the Certificate
            Principal Balance thereof has been reduced to zero;

                  third, to the Class M-2 Certificates, until the Certificate
            Principal Balance thereof has been reduced to zero;

                  fourth, to the Class B Certificates, until the Certificate
            Principal Balance thereof has been reduced to zero; and

                  fifth, any remaining Principal Distribution Amount will be
            distributed as part of the Monthly Excess Cashflow Amount as set
            forth in Section 4.02(b).

            (ii) on or after the Stepdown Date and as long as a Trigger Event is
      not in effect:

                                      -68-
<PAGE>

                  first, concurrently, the Senior Principal Distribution Amount
            to the Class A-1 and Class A-2 Certificates, pro rata, until the
            Certificate Principal Balances thereof have been reduced to zero;

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

                  third, to the Class M-2 Certificates, up to the Class M-2
            Principal Distribution Amount, until the Certificate Principal
            Balance thereof has been reduced to zero;

                  fourth, to the Class B Certificates, up to the Class M-3
            Principal Distribution Amount, until the Certificate Principal
            Balance thereof has been reduced to zero; and

                  fifth, any remaining Principal Distribution Amount will be
            distributed as part of the Monthly Excess Cashflow Amount as set
            forth in Section 4.02(b).

            (b) On each Distribution Date, any Monthly Excess Cashflow Amount
shall be distributed, to the extent available, in the following order of
priority on such Distribution Date:

            (i) to pay any remaining Accrued Certificate Interest for such
      Distribution Date, pro rata, for the Class A Certificates;

            (ii) to pay any Interest Carry Forward Amounts for such Distribution
      Date, pro rata, for the Class A Certificates;

            (iii) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date for the Class M-1 Certificates;

            (iv) to pay the remaining Interest Carry Forward Amount, if any, for
      the Class M-1 Certificates;

            (v) to pay the Class M-1 Realized Loss Amortization Amount for such
      Distribution Date; (vi) to pay any remaining unpaid Accrued Certificate
      Interest for such Distribution Date for the Class M-2 Certificates; (vii)
      to pay the remaining Interest Carry Forward Amount, if any, for the Class
      M-2 Certificates;

            (viii) to pay the Class M-2 Realized Loss Amortization Amount for
      such Distribution Date;

                                      -69-
<PAGE>

            (ix) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date for the Class B Certificates;

            (x) to pay the remaining Interest Carry Forward Amount, if any, for
      the Class B Certificates; (xi) to pay the Class B Realized Loss
      Amortization Amount for such Distribution Date; and

            (xii) to the Class CE Certificates, up to the Class CE Distributable
      Amount for such Distribution Date.

            On each Distribution Date, there shall be distributed to the Holder
of the Class R Certificate, any remaining amount in the Distribution Account on
such date after the application pursuant to Sections 4.01, 4.02(a) and
4.02(b)(i)-(xii).

            Section 4.03   Allocation of Losses.

            Realized  Losses  shall be  allocated  first  against  the Monthly
Excess  Interest  Amount and then  against  the  Overcollateralization  Amount
until such amount has been reduced to zero.  If,  after  giving  effect to the
distribution of the Principal  Distribution  Amount on any  Distribution  Date
the  aggregate  Certificate  Principal  Balance  of the  Offered  Certificates
exceeds the Pool Balance as of the end of the related Collection Period,  such
excess will be allocated  against the Class M-6,  Class M-5,  Class M-4, Class
M-3,  Class  M-2 and  Class  M-1  Certificates,  in that  order  and until the
respective Certificate Principal Balances thereof are reduced to zero.

            Section 4.04   Method of Distribution.

            The Trustee shall make distributions in respect of a Distribution
Date to each Certificateholder of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates, or by check mailed by first class mail to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, provided that the Trustee may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.

            Section 4.05   Distributions on Book-Entry Certificates.

            Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit 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

                                      -70-
<PAGE>

Certificate Owners that it represents. All such credits and disbursements with
respect to a Book-Entry Certificate are to be made by the Depository and the
Depository Participants in accordance with the provisions of the Certificates.
None of the Trustee, the Depositor or the Servicers shall have any
responsibility therefor except as otherwise provided by applicable law.

            Section 4.06   Statements.

            (a) On each Distribution Date, based on the Mortgage Asset
information contained in the Remittance Report, the Trustee shall prepare and
post on its website at [________], a statement (the "Distribution Date
Statement") as to the distributions made on such Distribution Date:

                  (i) the amount of the distribution made on such Distribution
            Date to the Holders of each Class of Certificates allocable to
            principal, separately identified;

                  (ii) the amount of the distribution made on such Distribution
            Date to the Holders of each Class of Certificates allocable to
            interest or Class CE Distributable Amount, separately identified;

                  (iii) the Overcollateralization Amount, the
            Overcollateralization Release Amount, the Overcollateralization
            Deficiency and the Overcollateralization Target Amount as of such
            Distribution Date and the Monthly Excess Interest Amount and Monthly
            Excess Cashflow Amount for such Distribution Date; (iv) the
            aggregate amount of servicing compensation received by the Servicers
            during the related Collection Period; (v) the aggregate amount of
            cumulative unreimbursed Servicing Advances and cumulative
            Nonrecoverable Advances; (vi) the Pool Balance, at the close of
            business at the end of the related Collection Period;

                  (vii) the number, weighted average remaining term to maturity
            and weighted average Coupon Rate of the Mortgage Assets as of the
            related Due Date;

                  (viii) the number and aggregate unpaid principal balance of
            Mortgage Assets (a) 31 to 60 days past due on a contractual basis,
            (b) 61 to 90 days past due on a contractual basis, (c) 91 or more
            days past due on a contractual basis, (d) as to which foreclosure
            proceedings have been commenced and (e) in bankruptcy as of the
            close of business on the last day of the calendar month preceding
            such Distribution Date;

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

                                      -71-
<PAGE>

                  (x) 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, and, cumulatively, the total number and
            cumulative principal balance of all REO Properties as of the close
            of business of the last day of the preceding Collection Period;

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

                  (xii) the aggregate amount of Realized Losses incurred during
            the related Collection Period and the cumulative amount of Realized
            Losses;

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

                  (xiv) the Accrued Certificate Interest in respect of each
            Class of Certificates for such Distribution Date, and the respective
            portions thereof, if any, remaining unpaid following the
            distributions made in respect of such Certificates on such
            Distribution Date;

                  (xv) the aggregate amount of any Prepayment Interest
            Shortfalls for such Distribution Date;

                  (xvi) the amount of the Trustee Fee paid;

                  (xvii) any Overcollateralization Deficiency after giving
            effect to the distribution of principal on such Distribution Date;
            (xviii) whether a Trigger Event has occurred and is continuing, and
            the cumulative Realized Losses, as a percentage of the original Pool
            Balance;

                  (xix) the Available Funds;

                  (xx) the rate at which interest accrues for each Class of
            Certificates for such Distribution Date; (xxi) the information
            contained in the Liquidation Report for such Distribution Date;

                  (xxii) the aggregate Principal Balance of Mortgage Assets
            purchased by the Servicers or the Depositor during the related
            Prepayment Period and indicating the Section of this Agreement
            requiring or allowing the purchase of each such Mortgage Asset;

                  (xxiii) the aggregate Principal Balance of the Mortgage Assets
            repurchased by the Servicers during the related Prepayment Period in
            connection with Section 3.16; and

                                      -72-
<PAGE>

                  (xxiv) the amounts on deposit in the Pre-Funding Account and
            Capitalized Interest Account, if any, stated separately.

            The Trustee may fully rely upon and shall have no liability with
respect to information with respect to the Mortgage Assets provided by the
Servicers.

            In the case of information furnished pursuant to subclauses (i),
(ii) and (xiii) above, the amounts shall be expressed in a separate section of
the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the Cut-off Date.

            (b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder of a Regular Certificate, if requested
in writing by such Person, such information as is reasonably necessary to
provide to such Person a statement containing the information set forth in
subclauses (i), (ii), (xiii) and (xiv) above, aggregated for such calendar year
or applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.

            (c) On each Distribution Date, the Trustee shall forward to the
Class R Certificateholder a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Class R
Certificateholder by the Trustee pursuant to any requirements of the Code as
from time to time in force.

            Section 4.07   Remittance Reports; Servicing Advances.

            (a) On the second Business Day following each Determination Date,
the Servicers shall deliver to the Trustee by telecopy (or by such other means
as the Servicers and the Trustee may agree from time to time) a Remittance
Report with respect to the related Distribution Date. On the same date, the
Servicers shall electronically forward to the Trustee in such medium as may be
agreed among the Servicers and the Trustee the information set forth in such
Remittance Report with respect to the related Distribution Date and such
information reasonably available to the Servicers necessary in order for the
Trustee to perform the calculations necessary to make the distributions
contemplated by Section 4.01, 4.02 and 4.03 and to prepare the Distribution Date
Statement. The Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicers.

            (b) Notwithstanding anything herein to the contrary, no Servicing
Advance shall be required to be made hereunder by a Servicer if such Servicing
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by a Servicer that it has made a Nonrecoverable Advance or that any proposed
Servicing Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officers' Certificate of such Servicer

                                      -73-
<PAGE>

delivered to the Depositor and the Trustee. The Trustee shall be entitled to
conclusively rely upon any such determination by a Servicer.

            Section 4.08   REMIC Distributions.

            (a) REMIC 4. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on each Class of REMIC 4 Regular
Interests (other than the REMIC 4 Components) shall be identical to the timing,
amounts and allocations on the corresponding Classes of Certificates (other than
the Class CE and Class R Certificates). Interest (and in the case of the Class
T4-4 Interest, principal) shall be deemed distributed to each Class of REMIC 4
Components as follows: (i) the Class T4-4, Class T4-11, Class T4-12 and Class
T4-13 Interests shall be entitled to all distributions on the Class T3-4, Class
T3-11, Class T3-12 and Class T3-13 Interests, respectively; (ii) the Class
T4-A1IO, Class T4-A2IO, Class T4-M1IO, Class T4-M2IO and Class T4-BIO Interests
shall be entitled to a specified portion of interest payments consisting of the
excess of interest distributable on each of the Class T3-A1, Class T3-A2, Class
T3-M1, Class T3-M2 and Class T3-B Interests over interest distributable on the
Class T4-A1, Class T4-A2, Class T4-M1, Class T4-M2 and Class T4-B Interests,
respectively. Any shortfalls of interest, including any Realized Losses
allocated to reduce the Subsequent Overcollateralization Amount, shall be borne,
first, by the REMIC 4 Components, pro rata based on interest accrued, before
being allocated to the applicable other REMIC 4 Regular Interests. Realized
Losses allocated to the Class T4-4 Interest shall equal Realized Losses
allocated to the Class T3-4 Interest pursuant to Section 4.08(b). The Class CE
Certificates shall be deemed to receive the aggregate of the amounts
distributable in respect of the REMIC 4 Components. Any portion of the Available
Funds remaining in REMIC 4 on a Distribution Date shall be distributed to the
Class R Certificate in respect of the Class R-4 Interest.

            (b) REMIC 3. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on the Classes of REMIC 3 Regular
Interests identified as Corresponding Classes shall be identical to the timing,
amounts and allocations in respect of Corresponding Classes of REMIC 4 Regular
Interests pursuant to Section 4.08(a). The Class T3-4 Interest shall be entitled
to all distributions on the Class T2-4 Interest. Interest shortfalls will reduce
interest payable, first, on the Class T3-4 Interest, to the same extent that
interest shortfalls are allocable to the Class T2-4 Interest; second, on the
Class T3-11, Class T3-12 and Class T3-13 Interests, pro rata; third, on the
Class T3-B, Class T3-M2 and Class T3-M1 Interests, in that order; and fourth, on
the Class T3-A1 and Class T3-A2 Interests, pro rata; provided, that the portion
of the interest payable on the Class T3-B, Class T3-M2, Class T3-M1, Class T3-A1
and Class T3-A2 Interests attributable to the Class T4-BIO, Class T4-M2IO, Class
T4-M1IO, Class T4-A1IO and Class T4-A2IO Interests shall bear interest
shortfalls pro rata and prior to the allocation of any remaining shortfalls to
such Interests. Amounts of principal and interest distributed in respect of, and
Realized Losses allocated to, the Class T3-4 Interest shall equal the
allocations made to the Class T2-4 Interest, reduced by any allocation of
interest shortfalls to the Class T3-4 Interest pursuant to the preceding
sentence. Amounts in the Distribution Account deemed distributed in respect of
the REMIC 3 Regular Interests shall be treated as held by REMIC 4 for
distribution in accordance with Sections 4.08(a). Any portion of Available Funds
remaining in REMIC 3 on a

                                      -74-
<PAGE>

Distribution Date shall be distributed to the Class R Certificate in respect of
the Class R-3 Interest.

            (c) REMIC 2. On each Distribution Date, the timing and amounts of
principal distributions and allocations of Realized Losses on each Class of
REMIC 2 Regular Interests shall be identical to the timing, amounts and
allocations in respect of the corresponding Classes of REMIC 1 Regular Interests
pursuant to Section 4.08(d). For these purposes, the Class T2-1 and Class T2-11
Interests correspond to the Class T1-1 Interest, the Class T2-2 and Class T2-12
Interests correspond to the Class T1-2 Interest, the Class T2-3 and Class T2-13
Interests correspond to the Class T1-3 Interest and the Class T2-4 Interest
corresponds to the Class T1-4 Interest. Interest will accrue on each of the
Class T2-1, Class T2-2 and Class T2-3 Interests at the REMIC 2 Pass-Through
Rate. Interest will accrue on each of the Class T2-11, Class T2-12 and Class
T2-13 Interests at the excess, if any, of the Pool Cap over the REMIC 2
Pass-Through Rate. Interest will accrue on the Class T2-4 Interest at the Pool
Cap. Any shortfalls of interest will be allocated, first, to the Class T2-4
Interest to the extent that interest shortfalls are allocated to the Class T1-4
Interest; second, pro rata, to the Class T2-11, Class T2-12 and Class T2-13
Interests; and third, pro rata, to the Class T2-1, Class T2-2 and Class T2-3
Interests. Amounts in the Distribution Account deemed distributed in respect of
the REMIC 2 Regular Interests shall be treated as held by REMIC 3 for
distribution in accordance with Section 4.08(b). Any portion of Available Funds
remaining in REMIC 2 on a Distribution Date shall be distributed to the Class R
Certificate in respect of the Class R-2 Interest.

            (d) REMIC 1. On each Distribution Date, the REMIC 1 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 (other
than to the Class R Certificate in respect of the Class R-4 Interest) from
amounts on deposit in the Distribution Account. Any shortfalls of interest will
be allocated first, to the Class T1-4 Interest, and then to the Class T1-1,
Class T1-2 and Class T1-3 Interests, pro rata based on interest accrued. Amounts
in reduction of principal balance of the REMIC 1 Regular Interests shall be
allocated so that the principal balances of the Class T1-1, Class T1-2 and Class
T1-3 Interests equal the amounts specified in the definitions thereof in Article
I. Realized Losses shall be allocated first to the Class T1-4 Interest, to the
extent of the Remaining Initial Overcollateralization Amount, and then pro rata
to the Class T1-1, Class T1-2 and Class T1-3 Interests. Such amounts with
respect to principal and any Realized Losses with respect to principal shall
reduce the principal balances of the REMIC 1 Regular Interests so that, in the
aggregate, such balances correspond to the Pool Balance of the Mortgage Assets
as of the last day of the related Collection Period. Amounts in the Distribution
Account deemed distributed in respect of the REMIC 1 Regular Interests shall be
treated as held by REMIC 2 for distribution in accordance with Section 4.08(c).
Any amounts remaining in REMIC 1 on a Distribution Date shall be distributed to
the Class R Certificate in respect of the Class R-1 Interest.

            (e) Notwithstanding anything to the contrary contained herein, the
above distributions in this Section 4.08 (other than on the Certificates) are
deemed distributions, and distributions of funds from the Distribution Account
shall be made only in accordance with Sections 4.01 and 4.02 hereof.

                                      -75-
<PAGE>

                                   ARTICLE V

                                THE CERTIFICATES

            Section 5.01 The Certificates.

            Each of the Class A-1, Class A-2, Class M-1, Class M-2, Class B,
Class CE and Class R Certificates shall be substantially in the forms annexed
hereto as exhibits, and shall, on original issue, be executed by the Trustee and
authenticated and delivered by the Certificate Registrar to or upon the receipt
of a Written Order to Authenticate from the Depositor concurrently with the sale
and assignment to the Trustee of the Trust Fund. Each Class of the Offered
Certificates shall be initially evidenced by one or more Certificates
representing a Percentage Interest with a minimum dollar (or notional amount)
denomination of $25,000 and integral multiples of $1 in excess thereof. The
Class CE Certificates are issuable only in minimum Percentage Interests of 10%.
The Class R Certificate is issuable only as a single certificate.

            The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Certificate Registrar substantially in the form
provided for herein, and such authentication upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Offered Certificates
shall be Book-Entry Certificates. The Class CE and Class R Certificates shall
not be Book-Entry Certificates but shall be issued in fully registered
certificate form.

            Section 5.02   Registration of Transfer and Exchange of
Certificates.

            (a) The Certificate Registrar shall cause to be kept at the
Corporate Trust Office of the Trustee a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Certificate Registrar
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall initially serve
as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Trustee as
Certificate Registrar shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Certificate Registrar to the same extent as they apply to the
Trustee. Any Certificate Registrar appointed in accordance with this Section
5.02(a) may at any time resign by giving at least 30 days' advance written
notice of resignation to the Trustee, the Servicers and the Depositor, such
resignation to become effective upon appointment of a successor Certificate
Registrar.

                                      -76-
<PAGE>

            Upon surrender for registration of transfer of any Certificate at
any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of the Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same aggregate Percentage Interest.

            At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
the Certificate Registrar shall authenticate and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.

            (b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the Depository, the initial Depository, by, or on behalf of, the Depositor; or
to, and deposited with the Certificate Custodian, on behalf of the Depository,
if directed to do so pursuant to instructions from the Depository. Except as
provided in paragraph (c) below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all times:
(i) registration of such Certificates may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
such Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall for all purposes deal with the Depository as representative of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners; and (vii) the direct participants of the Depository shall have no rights
under this Agreement under or with respect to any of the Certificates held on
their behalf by the Depository, and the Depository may be treated by the Trustee
and its agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.

            All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are

                                      -77-
<PAGE>

hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.

            (c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Book-Entry Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Trust's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and the Certificate Registrar shall authenticate the Definitive
Certificates. None of the Depositor or the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Servicers, any Paying
Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.

            (d) Except with respect to a transfer of the Private Certificates
between the Depositor and its affiliates, no transfer, sale, pledge or other
disposition of any Private Certificate shall be made unless such disposition is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and any applicable state securities laws or is made in
accordance with the 1933 Act and laws. In the event of any such transfer, (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Certificate Registrar, in substantially the
form attached hereto as Exhibit H) under the 1933 Act, the Certificate Registrar
and the Depositor shall require a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Certificate Registrar or
the Depositor or (ii) the Certificate Registrar shall require the transferor to
execute a transferor certificate (in substantially the form attached hereto as
Exhibit J) and the transferee to execute an investment letter (in substantially
the form attached hereto as Exhibit H) acceptable to and in form and substance
reasonably satisfactory to the Depositor and the Certificate Registrar
certifying to the Depositor and the Certificate Registrar the facts surrounding
such transfer, which investment letter shall not be an expense of the
Certificate Registrar or the Depositor. The Holder of a Private Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

                                      -78-
<PAGE>

            No transfer of an ERISA-Restricted Certificate shall be made unless
the Certificate Registrar shall have received either (i) a representation from
the transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor, (such requirement
is satisfied only by the Certificate Registrar's receipt of a representation
letter from the transferee substantially in the form of Exhibit G hereto, as
appropriate), to the effect that such transferee is not an employee benefit plan
or arrangement subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code, nor a person acting on behalf of any such plan or arrangement nor
using the assets of any such plan or arrangement to effect such transfer or (ii)
(except in the case of the Class R Certificate) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Certificate Registrar, to the effect that the
purchase or holding of such ERISA Restricted Certificate will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Depositor, the Servicers, the Trustee or the Certificate Registrar to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Certificate Registrar by
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA-Restricted Certificates, unless the Certificate Registrar shall
have received from the transferee an alternative representation acceptable in
form and substance to the Depositor. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA-Restricted Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Certificate Registrar of an Opinion of Counsel satisfactory
to the Certificate Registrar as described above shall be void and of no effect.

            Each Person who has or who acquires any Ownership Interest in the
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in the Class R Certificate are expressly subject to the
following provisions:

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

            (ii) No Person shall acquire an Ownership Interest in the Class R
      Certificate unless such Ownership Interest is a pro rata undivided
      interest.

            (iii) In connection with any proposed transfer of any Ownership
      Interest in the Class R Certificate, the Certificate Registrar shall as a
      condition to registration of the transfer, require delivery to it, in form
      and substance satisfactory to it, of each of the following:

                                      -79-
<PAGE>

            A.    an affidavit in the form of Exhibit I hereto from the proposed
transferee to the effect that, among other things, such transferee is a
Permitted Transferee and that it is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee; and

            B.    a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Class R Certificate.

            (iv) Any attempted or purported transfer of any Ownership Interest
      in the Class R Certificate in violation of the provisions of this Section
      shall be absolutely null and void and shall vest no rights in the
      purported transferee. If any purported transferee shall, in violation of
      the provisions of this Section, become the Holder of the Class R
      Certificate, then the prior Holder of such Class R Certificate that is a
      Permitted Transferee shall, upon discovery that the registration of
      transfer of such Class R Certificate was not in fact permitted by this
      Section, be restored to all rights as Holder thereof retroactive to the
      date of registration of transfer of such Class R Certificate. The
      Certificate Registrar shall be under no liability to any Person for any
      registration of transfer of the Class R Certificate that is in fact not
      permitted by this Section or for making any distributions due on such
      Class R Certificate to the Holder thereof or taking any other action with
      respect to such Holder under the provisions of this Agreement so long as
      the Certificate Registrar received the documents specified in clause
      (iii). The Trustee shall be entitled to recover from any Holder of the
      Class R Certificate that was in fact not a Permitted Transferee at the
      time such distributions were made all distributions made on such Class R
      Certificate. Any such distributions so recovered by the Trustee shall be
      distributed and delivered by the Trustee to the prior Holder of such Class
      R Certificate that is a Permitted Transferee.

            (v) If any Person other than a Disqualified Organization acquires
      any Ownership Interest in the Class R Certificate in violation of the
      restrictions in this Section, then the Certificate Registrar shall have
      the right but not the obligation, without notice to the Holder of the
      Class R Certificate or any other Person having an Ownership Interest
      therein, to notify the Depositor to arrange for the sale of the Class R
      Certificate. The proceeds of such sale, net of commissions (which may
      include commissions payable to the Depositor or its affiliates in
      connection with such sale), expenses and taxes due, if any, will be
      remitted by the Trustee to the previous Holder of the Class R Certificate
      that is a Permitted Transferee, except that in the event that the Trustee
      determines that the Holder of the Class R Certificate may be liable for
      any amount due under this Section or any other provisions of this
      Agreement, the Trustee may withhold a corresponding amount from such
      remittance as security for such claim. The terms and conditions of any
      sale under this clause (v) shall be determined in the sole discretion of
      the Trustee and it shall not be liable to any Person having an Ownership
      Interest in the Class R Certificate as a result of its exercise of such
      discretion.

            (vi) If any Person other than a Permitted Transferee acquires any
      Ownership Interest in the Class R Certificate in violation of the
      restrictions in this Section, then the Trustee will provide to the
      Internal Revenue Service, and to the persons specified in

                                      -80-
<PAGE>

      Sections 860E(e)(3) and (6) of the Code, information needed to compute the
      tax imposed under Section 860E(e)(5) of the Code on transfers of residual
      interests to disqualified organizations. The Trustee shall be entitled to
      reasonable compensation for providing such information from the person to
      whom it is provided.

The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Certificate Registrar, in form and substance satisfactory to the Certificate
Registrar, (i) written notification from each Rating Agency that the removal of
the restrictions on Transfer set forth in this Section will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC hereunder to
fail to qualify as a REMIC.

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

            All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.

            Section 5.03   Mutilated, Destroyed, Lost or Stolen Certificates.

            If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, and the Certificate Registrar shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.

            Section 5.04   Persons Deemed Owners.

            The Servicers, the Depositor, the Trustee, the Certificate
Registrar, any Paying Agent and any agent of the Servicers, the Depositor, the
Certificate Registrar, any Paying Agent or the Trustee may treat the Person,
including a Depository, 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 4.02 and for all other purposes whatsoever, and none of the
Servicers, the Trust, the Trustee nor any agent of any of them shall be affected
by notice to the contrary.

                                      -81-
<PAGE>

            Section 5.05   Appointment of Paying Agent.

            The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 and 4.02 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies. The
Trustee as Paying Agent shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Paying Agent to the same extent as they apply to the Trustee. Any
Paying Agent appointed in accordance with this Section 5.05 may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicers and the Depositor, such resignation to become effective
upon appointment of a successor Paying Agent.

                                   ARTICLE VI

                         THE SERVICERS AND THE DEPOSITOR

            Section 6.01   Liability of the Servicers and the Depositor.

            The Depositor and each Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Depositor or such Servicer herein, as the case may be. Section

            6.02 Merger or Consolidation of, or Assumption of the Obligations
of, a Servicer or the Depositor.

            Any entity into which a Servicer or the Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which a Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of a or the Depositor, shall be the
successor of such Servicer or the Depositor, 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 a successor servicer shall satisfy all the requirements
of Section 7.02 with respect to the qualifications of a successor servicer.

            Section 6.03   Limitation on Liability of the Servicers and
Others.

            Neither of the Servicers nor any of the directors or officers or
employees or agents of the Servicers shall be under any liability to the Trust
or the Certificateholders for any action taken or for refraining from the taking
of any action by a Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect a

                                      -82-
<PAGE>

Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of such Servicer or by reason of its reckless disregard of
its obligations and duties of such Servicer hereunder. Each Servicer and any
director or officer or employee or agent of such Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. Each Servicer and any director
or officer or employee or agent of such Servicer shall be indemnified by the
Trust and held harmless 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 incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. Each
Servicer may undertake any such action which it may deem necessary or desirable
in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust and each
Servicer shall be entitled to pay such expenses from the proceeds of the Trust
or to be reimbursed therefor pursuant to Section 3.05 upon presentation to the
Trustee of documentation of such expenses, costs and liabilities. Each
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of such Servicer pursuant to Section 6.04
or 7.01 with respect to any losses, expenses, costs or liabilities arising prior
to such resignation or termination (or arising from events that occurred prior
to such resignation or termination). This paragraph shall apply to each Servicer
solely in its capacity as a Servicer hereunder and in no other capacities.

            Section 6.04   Servicers Not to Resign.

            Subject to the provisions of Section 7.01 and Section 6.02, each
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of such so causing such
a conflict being of a type and nature carried on by such Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) such Servicer has proposed a
successor servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; and (b) each Rating Agency
shall have delivered a letter to the Trustee prior to the appointment of such
successor servicer stating that the proposed appointment of such successor
servicer as a Servicer hereunder will not result in the reduction or withdrawal
of the then current rating of the Offered Certificates; provided, however, that
no such resignation by a Servicer shall become effective until such successor
servicer or, in the case of (i) above, the Trustee shall have assumed the
resigning Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 7.02. Any
such resignation shall not relieve the resigning Servicer of responsibility for
any of the obligations specified in Sections 7.01 and 7.02 as obligations that
survive the resignation or termination of such Servicer. Any such determination
permitting the resignation of a Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee.

                                      -83-
<PAGE>

            Section 6.05   Delegation of Duties.

            In the ordinary course of business, the Servicers at any time may
delegate any of their duties hereunder to any Person, including any of their
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not relieve
a Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 6.04. A
Servicer shall provide the Trustee and the Rating Agencies with 60 days prior
written notice prior to the delegation of any of its duties to any Person other
than any of such Servicer's Affiliates or their respective successors and
assigns.

                                  ARTICLE VII

                                     DEFAULT

            Section 7.01   Servicer Events of Termination.

            (a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:

            (i) The failure by a Servicer to deposit in the Collection Account
      or Distribution Account any deposit required to be made under the terms of
      this Agreement, which failure continues unremedied for a period of five
      Business Days after receipt of written notice by such Servicer; or

            (ii) The failure by a Servicer to make any required Servicing
      Advance which failure continues unremedied for a period of 30 days, or the
      failure by a Servicer duly to observe or perform, in any material respect,
      any other covenants, obligations or agreements of such Servicer as set
      forth in this Agreement, which failure continues unremedied for a period
      of 30 days, after the date on which written notice of such failure,
      requiring the same to be remedied, shall have been given to such Servicer
      by the Trustee or by any Holder of a Regular Certificate evidencing at
      least 51% of the Voting Rights; or

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

            (iv) A Servicer shall voluntarily go into liquidation, consent to
      the appointment of a conservator or receiver or liquidator or similar
      person in any insolvency, readjustment of debt, marshalling of assets and
      liabilities or similar proceedings of or relating to such Servicer or of
      or relating to all or substantially all of its property; or a decree or
      order of a court or agency or supervisory authority having jurisdiction in
      the premises for the appointment of a conservator, receiver, liquidator or
      similar person in

                                      -84-
<PAGE>

      any insolvency, readjustment of debt, marshalling of assets and
      liabilities or similar proceedings, or for the winding-up or liquidation
      of its affairs, shall have been entered against such Servicer and such
      decree or order shall have remained in force undischarged, unbonded or
      unstayed for a period of 60 days; or such Servicer shall admit in writing
      its inability to pay its debts generally as they become due, file a
      petition to take advantage of any applicable insolvency or reorganization
      statute, make an assignment for the benefit of its creditors or
      voluntarily suspend payment of its obligations; or

            (v) As of any Distribution Date, if the average for the related
      Collection Period and the two preceding Collection Periods of the
      fraction, expressed as a percentage, the numerator of which is (a) the
      aggregate Principal Balance of 60+ Day Delinquent Mortgage Assets serviced
      by a Servicer and the denominator of which is (b) the aggregate Principal
      Balance of the Mortgage Assets serviced by a Servicer, in the case of both
      (a) and (b), as of the last day of each such Collection Period, exceeds
      [__]%.

            (b) Then, and in each and every such case, so long as a Servicer
Event of Termination shall not have been remedied within the applicable grace
period, the Trustee shall, at the direction of the Holders of each Class of
Regular Certificates evidencing Percentage Interests aggregating not less than
51%, by notice then given in writing to the defaulting Servicer (and to the
Trustee if given by Holders of Certificates), terminate all of the rights and
obligations of the defaulting Servicer as a servicer under this Agreement. Any
such notice to a defaulting Servicer shall also be given to each Rating Agency,
the non-defaulting Servicer and the Depositor. On or after the receipt by the
defaulting Servicer (and by the Trustee if such notice is given by the Holders)
of such written notice, all authority and power of the defaulting Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Assets
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section or successor servicer appointed in connection with Section 7.02;
and, without limitation, the Trustee or successor servicer is hereby authorized
and empowered to execute and deliver, on behalf of the defaulting Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Asset and Related Documents or otherwise. The
defaulting Servicer agrees to cooperate with the Trustee (or the applicable
successor servicer) in effecting the termination of the responsibilities and
rights of such Servicer hereunder, including, without limitation, the delivery
to the Trustee (or the applicable successor servicer) of all documents and
records requested by it to enable it to assume such Servicer's functions under
this Agreement within ten Business Days subsequent to such notice, the transfer
within one Business Day subsequent to such notice to the Trustee (or the
applicable successor servicer) for the administration by it of all cash amounts
that shall at the time be held by such Servicer and to be deposited by it in the
Collection Account or the Distribution Account or that have been deposited by
such Servicer in such accounts or thereafter received by the such Servicer with
respect to the Mortgage Assets or any REO Property received by such Servicer.
All reasonable out-of-pocket costs and expenses (including attorneys' fees)
incurred in connection with transferring the servicing to the successor servicer
and amending this Agreement to reflect such succession as a Servicer pursuant to
this Section shall be paid by the defaulting Servicer (or if the predecessor
servicer is the Trustee, the initial servicer) upon presentation of reasonable
documentation of such costs and expenses, and if such predecessor servicer
defaults in its obligation to pay such

                                      -85-
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costs, such costs shall be paid by the successor servicer or the Trustee (in
which case the successor servicer or the Trustee shall be entitled to
reimbursement therefor from the assets of the Trust).

            Notwithstanding any termination of the activities of a Servicer
hereunder, such Servicer shall be entitled to receive payment of all accrued and
unpaid Servicing Fees and reimbursement for all outstanding Servicing Advances
properly made prior to the date of termination.

            Section 7.02   Trustee to Act; Appointment of Successor.

            (a) Within 90 days of the time the defaulting Servicer (and the
Trustee, if notice is sent by the Holders) receives a notice of termination
pursuant to Section 7.01 or 6.04, the Trustee (or such other successor servicer
as is approved in accordance with this Agreement) shall be the successor in all
respects to such Servicer in its capacity as a servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on such
Servicer by the terms and provisions hereof arising on and after its succession.
As compensation therefor, the Trustee (or such other successor servicer) shall
be entitled to such compensation as the defaulting Servicer would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
servicer or (ii) if the Trustee is legally unable so to act, the Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $50,000,000 as the
successor to the defaulting Servicer hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the such Servicer
hereunder; provided, that the appointment of any such successor servicer will
not result in the qualification, reduction or withdrawal of the ratings assigned
to the Certificates or the ratings that are in effect by the Rating Agencies as
evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the defaulting Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Assets in an amount equal to the compensation which the
defaulting Servicer would otherwise have received pursuant to Section 3.18 (or
such other compensation as the Trustee and such successor shall agree, not to
exceed the Servicing Fee such Servicer would have been entitled to under this
Agreement). The successor servicer shall be entitled to withdraw from the
Collection Account all costs and expenses associated with the transfer of the
servicing to the successor servicer, including costs and expenses of the
Trustee. The appointment of a successor servicer shall not affect any liability
of the predecessor servicer which may have arisen under this Agreement prior to
its termination as a Servicer to pay any deductible under an insurance policy
pursuant to Section 3.12 or to indemnify the parties indicated in Section 3.26
pursuant to the terms thereof, nor shall any successor servicer be liable for
any acts or omissions of the predecessor servicer or for any breach by such
servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.

                                      -86-
<PAGE>

            (b) Any successor, including the Trustee, to a Servicer as a
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Assets for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as a Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as a Servicer is so required pursuant to Section 3.12.

            Section 7.03   Waiver of Defaults.

            The Holders of Certificates entitled to at least 66 2/3% of the
Voting Rights allocated to the Classes of Certificates affected by a Servicer
Event of Termination may, on behalf of all Certificateholders, waive any events
permitting removal of a Servicer as servicer pursuant to this Article VII,
provided, however, that such Holders may not waive a default in making a
required distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Event of Termination arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Trustee to the Rating Agencies.

            Section 7.04   Notification to Certificateholders.

            (a) On any termination or appointment of a successor to a Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register and each Rating Agency.

            (b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Rating Agencies promptly after any such
occurrence.

            Section 7.05   Survivability of Servicer Liabilities.

            Notwithstanding anything herein to the contrary, upon termination of
a Servicer hereunder, any liabilities of such Servicer which accrued prior to
such termination shall survive such termination.

                                      -87-
<PAGE>

                                  ARTICLE VIII

                                   THE TRUSTEE

            Section 8.01   Duties of Trustee.

            The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination has
occurred (which has not been cured) of which a Responsible Officer has actual
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

            The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee 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; provided, however, that that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicers or the Depositor hereunder. If any such instrument is
found not to conform in any material respect to the requirements of this
Agreement, the Trustee shall notify the Certificateholders of such instrument in
the event that the Trustee, after so requesting, does not receive a
satisfactorily corrected instrument.

            No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:

            (i) prior to the occurrence of a Servicer Event of Termination of
      which a Responsible Officer of the Trustee shall have actual knowledge,
      and after the curing of all such Servicer Events of Termination which may
      have occurred, the duties and obligations of the Trustee shall be
      determined solely by the express provisions of this Agreement, the Trustee
      shall not be liable except for the performance of such duties and
      obligations as are specifically set forth in this Agreement, no implied
      covenants or obligations shall be read into this Agreement against the
      Trustee and, in the absence of bad faith on the part of the Trustee, the
      Trustee may conclusively rely, as to the truth of the statements and the
      correctness of the opinions expressed therein, upon any certificates or
      opinions furnished to the Trustee and conforming to the requirements of
      this Agreement;

            (ii) the Trustee shall not be personally liable for an error of
      judgment made in good faith by a Responsible Officer of the Trustee,
      unless it shall be proved that the Trustee was negligent in ascertaining
      or investigating the facts related thereto;

                                      -88-
<PAGE>

            (iii) the Trustee shall not 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 Majority Certificateholders relating
      to the time, method and place of conducting any proceeding for any remedy
      available to the Trustee or exercising or omitting to exercise any trust
      or power conferred upon the Trustee under this Agreement; and

            (iv) the Trustee shall not be charged with knowledge of any failure
      by a Servicer to comply with the obligations of a Servicer referred to in
      clauses (i) and (ii) of Section 7.01(a) or any Servicer Event of
      Termination unless a Responsible Officer of the Trustee at the Corporate
      Trust Office obtains actual knowledge of such failure or the Trustee
      receives written notice of such failure from a Servicer or the Majority
      Certificateholders. In the absence of such receipt of such notice, the
      Trustee may conclusively assume that there is no Servicer Event of
      Termination.

            The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of a Servicer under this Agreement, except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, a Servicer in accordance with the terms of
this Agreement.

            The Trustee shall not have any duty (A) to see any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof, (B)
to see to any insurance or (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Distribution Account.

            Section 8.02   Certain Matters Affecting the Trustee. (a) Except
as otherwise provided in Section 8.01:

            (i) the Trustee may request and rely upon, and shall be protected in
      acting or refraining from acting upon, any resolution, Officer's
      Certificate, certificate of auditors or any other certificate, statement,
      instrument, opinion, report, notice, request, consent, order, appraisal,
      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) the Trustee may consult with counsel and any advice or Opinion
      of Counsel shall be full and complete authorization and protection in
      respect of any action taken or suffered or omitted by it hereunder in good
      faith and in accordance with such advice or Opinion of Counsel;

                                      -89-
<PAGE>

            (iii) the Trustee shall not be under any obligation to exercise any
      of the rights 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 the Certificateholders pursuant to the
      provisions of this Agreement, unless such Certificateholders shall have
      offered to the Trustee reasonable security or indemnity against the costs,
      expenses and liabilities which may be incurred therein or thereby; the
      right of the Trustee to perform any discretionary act enumerated in this
      Agreement shall not be construed as a duty, and the Trustee shall not be
      answerable for other than its negligence or willful misconduct in the
      performance of any such act;

            (iv) the Trustee shall not 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 Servicer Event of Termination and
      after the curing of all Servicer Events of Termination which may have
      occurred, the Trustee shall not be bound to make any investigation into
      the facts or matters stated in any resolution, certificate, statement,
      instrument, opinion, report, notice, request, consent, order, approval,
      bond or other paper or documents, unless requested in writing to do so by
      the Majority Certificateholders; provided, however, that if the payment
      within a reasonable time to the Trustee 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, not reasonably assured to
      the Trustee by the security afforded to it by the terms of this Agreement,
      the Trustee may require reasonable indemnity against such cost, expense or
      liability as a condition to such proceeding. The reasonable expense of
      every such examination shall be paid by the Depositor or, if paid by the
      Trustee, shall be reimbursed by the Depositor upon demand. Nothing in this
      clause (v) shall derogate from the obligation of the Servicers to observe
      any applicable law prohibiting disclosure of information regarding the
      Obligors; (vi) the Trustee shall not be accountable, have any liability or
      make any representation as to any acts or omissions hereunder of the
      Servicers until such time as the Trustee may be required to act as a
      Servicer pursuant to Section 7.02;

            (vii) the Trustee may execute any of the trusts or powers hereunder
      or perform any duties hereunder either directly or by or through agents or
      attorneys or a custodian and the Trustee shall not be responsible for any
      misconduct or negligence on the part of any such agent, attorney or
      custodian appointed by it with due care; and

            (viii) the right of the Trustee to perform any discretionary act
      enumerated in this Agreement shall not be construed as a duty, and the
      Trustee shall not be answerable for other than its negligence or willful
      misconduct in the performance of such act.

            Section 8.03 Trustee Not Liable for Certificates or Mortgage Assets.

            The recitals contained herein and in the Certificates (other than
the authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no

                                      -90-
<PAGE>

representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and authentication of the Trustee on the
Certificates) or of any Mortgage Asset or Related Document. The Trustee shall
not be accountable for the use or application by a Servicer, or for the use or
application of any funds paid to a Servicer in respect of the Mortgage Assets or
deposited in or withdrawn from the Collection Account by a Servicer. The Trustee
shall not at any time have any responsibility or liability for or with respect
to the legality, validity and enforceability of any Mortgage or any Mortgage
Asset, or the perfection and priority of any Mortgage or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of a Servicer pursuant to Section 7.02); the validity of the
assignment of any Mortgage Asset to the Trustee or of any intervening
assignment; the completeness of any Mortgage Asset; the performance or
enforcement of any Mortgage Asset (other than if the Trustee shall assume the
duties of a Servicer pursuant to Section 7.02); the compliance by the Depositor
or a Servicer with any warranty or representation made under this Agreement or
in any related document or the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any
non-compliance therewith or any breach thereof; any investment of monies by or
at the direction of the Servicers or any loss resulting therefrom, it being
understood that the Trustee shall remain responsible for any Trust property that
it may hold in its individual capacity; the acts or omissions of any of a
Servicer (other than if the Trustee shall assume the duties of a Servicer
pursuant to Section 7.02), or any Obligor; any action of a Servicer (other than
if the Trustee shall assume the duties of a Servicer pursuant to Section 7.02),
taken in the name of the Trustee; the failure of a Servicer to act or perform
any duties required of it as agent of the Trustee hereunder; or any action by
the Trustee taken at the instruction of a Servicer (other than if the Trustee
shall assume the duties of a Servicer pursuant to Section 7.02); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. The Trustee shall not have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder.

            Section 8.04   Trustee May Own Certificates.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with a
Servicer, the Depositor or their Affiliates.

            Section 8.05   Trustee Fees and Expenses.

            The Trustee  shall be entitled to the Trustee Fee (which shall not
be limited by any provision of law in regard to the  compensation of a trustee
of an express trust) for all services  rendered by the Trustee in the exercise
and performance of any of the powers and duties  hereunder.  The Trustee shall
withdraw from the Distribution  Account on each  Distribution  Date and pay to
itself  the  Trustee  Fee.  The Trust  shall  reimburse  the  Trustee  for all
reasonable  expenses,  disbursements  and  advances  incurred  or  made by the
Trustee in accordance with any of the provisions of this Agreement  (including
the reasonable  compensation and the expenses

                                      -91-
<PAGE>

and disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith or which is the responsibility of Certificateholders or
the Trustee hereunder. In addition, the Trustee and its officers, directors,
employees and agents shall be indemnified by the Trust from, and held harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. This Section shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.

            Section 8.06   Eligibility Requirements for Trustee.

            The Trustee hereunder shall at all times be an entity duly organized
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of BBB by [___] and [___]and subject to supervision or examination
by federal or state authority. If such entity publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06,
the combined capital and surplus of such entity shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. The principal office of the Trustee (other than the initial
Trustee) shall be in a state with respect to which an Opinion of Counsel has
been delivered to such Trustee at the time such Trustee is appointed Trustee to
the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 8.06, the Trustee shall resign immediately
in the manner and with the effect specified in Section 8.07.

            Section 8.07  Resignation or Removal of Trustee.

            The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Servicers
and each Rating Agency. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

            If at any time the Trustee 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 if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of their property shall be appointed, or any public
officer shall take charge or control of the Trustee or of their property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee. If the Depositor removes the Trustee under the
authority of the immediately preceding sentence, the Depositor shall promptly
appoint a successor Trustee by written instrument, in duplicate, one

                                      -92-
<PAGE>

copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee.

            The Majority Certificateholders may at any time remove the Trustee
by written instrument or instruments delivered to the Servicers, the Depositor
and the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor Trustee in accordance with this Section.

            Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.

            Section 8.08   Successor Trustee.

            Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Rating Agencies, the
Servicers and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Depositor, the Servicers and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.

            No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

            Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment of
a successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.

            Section 8.09   Merger or Consolidation of Trustee.

            Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, 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 of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or

                                      -93-
<PAGE>

any Mortgaged Property may at the time be located, the Depositor and the Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicers and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the written approval of each
Servicer. If each Servicer shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, or in the case a Servicer
Event of Termination shall have occurred and be continuing, the Trustee with the
non-defaulting Servicer shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor Trustee under Section 8.06, and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.

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

            (i) all rights, powers, duties and obligations conferred or imposed
      upon the Trustee shall be conferred or imposed upon and exercised or
      performed by the Trustee and such separate trustee or co-trustee jointly
      (it being understood that such separate trustee or co-trustee is not
      authorized to act separately without the Trustee joining in such act),
      except to the extent that under any law of any jurisdiction in which any
      particular act or acts are to be performed (whether as Trustee hereunder
      or as successor to a Servicer hereunder), the Trustee shall be incompetent
      or unqualified to perform such act or acts, in which event such rights,
      powers, duties and obligations (including the holding of title to the
      Trust or any portion thereof in any such jurisdiction) shall be exercised
      and performed singly by such separate trustee or co-trustee, but solely at
      the direction of the Trustee;

            (ii) no trustee hereunder shall be held personally liable by reason
      of any act or omission of any other trustee hereunder; and

            (iii) the Servicers and the Trustee, acting jointly may at any time
      accept the resignation of or remove any separate trustee or co-trustee
      except that following the occurrence of a Servicer Event of Termination,
      the Trustee acting with the non-defaulting Servicer may accept the
      resignation or remove any separate trustee or co-trustee.

            Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Rating Agencies and the Servicers.

                                      -94-
<PAGE>

            Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.

            Section 8.11   Limitation of Liability.

            The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the undertakings
and agreements made on the part of the Trustee in the Certificates is made and
intended not as a personal undertaking or agreement by the Trustee but is made
and intended for the purpose of binding only the Trust.

            Section 8.12 Trustee May Enforce Claims Without Possession
of Certificates.

            (a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.

            (b) The Trustee shall afford the Depositor, the Servicers and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. The
Trustee shall cooperate fully with the Servicers, the Depositor and such
Certificateholder and shall make available to the Servicers, the Depositor and
such Certificateholder for review and copying at the expense of the party
requesting such copies, such books, documents or records as may be requested
with respect to the Trustee's duties hereunder. The Depositor, the Servicers and
the Certificateholders shall not have any responsibility or liability for any
action or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.

            Section 8.13   Suits for Enforcement.

            In case a Servicer Event of Termination or other default by a
Servicer hereunder shall occur and be continuing, the Trustee may proceed to
protect and enforce its rights and the rights of the Certificateholders under
this Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised

                                      -95-
<PAGE>

by counsel, and subject to the foregoing, shall deem most effectual to protect
and enforce any of the rights of the Trustee and the Certificateholders.

            Section 8.14   Waiver of Bond Requirement.

            The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.

            Section 8.15   Waiver of Inventory, Accounting and Appraisal
Requirement.

            The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.

                                   ARTICLE IX

                              REMIC ADMINISTRATION

            Section 9.01 REMIC Administration.

            (a) The Trustee shall make or cause to be made REMIC elections for
each of the Lower-Tier REMIC and the Upper-Tier REMIC as set forth in the
Preliminary Statement on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement.

            (b) The Closing Date is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 860G(a)(9) of the Code.

            (c) The Trustee shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder. The Trustee shall
be entitled to reimbursement of expenses to the extent provided in clause (i)
above from the Trust.

            (d) The Trustee shall prepare or cause to be prepared, sign and file
or cause to be filed, each REMIC's federal and state tax and information returns
as such REMIC's direct representative. The expenses of preparing and filing such
returns shall be borne by the Trustee.

            (e) The Holder of the Class R Certificate shall be the "tax matters
person" as defined in the REMIC Provisions (the "Tax Matters Person") with
respect to each REMIC, and

                                      -96-
<PAGE>

the Trustee is irrevocably designated as and shall act as attorney-in-fact and
agent for such Tax Matters Person for each REMIC. The Trustee, as agent for the
Tax Matters Person, shall perform, on behalf of each REMIC, 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,
if required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the Treasury
or other governmental authority such information as is necessary for the
application of any tax relating to the transfer of the Class R Certificate to
any disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.

            (f) The Trustee, the Servicers, and the Holders of Certificates
shall take any action or cause any REMIC formed under this Agreement to take any
action necessary to create or maintain the status of such REMIC as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. None of the Trustee, the Servicers or the Holder of the
Class R Certificate shall take any action or cause any REMIC formed under this
Agreement 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 such REMIC as a REMIC or (ii) result in the
imposition of a tax upon such REMIC (including but not limited to the tax on
prohibited transactions as defined in Code Section 860F(a)(2) and the tax on
prohibited contributions set forth on Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee and the Servicers have
received an Opinion of Counsel (at the expense of the party seeking to take such
action) to the effect that the contemplated action will not endanger such status
or result in the imposition of such a tax. In addition, prior to taking any
action with respect to any REMIC formed under this Agreement or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of the Class R
Certificate will consult with the Trustee and the Servicers, or their respective
designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to such REMIC, and no such Person
shall take any such action or cause such REMIC to take any such action as to
which the Trustee or a Servicer has advised it in writing that an Adverse REMIC
Event could occur.

            (g) The Holder of the Class R Certificate shall pay when due any and
all taxes imposed on any REMIC formed under this Agreement by federal or state
governmental authorities, but only from amounts, if any, distributable thereon.
To the extent that such REMIC taxes are not paid by the Class R
Certificateholder, the Trustee shall pay any remaining REMIC taxes out of future
amounts otherwise distributable to the Holder of the Class R Certificate or, if
no such amounts are available, out of other amounts held in the Distribution
Account, and shall reduce amounts otherwise payable to Holders of the REMIC
Regular Interests or the Certificates, as the case may be.

            (h) The Trustee, shall, for federal income tax purposes, maintain or
cause to be maintained books and records with respect to each REMIC formed under
this Agreement on a calendar year and on an accrual basis.

                                      -97-
<PAGE>

            (i) No additional contributions of assets shall be made to any
REMIC, except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Assets.

            (j) None of the Trustee or a Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.

            (k) On or before April 15 of each calendar year beginning in 20__,
the Trustee shall deliver to each Rating Agency an Officer's Certificate stating
the Trustee's compliance with the provisions of this Section 9.01.

            Section 9.02   Prohibited Transactions and Activities.

            None of the Depositor, a Servicer or the Trustee shall sell, dispose
of, or substitute for any of the Mortgage Assets, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Asset, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of any REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement, (v) a
repurchase of Mortgage Assets pursuant to Article II of this Agreement or (vi)
an optional purchase by a Servicer pursuant to Section 3.16 of this Agreement,
nor acquire any assets for any REMIC, nor sell or dispose of any investments in
the Distribution Account for gain, nor accept any contributions to any REMIC
after the Closing Date, unless it has received an Opinion of Counsel (at the
expense of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the interests therein other
than the Class R Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause such REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.

            Section 9.03   Indemnification with Respect to Certain Taxes
and Loss of REMIC Status.

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

                                      -98-
<PAGE>

(3) for any special or consequential damages to Certificateholders (in addition
to payment of principal and interest on the Certificates).

                  Section 9.04    REO Property.

                  (a) Subject to compliance with applicable laws and regulations
as shall at any time be in force, and notwithstanding any other provision of
this Agreement, the Servicers, acting on behalf of the Trust hereunder, shall
not rent, lease, or otherwise earn income on behalf of any REMIC with respect to
any REO Property which might 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 any REMIC of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
a Servicer has advised the Trustee in writing to the effect that, under the
REMIC Provisions, such action would not adversely affect the status of any REMIC
as a REMIC and any income generated for such REMIC by the REO Property would not
result in the imposition of a tax upon such REMIC.

                  (b) The Servicers shall make reasonable efforts to sell any
REO Property for its fair market value. In any event, however, a Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless such
Servicer has received a grant of extension from the Internal Revenue Service to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property for
a longer period without adversely affecting its REMIC status or causing the
imposition of a Federal or state tax upon any REMIC. If a Servicer has received
such an extension, then such Servicer shall continue to attempt to sell the REO
Property for its fair market value as determined in good faith by such Servicer
for such longer period as such extension permits (the "Extended Period"). If a
Servicer has not received such an extension and such Servicer is unable to sell
the REO Property within 33 months after its acquisition by the Trust Fund or if
such Servicer has received such an extension, and such Servicer is unable to
sell the REO Property within the period ending three months before the close of
the Extended Period, such Servicer shall, before the end of the applicable
period, (i) purchase such REO Property at a price equal to the REO Property's
fair market value as determined in good faith by such Servicer or (ii) auction
the REO Property to the highest bidder (which may be such Servicer) in an
auction reasonably designed to produce a fair price prior to the expiration of
the applicable period.

                                   ARTICLE X

                                   TERMINATION

                  Section 10.01   Termination.

                  (a) The respective obligations and responsibilities of the
Servicers, the Depositor, the Trustee and the Certificate Registrar created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicers to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate

                                      -99-
<PAGE>

Principal Balance of each Class of Certificates has been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Asset in the Trust,
and (iii) the optional purchase by the Servicers of the Mortgage Assets as
described below. Notwithstanding the foregoing, in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date hereof.

            The Servicers, acting together and not individually, may, at their
option, terminate the Trust Fund and retire the Offered Certificates on the next
succeeding Distribution Date upon which the aggregate current Pool Balance is
less than 10% of the aggregate Pool Balance of the Mortgage Assets as of the
Cut-off Date by purchasing all of the outstanding (i) Mortgage Assets in the
Trust Fund at a price equal to the sum of the outstanding Principal Balance of
the Mortgage Assets and accrued and unpaid finance charges thereon at the
weighted average of the Coupon Rates through the end of the Collection Period
preceding the final Distribution Date plus unreimbursed Servicing Advances and
any unpaid Servicing Fees allocable to such Mortgage Assets and (ii) REO
Properties in the Trust Fund at a price equal to their fair market value as
determined in good faith by the applicable Servicers (the "Termination Price").
If the Servicers are subject to regulation by the OCC, the FDIC, the Federal
Reserve or the Office of Thrift Supervision, however, the option may not be
exercised unless the aggregate fair market value of the Mortgage Assets and REO
Properties is greater than or equal to the Termination Price. Notwithstanding
the foregoing, no party may exercise this optional purchase right unless any
Reimbursement Amount owed to the Trust pursuant to Section 2.03 hereof has been
paid.

            In connection with any such purchase pursuant to the preceding
paragraph, the Servicers shall deliver to the Trustee for deposit in the
Distribution Account all amounts then on deposit in the Collection Account,
which deposit shall be deemed to have occurred immediately following such
purchase.

            Any such purchase shall be accomplished by delivery on the
Determination Date before such Distribution Date of the Termination Price to the
Trustee for deposit into the Distribution Account as part of Available Funds.

            (b) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee upon the Trustee receiving notice of such date from the Servicers,
by letter to the Certificateholders mailed not earlier than the 15th day of the
month preceding the month of such final distribution and not later than the 15th
day of the month of such final distribution specifying (1) the Distribution Date
upon which final distribution of the Certificates will be made upon presentation
and surrender of such Certificates at the office or agency of the Trustee
therein designated, (2) the amount of any such final distribution and (3) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. Not less
than five (5) Business Days prior to such Determination Date relating to such
Distribution Date, the Trustee shall notify the Depositor of the amount of any
unpaid Reimbursement Amount owed to the Trust.

                                     -100-
<PAGE>

            (c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Sections 4.01 and 4.02 for
such Distribution Date.

            (d) In the event that all Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Servicers shall give a second
written notice to the remaining Certificateholders, to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within nine months after the second notice all the Certificates
shall not have been surrendered for cancellation, the Class R Certificateholder
shall be entitled to all unclaimed funds and other assets which remain subject
hereto (except with respect to the Class CE and Class P Certificates) and the
Trustee upon transfer of such funds shall be discharged of any responsibility
for such funds, and all other Certificateholders shall look to the Class R
Certificateholder for payment.

            Section 10.02  Additional Termination Requirements.

            (a) In the event that the Servicers exercise their purchase option
as provided in Section 10.01, the Trust shall be terminated in accordance with
the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or (ii) cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:

            (i) The Trustee shall designate a date within 90 days prior to the
      final Distribution Date as the date of adoption of plans of complete
      liquidation of each of REMIC 1, REMIC 2, REMIC 3 and REMIC 4 and shall
      specify such date in the final federal income tax return of each REMIC;

            (ii) After the date of adoption of such plans of complete
      liquidation and at or prior to the final Distribution Date, the Trustee
      shall sell all of the assets of the Trust to the Servicers for cash; and

            (iii) At the time of the making of the final payment on the
      Certificates, the Trustee shall distribute or credit, or cause to be
      distributed or credited in the following order of priority (A) (i) to the
      Holders of each of the Class A-1 and Class A-2 Certificates, pro rata, and
      (ii) to the Class M-1, Class M-2 and Class B Certificates, the related
      Certificate Principal Balance, as applicable, plus one month's interest
      thereon at the applicable Pass-Through Rate, (B) to the Class CE
      Certificates, the amount of any remaining Monthly Excess Cash Flow Amounts
      not previously distributed thereon, (C) to

                                     -101-
<PAGE>

      the remaining REMIC Regular Interests the amounts allocable thereto
      pursuant to Section 4.08 and (D) to the Class R Certificateholder, all
      cash on hand in respect of the REMICs after such payment (other than cash
      retained to meet claims) and the Trust shall terminate at such time.

            (b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

            Section 11.01  Amendment.

            This Agreement may be amended from time to time by the Depositor,
the Servicers and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity or mistake, (ii) to correct,
modify or supplement any provision herein which may be inconsistent with any
other provision herein or the Prospectus Supplement, (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; or (iv)
to comply with any requirements imposed by the Code; provided, however, that any
such action listed in clause (iii) above shall not adversely affect in any
respect the interests of any Certificateholder, as evidenced by (i) notice in
writing to the Depositor, the Servicers and the Trustee from the Rating Agencies
that such action will not result in the reduction or withdrawal of the rating of
any outstanding Class of Certificates with respect to which it is a Rating
Agency, or (ii) an Opinion of Counsel delivered to the Servicers and the
Trustee.

            In addition, this Agreement may be amended from time to time by the
Depositor, the Servicers and the Trustee, with the consent of the Majority
Certificateholders 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 or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a majority of the Percentage Interest in such Class,
or (z) reduce the percentage of Voting Rights required by clause (y) above
without the consent of the Holders of all Certificates of such Class then
outstanding. Upon approval of an amendment, a copy of such amendment shall be
sent to the Rating Agencies. Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (at the expense of the Person seeking such amendment) stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Trustee may, but shall not be

                                     -102-
<PAGE>

obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.

            Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause any REMIC constituting part of
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding and that the amendment is being made in accordance with the
terms hereof.

            Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is a Servicer (but in no event at the expense of the Trustee), otherwise
at the expense of the Trust, a copy of such amendment and the Opinion of Counsel
referred to in the immediately preceding paragraph to the Servicers and each
Rating Agency.

            It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment; instead it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

            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
Servicers at the expense of the Trust, but only upon direction of the
Certificateholders, 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 together constitute but
one and the same instrument.

            Section 11.03  Limitation on Rights of Certificateholders.

            The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) 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, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

            Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the

                                     -103-
<PAGE>

obligations of the parties hereto, nor shall anything herein set forth or
contained in the terms of the Certificates be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third 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 and of
the continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 51% 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 60 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding. It 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 whatever 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, which priority or
preference is not otherwise provided for herein, 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 11.03 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; Jurisdiction.

            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. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.

            Section 11.05  Notices.

            All directions, demands and notices hereunder 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 (a) in
the case of the Trustee, [__________________], or such other address as may
hereafter be furnished to the Depositor and the Servicers in writing

                                     -104-
<PAGE>

by the Trustee, (b) in the case of the Depositor, Mid-State Capital Corporation,
4211 West Boy Scout Boulevard, Tampa, Florida 33607, Attention: MSCC
Pass-Through Certificates, Series 2000-[___], or such other address as may be
furnished to the Servicers and the Trustee in writing by the Depositor, (c) in
the case of Mid-State Homes, Inc., 4211 West Boy Scout Boulevard, Tampa, Florida
33607, Attention: General Counsel, or such other address as may be hereafter
furnished to the Depositor and the Trustee by Mid-State Homes, Inc. in writing,
and (d) in the case of Walter Mortgage Company, 4211 West Boy Scout Boulevard,
Tampa, Florida 33607, Attention: General Counsel, or such other address as may
be hereafter furnished to the Depositor and the Trustee by Walter Mortgage
Company in writing. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Event of Termination shall be given by telecopy and by certified mail.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.

            Section 11.06  Severability of Provisions.

            If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be 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  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 11.08  Notice to the Rating Agencies.

            (a) The Trustee shall be obligated to use its best reasonable
efforts promptly to provide notice to the Rating Agencies with respect to each
of the following of which a Responsible Officer of the Trustee has actual
knowledge:

            (i) any material change or amendment to this Agreement;

            (ii) the occurrence of any Servicer Event of Termination that has
      not been cured or waived;

            (iii) the resignation or termination of a Servicer or the Trustee;

            (iv) the final payment to Holders of the Certificates of any Class;

            (v)   any change in the location of the Collection Account or
                  Distribution Account; and

                                     -105-
<PAGE>

            (vi) if the Trustee is acting as successor servicer pursuant to
      Section 7.02 hereof, any event that would result in the inability of the
      Trustee to make Advances.

            (vii) In addition, the Trustee shall promptly furnish to each Rating
      Agency copies of the following:

                  (A) each annual statement as to compliance described in
            Section 3.19 hereof; and

                  (B) each annual independent public accountants' servicing
            report described in Section 3.20 hereof; and

            Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to:
[___________] and [__________].

            Section 11.09  Further Assurances.

            Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.

            Section 11.10  Benefits of Agreement.

            Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.

            Section 11.11 Acts of Certificateholders.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Servicers.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Certificateholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section 11.11.

            (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her

                                     -106-
<PAGE>

individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.

            (c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.

                                     -107-
<PAGE>

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

                                       MID-STATE CAPITAL CORPORATION, as
                                          Depositor

                                       By:____________________________________
                                          Name:
                                          Title:

                                       MID-STATE HOMES, INC., as a Servicer

                                       By:____________________________________
                                          Name:
                                          Title:

                                       WALTER MORTGAGE COMPANY, as a Servicer

                                       By:____________________________________
                                          Name:
                                          Title:

                                       [_________________________], as Trustee

                                       By:____________________________________
                                          Name:
                                          Title:

<PAGE>

STATE OF                   )
                        ) ss.:
COUNTY OF                  )

            On the [___] day of [_____], 20__ before me, a notary public in and
for said State, personally appeared [_________], known to me to be a
[____________] of Mid-State Capital Corporation, a Delaware corporation 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

<PAGE>

STATE OF                   )
                        ) ss.:
COUNTY OF                  )

            On the [___] day of [_____], 20__ before me, a notary public in and
for said State, personally appeared [_________], known to me to be a
[____________] of Mid-State Homes, Inc., a Florida corporation 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

<PAGE>

STATE OF                   )
                        ) ss.:
COUNTY OF                  )

            On the [___] day of [_____], 20__ before me, a notary public in and
for said State, personally appeared [_________], known to me to be a
[____________] of Walter Mortgage Company, a Delaware corporation 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

<PAGE>

STATE OF                   )
                        ) ss.:
COUNTY OF                  )

            On the [___] day of [_____], 20__ before me, a notary public in and
for said State, personally appeared [_________], known to me to be a
[____________] of [__________], a [______________] that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said [________], and acknowledged to me that such [_______] 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
<PAGE>

                                   EXHIBIT A-1

                       [FORM OF THE CLASS A-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                         MSCC PASS-THROUGH CERTIFICATES
                           SERIES 20 -[__], CLASS A-1

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class A-1           Original  Class  Certificate  Principal
                                       Balance  of the Class A-1  Certificates
Pass-Through Rate:  Fixed              as of the Closing Date:  $

Date of Pooling and Servicing          Initial Certificate Principal Balance: $
and Cut-off Date:

First Distribution Date:               Servicers:  Mid-State Homes, Inc. and
                                       Walter Mortgage Company
No.
                                       Trustee:
CUSIP:
                                       Closing Date:
ISIN:

                                     A-1-1
<PAGE>

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Mid-State Capital Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicers and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-1 Certificates on such Distribution
Date pursuant to the Agreement; provided.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class A-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

                                     A-1-2
<PAGE>

            The Pass-Through Rate for the Class A-1 Certificates for each
Distribution Date will be [___]% per annum. Interest will accrue on the Class
A-1 Certificates during each Interest Accrual Period at a rate equal to the
lesser of (i) the Class A-1 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-1 Certificates.

            The Class A-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to the Voting Rights identified in the agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

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

                                     A-1-3
<PAGE>

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-1-4
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:      _

                                     A-1-5
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     A-1-6
<PAGE>

                           DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     A-1-7
<PAGE>

                                   EXHIBIT A-2

                       [FORM OF THE CLASS A-2 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                         MSCC PASS-THROUGH CERTIFICATES
                           SERIES 20 -[__], CLASS A-2

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class A-2            Original  Class  Certificate  Principal
                                        Balance  of the Class A-2  Certificates
Pass-Through Rate:  Fixed               as of the Closing Date:  $

Date of Pooling and Servicing           Initial Certificate Principal Balance: $
Agreement and Cut-off Date:

First Distribution Date:                Servicers:  Mid-State Homes, Inc. and
                                        Walter Mortgage Company
No.
                                        Trustee:
CUSIP:
                                        Closing Date:
ISIN:

                                     A-2-1
<PAGE>

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Mid-State Capital Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicers and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-2 Certificates on such Distribution
Date pursuant to the Agreement; provided.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class A-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

                                     A-2-2
<PAGE>

            The Pass-Through Rate for the Class A-2 Certificates for each
Distribution Date will be [___]% per annum. Interest will accrue on the Class
A-2 Certificates during each Interest Accrual Period at a rate equal to the
lesser of (i) the Class A-2 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-2 Certificates.

            The Class A-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to the Voting Rights identified in the agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

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

                                     A-2-3
<PAGE>

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-2-4
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     A-2-5
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     A-2-6
<PAGE>

                           DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     A-2-7
<PAGE>

                                   EXHIBIT B-1

                       [FORM OF THE CLASS M-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
      CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
      TO HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                         MSCC PASS-THROUGH CERTIFICATES
                           SERIES 20 -[__], CLASS M-1

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class M-1            Original  Class  Certificate  Principal
                                        Balance  of the Class M-1  Certificates
Pass-Through Rate:  Fixed               as of the Closing Date:  $

Date of Pooling and Servicing           Initial Certificate Principal Balance: $
Agreement and Cut-off Date:

First Distribution Date:                Servicers:  Mid-State Homes, Inc. and
                                        Walter Mortgage Company
No.
                                        Trustee:
CUSIP:
                                        Closing Date:
ISIN:

                                     B-1-1
<PAGE>

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Mid-State Capital Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicers and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement; provided.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

                                     B-1-2
<PAGE>

            The Pass-Through Rate for the Class M-1 Certificates for each
Distribution Date will be [___]% per annum. Interest will accrue on the Class
M-1 Certificates during each Interest Accrual Period at a rate equal to the
lesser of (i) the Class M-1 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-1 Certificates.

            The Class M-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            This certificate is subordinated in right of payment to the Class A
Certificates as described in the Pooling and Servicing Agreement referred to
herein.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to the Voting Rights identified in the agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are

                                     B-1-3
<PAGE>

exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

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

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-1-4
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     B-1-5
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     B-1-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     B-1-7
<PAGE>

                                   EXHIBIT B-2

                       [FORM OF THE CLASS M-2 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
      CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
      REFERRED TO HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                         MSCC PASS-THROUGH CERTIFICATES
                           SERIES 20 -[__], CLASS M-2

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class M-2            Original  Class  Certificate  Principal
                                        Balance  of the Class M-2  Certificates
Pass-Through Rate:  Fixed               as of the Closing Date:  $

Date of Pooling and Servicing           Initial Certificate Principal Balance: $
Agreement and Cut-off Date:

First Distribution Date:                Servicers:  Mid-State Homes, Inc. and
                                        Walter Mortgage Company
No.
                                        Trustee:
CUSIP:
                                        Closing Date:
ISIN:

                                     B-2-1
<PAGE>

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Mid-State Capital Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicers and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement; provided.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice

                                     B-2-2
<PAGE>

by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.

            The Pass-Through Rate for the Class M-2 Certificates for each
Distribution Date will be [___]% per annum. Interest will accrue on the Class
M-2 Certificates during each Interest Accrual Period at a rate equal to the
lesser of (i) the Class M-2 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-2 Certificates.

            The Class M-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            This certificate is subordinated in right of payment to the Class A
and Class M-1 Certificates as described in the Pooling and Servicing Agreement
referred to herein.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to the Voting Rights identified in the agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are

                                     B-2-3
<PAGE>

exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

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

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-2-4
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

            This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     B-2-5
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     B-2-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     B-2-7
<PAGE>

                                   EXHIBIT B-3

                        [FORM OF THE CLASS B CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
      AGREEMENT REFERRED TO HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                         MSCC PASS-THROUGH CERTIFICATES
                            SERIES 20 -[__], CLASS B

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class B              Original  Class  Certificate  Principal
                                        Balance of the Class B Certificates  as
Pass-Through Rate:  Fixed               of the Closing Date:  $

Date of Pooling and Servicing           Initial Certificate Principal Balance: $
Agreementand Cut-off Date:

First Distribution Date:                Servicers:  Mid-State Homes, Inc. and
                                        Walter Mortgage Company
No.
                                        Trustee:
CUSIP:
                                        Closing Date:

                                     B-3-1
<PAGE>

ISIN:

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class B Certificates) in that certain beneficial ownership interest
evidenced by all the Class B Certificates in the Trust Fund created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Mid-State Capital Corporation (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B Certificates on such Distribution
Date pursuant to the Agreement; provided.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class B
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

                                     B-3-2
<PAGE>

            The Pass-Through Rate for the Class B Certificates for each
Distribution Date will be [___]% per annum. Interest will accrue on the Class B
Certificates during each Interest Accrual Period at a rate equal to the lesser
of (i) the Class B Pass-Through Rate and (ii) the Pool Cap for such Distribution
Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class B Certificates.

            The Class B Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            This certificate is subordinated in right of payment to the Class A,
Class M-1 and Class B Certificates as described in the Pooling and Servicing
Agreement referred to herein.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicers and the Trustee with the consent of the Holders of Certificates
entitled to the Voting Rights identified in the agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                                     B-3-3
<PAGE>

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

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-3-4
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

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

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     B-3-5
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     B-3-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     B-3-7
<PAGE>

                                   EXHIBIT C-1

                         [FORM OF CLASS CE CERTIFICATES]

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
      OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
      MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
      SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
      (THE "CODE") AND CERTAIN OTHER PROPERTY.

      THIS CLASS CE CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS CE CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS CE CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
      RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
      INCOME SECURITY ACT OF 1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY
      MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
      WILL BE REGISTERED.

                                     C-1-1
<PAGE>

                         MSCC PASS-THROUGH CERTIFICATES
                           SERIES 20 -[___], CLASS CE

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class CE              Servicers:  Mid-State Homes, Inc. and
                                         Walter Mortgage Company
Date of Pooling and
Servicing Agreement
and Cut-off Date:                        Trustee:

First Distribution Date:                 Closing Date:

No.:                                     Percentage Interest:

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that __________________________________ is the
registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class CE Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Mid-State Capital Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicers and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date

                                     C-1-2
<PAGE>

immediately prior to such Distribution Date and is the registered owner of Class
CE Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
specified on the face hereof.

            The Class CE Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicers and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                                     C-1-3
<PAGE>

            No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under 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 a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) unless such transfer is made in reliance upon Rule 144A under the 1933 Act,
that the Depositor and the Certificate Registrar receive an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicers 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.

            No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.

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

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all

                                     C-1-4
<PAGE>

Mortgage Assets and all property acquired in respect of such Mortgage Assets.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Assets and all property
acquired in respect of any Mortgage Asset at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Assets at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assume no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-1-5
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

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

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     C-1-6
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     C-1-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     C-1-8
<PAGE>

                                   EXHIBIT C-3

                          [FORM OF CLASS R CERTIFICATE]

      THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

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

      THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES AND
      CLASS CE CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN
      THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
      RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
      INCOME SECURITY ACT OF 1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY
      MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
      WILL BE REGISTERED.

      ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY
      BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT TO THE
      CERTIFICATE REGISTRAR THAT SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
      ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
      INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
      FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN
      SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX

                                     C-2-1
<PAGE>

      IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO
      THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED
      IN SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
      FOREGOING CLAUSES (A), (B) OR (C) BEING HEREINAFTER REFERRED TO AS A
      "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
      ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
      ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE SATISFIES CERTAIN
      ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
      TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER
      OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE TO
      A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION,
      SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT
      WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
      FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
      DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THE CLASS R CERTIFICATE
      BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE
      PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(d) OF THE
      POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
      DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
      OWNERSHIP OF THIS CLASS R CERTIFICATE.

                                     C-2-2
<PAGE>

                         MSCC PASS-THROUGH CERTIFICATES
                            SERIES 20 -[___], CLASS R

evidencing  a  beneficial  ownership  interest  in  a  Trust  Fund  consisting
primarily Mortgage Assets formed and sold by

                          MID-STATE CAPITAL CORPORATION

Series 20  -[___], Class R               Servicers:  Mid-State Homes, Inc. and
                                         Walter Mortgage Company
Date of Pooling and
Servicing Agreement
and Cut-off Date:                        Trustee:

First Distribution Date:                 Closing Date:

No.:                                     Percentage Interest:

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MID-STATE CAPITAL CORPORATION, THE SERVICERS, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________________ is the registered owner
of 100% Percentage Interest in that certain beneficial ownership interest
evidenced by the Class R Certificate in the Trust Fund created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Mid-State Capital Corporation (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Servicers and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account in the amount required to be
distributed to the Holder of Class R Certificate on such Distribution Date
pursuant to the Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class R
Certificate, or

                                     C-2-3
<PAGE>

by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register,
provided that the Certificate Registrar may deduct a reasonable wire transfer
fee from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            This Certificate is one of a duly authorized issue of Certificates
designated as MSCC Pass-Through Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof.

            The Class R Certificate is limited in right of payment to certain
collections and recoveries respecting the Mortgage Assets, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Assets.

            The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicers, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicers and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

            The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

            No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or

                                     C-2-4
<PAGE>

qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that a transfer is to be made without registration or qualification, the
Certificate Registrar shall require, in order to assure compliance with such
laws, either (i) that the Certificateholder desiring to effect the transfer and
such Certificateholder's prospective transferee each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, or (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, that the Depositor and the
Certificate Registrar receive an Opinion of Counsel satisfactory to them that
such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the Servicers 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.

            No transfer of this Certificate or any interest therein may be made
to employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.

            The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement and to any amendment of the Agreement deemed necessary by counsel
of the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
to cease to qualify as four separate REMICs or cause the imposition of a tax
upon the Trust.

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

            The Depositor, the Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicers, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicers, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.

                                     C-2-5
<PAGE>

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Asset
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Assets and all property acquired in respect of such
Mortgage Assets. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Assets
and all property acquired in respect of any Mortgage Asset at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Assets at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

            The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

            Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-2-6
<PAGE>

            IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.

Dated:

                                       [___________________________], as
                                          Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

            This is the Class R Certificate referred to in the within-mentioned
Agreement.

                                       [__________________________], as
                                          Certificate Registrar

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

Date of authentication:

                                     C-2-7
<PAGE>

                                  ABBREVIATIONS

            The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM   - as tenants in common         UNIF GIFT MIN ACT   -Custodian
                                                              ---------
                                                             (Cust) (Minor)
TEN ENT   - as tenants by the entireties                      under Uniform
                                                              Gifts to
JT TEN    - as joint tenants with right                       Minors Act
            of survivorship and not as                        ________________
            tenants in common                                     (State)

            Additional abbreviations may also be used though not in the above
list.

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) ____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

            I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:

_______________________________________________________________________________

Dated:

                                          --------------------------------------
                                           Signature by or on behalf of assignor

                                          --------------------------------------
                                           Signature Guaranteed

                                     C-2-8
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
 for the account of _______________________, account number __________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to ____________________________________
 This information is provided by _____________________________________________,
the assignee named above, or_____________________________________, as its agent.

                                     C-2-9
<PAGE>

                                    EXHIBIT D

                           SCHEDULE OF MORTGAGE ASSETS

                                      D-1
<PAGE>

                                       E-2

                                       E-1
                                    EXHIBIT E

                   FORM OF REQUEST FOR RELEASE OF DOCUMENTS

To:   [Trustee]

Re:         Pooling and Servicing Agreement dated as of [______], 20 among
            Mid-State Capital Corporation, as depositor, Mid-State Homes, Inc.,
            as a servicer, Walter Mortgage Company, as a servicer, and
            [___________], as trustee_______________________

            All capitalized terms used herein shall have the means ascribed to
them in the Pooling and Servicing Agreement (the "Agreement") referenced above.

            In connection with the administration of the Mortgage Asset held by
you as Trustee pursuant to the Agreement, we request the release, and hereby
acknowledge receipt, of the Trustee's Mortgage Asset File for the Mortgage Asset
described below, for the reason indicated.

Mortgage Asset identification number:

Obligor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_____ 1.    Paid in Full

_____ 2.    Foreclosure

_____ 3.    Substitution

_____ 4.    Other Liquidation (Repurchases, etc.)

_____ 5.    Nonliquidation    Reason:
                                     -----------------

                              By:
                                 ---------------------
                                 (authorized signer)

                              Issuer:
                                     -----------------

                              Address:
                                      ----------------

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

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

Custodian

[-----------------------------]

                                      E-1
<PAGE>

            Please acknowledge the execution of the above request by your
signature and date below:

-----------------------    -------------------------
      Signature                     Date

Documents returned to Custodian:

-----------------------    -------------------------
      Custodian                     Date

                                      E-2
<PAGE>

                                    EXHIBIT F

                           FORM OF LOST NOTE AFFIDAVIT

            Personally  appeared  before  me  the  undersigned   authority  to
administer  oaths,  ______________________  who first being duly sworn deposes
and       says:       Deponent       is        ______________________       of
______________________________,  ("Seller") and who has personal  knowledge of
the facts set out in this affidavit.

            On ___________________,  _________________________ did execute and
deliver a Note in the principal amount of $__________.

            That said Note has been misplaced or lost through causes unknown and
is presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and finance charges on said Note is
still presently outstanding, due, and unpaid, and Seller is still owner and
holder in due course of said lost Note.

            Seller executes this affidavit for the purpose of inducing
[_______________________], as trustee on behalf of MSCC Pass-Through
Certificates, Series 20 -[___], to accept the transfer of the above described
loan from Seller.

            Seller agrees to indemnify and hold harmless [_____________________]
and [___________________] for any losses incurred by such parties resulting from
the above described Note has been lost or misplaced.

                                        By:___________________________________
                                           ___________________________________

STATE OF                )
                        )  SS:
COUNTY OF               )

            On this ____ day of _______ 20__, before me, a Notary Public, in and
for said County and State, appeared ________________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.

            Witness my hand and Notarial Seal this ____ day of _______ 20__.

My commission expires         .
                     ---------

                                      F-1
<PAGE>

                                    EXHIBIT G

                          FORM OF ERISA REPRESENTATION

[Trustee]

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607
Attention:  MSCC Pass-Through Certificates, Series 20  -[___]

      Re:   MSCC Pass-Through Certificates, Series 20 -[___]
            ------------------------------------------------

Ladies and Gentlemen:

            1. [The undersigned is the ______________________ of (the
"Transferee") a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.] [The undersigned,
___________________, is the transferee (the "Transferee").]

            2. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Mid-State Capital
Corporation, as depositor (the "Depositor"), Mid-State Homes, Inc., as a
servicer, Walter Mortgage Company, as a servicer, and [__________________], as
trustee (the "Trustee"), no transfer of the ERISA-Restricted Certificates shall
be permitted to be made to any person unless the Depositor and the Certificate
Registrar (as defined in the Agreement) have received a certificate from such
transferee in the form hereof.

            3. The Transferee either (x) (i) is not an employee benefit plan
subject to Section 406 or Section 407 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") or any materially similar provisions of
applicable federal, state or local law ("Similar Law"), the Trustee of any such
plan or a person acting on behalf of any such plan nor a person using the assets
of any such plan or (ii) (except in the case of the Class R and Class CE P
Certificates) is an insurance company which is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60 or (y) (except in the case of the Class R
Certificate) shall deliver to the Certificate Registrar and the Depositor an
opinion of counsel (a "Benefit Plan Opinion") satisfactory to the Certificate
Registrar, and upon which the Certificate Registrar and the Depositor shall be
entitled to rely, to the effect that the purchase or holding of such Certificate
by the Transferee will not result in the assets of the Trust Fund being deemed
to be plan assets and subject to the prohibited transaction provisions of ERISA
or the Code (or similar provisions of Similar Law) and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken by
such entities in the Pooling and Servicing Agreement, which opinion of counsel
shall not be an expense of the Trustee or the Depositor.

                                      G-1
<PAGE>

            Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement.

            IN WITNESS WHEREOF, the Transferee has executed this certificate.

                                       ---------------------------------------
                                        [Transferee]

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

                                      G-2
<PAGE>

                                    EXHIBIT H

                  FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                                     [DATE]

[Trustee]

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607
Attention:  MSCC Pass-Through Certificates, Series 20  -[___]

      Re:   MSCC Pass-Through Certificates, Series 20 -[___]
            ------------------------------------------------

Ladies and Gentlemen:

            In connection with our acquisition of the MSCC Pass-Through
Certificates, Series 20 -[___] (the "Certificates"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor,"
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
we are acquiring the Certificates for investment for our own account and not
with a view to any distribution of such Certificates (but without prejudice to
our right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (e) we agree that the Certificates must be
held indefinitely by us and we acknowledge that we are able to bear the economic
risk of investment in the Certificates, (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, (g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement and (h)
we acknowledge that the Certificates will bear a legend setting forth the
applicable restrictions on transfer.

                                      H-1
<PAGE>

                                       Very truly yours,

                                       [NAME OF TRANSFEREE]

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                                      H-2
<PAGE>

                       FORM OF RULE 144A INVESTMENT LETTER

                                                       [DATE]

[Trustee]

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607
Attention:  MSCC Pass-Through Certificates, Series 20  -[___]

      Re:   MSCC Pass-Through Certificates, Series 20 -[___]
            ------------------------------------------------

Ladies and Gentlemen:

            In connection with our acquisition of the MSCC Pass-Through
Certificates, Series 20 -[___] (the "Certificates"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (c)
we have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (d) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Certificates for our own
account or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.

                                      H-3
<PAGE>

                                       Very truly yours,

                                       [NAME OF TRANSFEREE]

                                       By:
                                          --------------------------------------
                                          Authorized Officer

                                      H-4
<PAGE>

                                                          ANNEX 1 TO EXHIBIT J
                                                          --------------------

           QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
           --------------------------------------------------------

         [For Transferees Other Than Registered Investment Companies]

            The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

            i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

            ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $_____ (1) in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

            ___ Corporation, etc. The Buyer is a corporation (other than a bank,
            savings and loan association or similar institution), Massachusetts
            or similar business trust, partnership, or charitable organization
            described in Section 501(c)(3) of the Internal Revenue Code of 1986,
            as amended.

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

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

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

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

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

                                      H-5
<PAGE>

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

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

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

            ___ Investment Advisor. The Buyer is an investment advisor
            registered under the Investment Advisors Act of 1940.

            ___ Small Business Investment Company. Buyer is a small business
            investment company licensed by the U.S. Small Business
            Administration under Section 301(c) or (d) of the Small Business
            Investment Act of 1958.

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

            iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.

            iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

            v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will

                                      H-6
<PAGE>

continue to rely on the statements made herein because one or more sales to the
Buyer may be in reliance on Rule 144A.

            vi. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

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

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

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

                                      H-7
<PAGE>

                                                          ANNEX 2 TO EXHIBIT J
                                                          --------------------

           QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
           --------------------------------------------------------

          [For Transferees That are Registered Investment Companies]

            The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

            1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

            2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

            ___ The Buyer owned $ in securities (other than the excluded
            securities referred to below) as of the end of the Buyer's most
            recent fiscal year (such amount being calculated in accordance with
            Rule 144A).

            ___ The Buyer is part of a Family of Investment Companies which
            owned in the aggregate $ in securities (other than the excluded
            securities referred to below) as of the end of the Buyer's most
            recent fiscal year (such amount being calculated in accordance with
            Rule 144A).

            3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

            4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

                                      H-8
<PAGE>

            5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

            6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.

                                        --------------------------------------
                                        Print Name of Buyer or Adviser

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

                                        IF AN ADVISER:

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

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

                                      H-9
<PAGE>

                                    EXHIBIT I

               FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT

               MSCC PASS-THROUGH CERTIFICATES, SERIES 20 -[___]

STATE OF                )
                        ) ss.:
COUNTY OF               )

            The undersigned, being first duly sworn, deposes and says as
follows:

            1. The undersigned is [an officer of] , the proposed Transferee of
an Ownership Interest in the Class R Certificates (the "Certificate") issued
pursuant to the Pooling and Servicing Agreement, (the "Agreement"), relating to
the above-referenced Certificates, among Mid-State Capital Corporation, as
depositor (the "Depositor"), Mid-State Homes, Inc., as a servicer, Walter
Mortgage Company, as a servicer, and [__________________], as trustee (the
"Trustee"). Capitalized terms used, but not defined herein shall have the
meanings ascribed to such terms in the Agreement. The Transferee has authorized
the undersigned to make this affidavit on behalf of the Transferee.

            2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificates either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

            3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are
Disqualified Organization; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is a Disqualified Organization, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is not a Disqualified Organization and, at the time
of Transfer, such Person does not have actual knowledge that the affidavit is
false.

            4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is a
Disqualified Organization is the record holder of an interest in such entity.
The Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is not a Disqualified Organization and the
pass-through entity does not have actual knowledge that such affidavit is false.
(For this purpose, a "pass-through entity" includes a regulated investment
company, a real estate investment trust or common trust fund, a partnership,
trust or estate, and certain cooperatives and, except as may be provided in
Treasury Regulations, persons holding interests in pass-through entities as a
nominee for another Person.)

                                      I-1
<PAGE>

            5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

            6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth in this Exhibit J to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.

            7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.

            8. The Transferee's taxpayer identification number is____________ .

            9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

            10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.

            11. That the Transferee will not cause income from the Class R
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of the Transferee
or any other person.

            12. That, if the Transferee is purchasing the Class R Certificate in
a transfer intended to meet the safe harbor provisions of Treasury Regulations
Sections 1.860E-1(c), the Transferee has executed and attached Attachment A
hereto.

            13. The Transferee is not an employee benefit plan that is subject
to ERISA or a plan that is subject to Section 4975 of the Code or a plan or
arrangement subject to any materially similar provisions of applicable federal,
state or local law, nor are we acting on behalf of such a plan.

                                      I-2
<PAGE>

            IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _____, 20__.

                                       [NAME OF TRANSFEREE]

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

[Corporate Seal]

ATTEST:

[Assistant] Secretary

            Personally appeared before me the above-named , known or proved to
me to be the same person who executed the foregoing instrument and to be the of
the Transferee, and acknowledged that he executed the same as his free act and
deed and the free act and deed of the Transferee.

            Subscribed and sworn before me this this ____ day of _____, 20__.

                                        ---------------------------------------
                                        NOTARY PUBLIC

                                        My Commission expires the  ____ day of
                                        _____, 20__.

                                      I-3
<PAGE>

                                  ATTACHMENT A

                                       to

   AFFIDAVIT PURSUANT TO SECTION 860E(e)(4) OF THE INTERNAL REVENUE CODE OF
                1986, AS AMENDED, AND FOR NON-ERISA INVESTORS

Check the appropriate box:

[ ]     The consideration paid to the Transferee to acquire the Class R
Certificate equals or exceeds the excess of (a) the present value of the
anticipated tax liabilities over (b) the present value of the anticipated
savings associated with holding such Certificate, in each case calculated in
accordance with U.S. Treasury Regulations Sections 1.860E-1(c)(7) and (8),
computing present values using a discount rate equal to the short-term Federal
rate prescribed by Section 1274(d) of the Code and the compounding period used
by the Transferee.

            OR

[ ]     The  transfer of the Class R  Certificate  complies  with U.S.  Treasury
Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly:

(i)   the  Transferee  is  an  "eligible  corporation,"  as  defined  in  U.S.
      Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income from
      Class R Certificate will only be taxed in the United States;

(ii)  at the time of the transfer, and at the close of the Transferee's two
      fiscal years preceding the year of the transfer, the Transferee had gross
      assets for financial reporting purposes (excluding any obligation of a
      person related to the Transferee within the meaning of U.S. Treasury
      Regulations Section 1.860E-1(c)(6)(ii)) in excess of $100 million and net
      assets in excess of $10 million;

(iii) the Transferee will transfer the Class R Certificate only to another
      "eligible corporation," as defined in U.S. Treasury Regulations Section
      1.860E-1(c)(6)(i), in a transaction that satisfies the requirements of
      Sections 1.860E-1(c)(4)(i), (ii) and (iii) and Section 1.860E-1(c)(5) of
      the U.S. Treasury Regulations;

(iv)  the Transferee has determined the consideration paid to it to acquire the
      Class R Certificate based on reasonable market assumptions (including, but
      not limited to, borrowing and investment rates, prepayment and loss
      assumptions, expense and reinvestment assumptions, tax rates and other
      factors specific to the Transferee) that it has determined in good faith;
      and

(v)   in the event of any transfer of the Class R Certificate by the Transferee,
      the Transferee will require its transferee to complete a representation in
      the form of this Attachment A as a condition of the transferee's purchase
      of the Class R Certificate.

                                      I-4
<PAGE>

                                    EXHIBIT J

                         FORM OF TRANSFEROR CERTIFICATE

                                                  [DATE]

[Trustee]

Mid-State Capital Corporation
4211 West Boy Scout Boulevard
Tampa, Florida  33607
Attention:  MSCC Pass-Through Certificates, Series 20  -[___]

            Re:   MSCC Pass-Through Certificates, Series 20 -[___]
                  ------------------------------------------------
Ladies and Gentlemen:

            In connection with our disposition of the MSCC Pass-Through
Certificates, Series 20 -[__] (the "Certificates"), we certify that (a) we
understand that the Certificates have not been registered under the Securities
Act of 1933, as amended (the "Act"), and are being disposed by us in a
transaction that is exempt from the registration requirements of the Act, (b) we
have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of the Class R Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of the Class R Certificate is to impede the assessment or collection
of tax.

                                       Very truly yours,

                                       [_______________]

                                       By: ______________________________

                                      J-1
<PAGE>

                                    EXHIBIT K

                              Form of Certification

                              MSCC 20 -[___] TRUST,
                   PASS-THROUGH CERTIFICATES, SERIES 20 -[___]

      I, [identify the certifying individual] certify that:

1.    I have  reviewed  the annual  report on Form 10-K,  and all Monthly Form
      8-K's containing Distribution Date Statements filed in respect of periods
      included in the year covered by this annual report, of the MSCC 20 -[___]
      Trust;
2.    Based on my knowledge, the information in these reports, taken as a whole,
      does not contain any untrue statement of a material fact or omit to state
      a material fact necessary to make the statements made, in light of the
      circumstances under which such statements were made, not misleading as of
      the last day of the period covered by this annual report;

3.    Based on my knowledge, the distribution or servicing information required
      to be provided to the Trustee by the Servicers under the Pooling and
      Servicing Agreement, dated as of [________], 20 (the "Agreement"), among
      Mid-State Capital Corporation, as depositor, Mid-State Homes, Inc., as a
      servicer ("Mid-State"), Walter Mortgage Company, as a servicer (together
      with Mid-State, the "Servicers"), and Wells Fargo Bank Minnesota, National
      Association, as trustee (the "Trustee") for inclusion in these reports is
      included in these reports;

4.    Based on my knowledge and upon the annual compliance statements included
      in the annual report on Form 10-K and required to be delivered to the
      Trustee in accordance with the terms of the Agreement, and except as
      disclosed in the reports, the Servicers have fulfilled their obligations
      under the Agreement;

5.    The reports disclose all significant deficiencies relating to the
      Servicers' compliance with the minimum servicing standards based upon the
      reports provided by independent public accountants, after conducting
      reviews in compliance with the Uniform Single Attestation Program for
      Mortgage Bankers or similar procedure, as set forth in the Agreement, that
      are included in these reports; and

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

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

                                      N-1
<PAGE>

                                    EXHIBIT L

      Form of Certification to be Provided by the Trustee to the Depositor

                              MSCC 20 -[___] TRUST,
                   PASS-THROUGH CERTIFICATES, SERIES 20 -[___]

      I, [identify the certifying individual], certify to Mid-State Capital
Corporation and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

1.    I have reviewed the annual report on Form 10-K for the calendar year [___]
      and all Monthly Form 8-K's containing Distribution Date Statements filed
      in respect of periods included in the year covered by that annual report,
      of the MSCC 20 -[__] Trust;

2.    Based on my knowledge, the distribution information in the Distribution
      Date Statements contained in all Monthly Form 8-K's included in the year
      covered by the annual report on Form 10-K for the calendar year [___],
      taken as a whole, does not contain any untrue statement of a material fact
      or omit to state a material fact necessary to make the statements made, in
      light of the circumstances under which such statements were made, not
      misleading as of the last day of the period covered by that annual report;
      and

3.    Based on my knowledge, the distribution or servicing information required
      to be provided to the Trustee by the Servicers under the Pooling and
      Servicing Agreement, dated as of [________], 20 , among Mid-State Capital
      Corporation, as depositor, Mid-State Homes, Inc., as a servicer
      ("Mid-State"), Walter Mortgage Company, as a servicer (together with
      Mid-State, the "Servicers") and [_________________], as trustee (the
      "Trustee"), for inclusion in these reports is included in these reports.

                                       [____________________________], as
                                          Trustee

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

                                      N-1
<PAGE>

                                    EXHIBIT M

     Form of Certification to be Provided by the Servicers to the Depositor

                              MSCC 20 -[___] TRUST,
                   PASS-THROUGH CERTIFICATES, SERIES 20 -[___]

      We, [identify the certifying individuals], certify to Mid-State Capital
Corporation and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

1.    We have reviewed the annual report on Form 10-K for the calendar year
      [___], and all Monthly Form 8-K's containing Distribution Date Statements
      filed in respect of periods included in the year covered by that annual
      report, of the MSCC 20 -[__] Trust;

2.    Based on our knowledge, the servicing information in the Distribution Date
      Statements contained in all Monthly Form 8-K's included in the year
      covered by the annual report on Form 10-K for the calendar year [___],
      taken as a whole, does not contain any untrue statement of a material fact
      or omit to state a material fact necessary to make the statements made, in
      light of the circumstances under which such statements were made, not
      misleading as of the last day of the period covered by that annual report;

3.    Based on our knowledge, the servicing information required to be provided
      to the Trustee by the Servicers under the Pooling and Servicing Agreement,
      dated as of [______], 20 (the "Agreement"), among Mid-State Capital
      Corporation, as depositor, Mid-State Homes, Inc., as a servicer
      ("Mid-State"), Walter Mortgage Company, as a servicer ("Walter Mortgage"
      and, together with Mid-State, the "Servicers"), and
      [___________________________________], as trustee (the "Trustee"), for
      inclusion in these reports is included in these reports;

4.    We are responsible for reviewing the activities performed by the Servicers
      under the Agreement and based upon our knowledge and the annual compliance
      reviews required under the Agreement, and except as disclosed in the
      reports, the Servicers have fulfilled their obligations under the
      Agreement; and

5.    The reports disclose all significant deficiencies relating to the
      Servicers' compliance with the minimum servicing standards based upon the
      reports provided by independent public accountants, after conducting
      reviews in compliance with the Uniform Single Attestation Program for
      Mortgage Bankers or similar procedure, as set forth in the Agreement, that
      is included in these reports.

                                      N-1
<PAGE>

                                       MID-STATE HOMES, INC.

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

                                       WALTER MORTGAGE COMPANY

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

                                      M-2
<PAGE>

                                    EXHIBIT N

                      FORM OF ADDITIONAL TRANSFER AGREEMENT

            Additional  Transfer  Agreement,  dated  [________],  20 , between
Mid-State    Capital    Corporation,    as   seller   (the   "Seller"),    and
[_______________], as trustee (the "Trustee").

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

            WHEREAS, the Seller and the Trustee are parties to that certain
pooling and servicing agreement, dated [____________], 20 (the "Pooling
Agreement"), relating to the Mid-State Capital Corporation, Pass-Through
Certificates, Class A-1, Class A-2, Class M-1, Class M-2 and Class B; and

            WHEREAS, as contemplated in the Pooling Agreement, the Depositor
desires to convey certain Additional Mortgage Assets (as hereinafter defined) to
the Trustee.

            NOW, THEREFORE, the parties hereto hereby agree as follows:

            Section 1.01. Defined Terms. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Pooling
Agreement.

            "Agreement" means this Additional Transfer Agreement and all
amendments hereof and supplements hereto.

            "Additional Mortgage Assets" means the Mortgage Assets identified on
the Schedule of Mortgage Assets specified in Section 1.02 hereof.

            "Additional  Transfer Date" means,  with respect to the Additional
Mortgage Assets conveyed hereby, [________], 20  .

            Section 1.02. Schedule of Mortgage Assets. Annexed hereto is a
supplement to Exhibit D to the Pooling Agreement listing the Additional Mortgage
Assets to be conveyed by the Seller to the Trustee pursuant to this Agreement on
the Additional Transfer Date.

            Section 1.03. Sale of Additional Accounts by the Seller. Subject to
the conditions set forth in Section 1.05, in consideration of the Trustee's
delivery upon the order of the Seller of an amount equal to $[______________] to
the Seller, the Seller, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee, on
behalf of the Trust, without recourse for the benefit of the Certificateholders
all the right, title and interest of the Seller, including any security interest
therein for the benefit of the Seller, in and to (i) all Additional Mortgage
Assets listed on the supplement to Exhibit D to the Pooling Agreement, including
the related Principal Balance as of the Additional Transfer Date, all finance
charges accruing thereon after the Additional Transfer Date and all collections
in respect of finance charges and principal due after the Additional Transfer
Date; (ii) property which secured each such Mortgage Asset and which has been
acquired by foreclosure or deed in

                                      N-1
<PAGE>

lieu of foreclosure; (iii) its interest in any insurance policies in respect of
the Mortgage Assets; and (iv) all proceeds of any of the foregoing.

            Section 1.04. Representations and Warranties of Seller. The Seller
does hereby reaffirm the representations and warranties with respect to the
Additional Mortgage Assets set forth in Section 2.04 of the Pooling Agreement
for the benefit of the Certificateholders.

            Section 1.05. Conditions Precedent. The obligation of the Trustee to
accept the Additional Mortgage Assets is subject to the satisfaction, on or
prior to the Additional Transfer Date, of the conditions precedent set forth in
Section 2.08(b) of the Pooling Agreement.

            The Trustee shall not be required to investigate or otherwise verify
satisfaction of the conditions listed in Section 2.08(b) of the Pooling
Agreement, but shall be entitled to conclusively rely upon one or more Officer's
Certificates confirming such fulfillment.

            Section 1.06. Reaffirmation of Pooling Agreement. All terms,
conditions and provisions of the Pooling Agreement are hereby reaffirmed and
incorporated by reference by the Seller as to the Additional Mortgage Assets.

            Section 1.07. 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 under this Agreement shall be determined in
accordance with such laws.

                                      N-2
<PAGE>

            IN WITNESS WHEREOF, the Seller and the Trustee have caused this
Additional Transfer Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.

                                       MID-STATE CAPITAL CORPORATION

                                        By:_____________________________
                                               Authorized Officer

                                       [_______________________________],
                                          as Trustee

                                        By:_____________________________
                                             Authorized Signatory

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