Document:

Exhibit 4.1

<PAGE>
                     NEW CENTURY MORTGAGE SECURITIES, INC.,
                                    Depositor

                          COUNTRYWIDE HOME LOANS, INC.
                                    Servicer

                               FIRSTAR BANK, N.A.,
                                     Trustee

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,
                               Trust Administrator

                         POOLING AND SERVICING AGREEMENT

                            Dated as of July 1, 2000

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

                       NEW CENTURY HOME EQUITY LOAN TRUST,
                                 SERIES 2000-NCB

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<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
                                                                                                               Page

                                                     ARTICLE I

                                                    DEFINITIONS
<S>                                                                                                            <C>
         Section 1.01.              Defined Terms.................................................................2
         Section 1.02.              Accounting...................................................................34
         Section 1.03.              Allocation of Certain Interest Shortfalls....................................34

                                                    ARTICLE II

                                            ESTABLISHMENT OF THE TRUST;
                                       PURCHASE AND SALE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01.              Establishment of the Trust...................................................35
         Section 2.02.              Purchase and Sale of Mortgage Loans..........................................35
         Section 2.03.              Grant of Security Interest...................................................35
         Section 2.04.              Document Delivery Requirements...............................................36
         Section 2.05.              Acceptance by the Trustee....................................................38
         Section 2.06.              Repurchase or Substitution of Mortgage Loans by the Seller, the
                                    Depositor or the Originator..................................................40
         Section 2.07.              Representations, Warranties and Covenants of the Servicer....................45
         Section 2.08.              Representations and Warranties of the Depositor..............................47
         Section 2.09.              Issuance of Certificates.....................................................49

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING

                                                   OF THE TRUST

         Section 3.01.              Administration of the Trust; Servicing of the Mortgage Loans.................50
         Section 3.02.              Subservicing Agreements Between Servicer and Subservicers....................52

         Section 3.03.              Successor Subservicers, Termination of Subservicing Agreement................54
         Section 3.04.              Liability of the Servicer....................................................54
         Section 3.05.              No Contractual Relationship Between Subservicers and Trust
                                    Administrator, Trustee or Certificateholders.................................55

                                        i

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         Section 3.06.              Assumption or Termination of Sub-Servicing Agreements by Trust
                                    Administrator................................................................55
         Section 3.07.              Collection of Certain Mortgage Loan Payments.................................56
         Section 3.08.              Subservicing Accounts........................................................56
         Section 3.09.              Collection of Taxes, Assessments and Similar Items; Servicing
                                    Accounts.....................................................................57
         Section 3.10.              Collection Account and Certificate Account...................................57
         Section 3.11.              Withdrawals from the Collection Account and Certificate Account..............60
         Section 3.12.              Investment of Funds in the Accounts..........................................62
         Section 3.13.              Maintenance of Hazard Insurance and Errors and Omissions and
                                    Fidelity Coverage............................................................63
         Section 3.14.              Enforcement of Due-on-Sale Clauses; Assumption Agreements....................65
         Section 3.15.              Realization upon Defaulted Mortgage Loans....................................66
         Section 3.16.              Trustee and Trust Administrator to Cooperate; Release of Mortgage
                                    Files........................................................................68
         Section 3.17.              Servicing Compensation.......................................................69
         Section 3.18.              Reports to the Trust Administrator and the Trustee; Collection
                                    Account Statements...........................................................70
         Section 3.19.              Statement as to Compliance and Financial Statements..........................70
         Section 3.20.              Independent Public Accountants' Servicing Report.............................71
         Section 3.21.              Access to Certain Documentation..............................................71
         Section 3.22.              Title, Management and Disposition of REO Property............................72
         Section 3.23.              Prepayment Interest Shortfalls...............................................75
         Section 3.24.              [Reserved]...................................................................75
         Section 3.25.              [Reserved]...................................................................75
         Section 3.26.              Certain Procedures Relating to Successor Subservicers and Successor
                                    Servicers....................................................................75
         Section 3.27.              Reports to the Securities and Exchange Commission............................76
         Section 3.28.              Servicing Termination........................................................76
         Section 3.29.              Advance Facility.............................................................77
         Section 3.30.              PMI Policy; Claims Under the PMI Policy......................................77

                                                    ARTICLE IV

                                                   FLOW OF FUNDS

         Section 4.01.              Establishment of Accounts....................................................79
         Section 4.02.              The Certificate Insurance Policy.............................................79
         Section 4.03.              Deposits into, and Transfers Among, the Accounts.............................81
         Section 4.04.              Flow of Funds and Distributions..............................................82
         Section 4.05.              [Reserved]...................................................................84

                                       ii

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         Section 4.06.              Statements to Certificateholders.............................................84
         Section 4.07.              Remittance Reports; Delinquency Advances by the Servicer and
                                    Insurance Claims.............................................................89
         Section 4.08.              Compliance with Withholding Requirements.....................................90

                                                     ARTICLE V

                                                 THE CERTIFICATES

         Section 5.01.              The Certificates.............................................................93
         Section 5.02.              Registration of Transfer and Exchange of Certificates........................93
         Section 5.03.              Mutilated, Destroyed, Lost or Stolen Certificates............................98
         Section 5.04.              Persons Deemed Certificateholders............................................99
         Section 5.05.              Book-Entry Certificates......................................................99
         Section 5.06.              Notices to Depository.......................................................100
         Section 5.07.              Definitive Certificates.....................................................100

                                                    ARTICLE VI

                                          THE DEPOSITOR AND THE SERVICER

         Section 6.01.              Liability of the Depositor and the Servicer.................................102
         Section 6.02.              Merger or Consolidation of the Depositor or the Servicer....................102
         Section 6.03.              Limitation on Liability of the Depositor, the Servicer, any Subservicer
                                    and Others..................................................................102
         Section 6.04.              Limitation on Resignation of the Servicer; No Assignment or
                                    Delegation of Duties by Servicer............................................103
         Section 6.05.              Rights of the Depositor, the Certificateholders and Others in Respect
                                    of the Servicer.............................................................104
         Section 6.06.              Eligibility Requirements for Servicer.......................................105

                                                    ARTICLE VII
                                                      DEFAULT

         Section 7.01.              Servicer Defaults; Certain Matters Affecting the Servicer...................106
         Section 7.02.              Trust Administrator or Trustee to Act; Appointment of Successor.............108
         Section 7.03.              Notification to Mortgagors and Certificateholders...........................110
         Section 7.04.              Additional Remedies of Trustee upon Servicer Defaults.......................110
         Section 7.05.              Waiver of Servicer Defaults.................................................111
         Section 7.06.              Survivability of Servicer Liabilities.......................................111

                                       iii

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                                                   ARTICLE VIII

                                CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

         Section 8.01.              Duties of Trustee and the Trust Administrator...............................112
         Section 8.02.              Certain Matters Affecting the Trustee and the Trust Administrator...........113
         Section 8.03.              Neither Trustee nor Trust Administrator Liable for Certificates or
                                    Mortgage Loans..............................................................115
         Section 8.04.              Trustee and Trust Administrator May Own Certificates........................115
         Section 8.05.              Expenses of Trustee, Trust Administrator and Servicer. .....................115
         Section 8.06.              Trustee and Trust Administrator Eligibility Requirements....................116
         Section 8.07.              Resignation and Removal of the Trustee and the Trust Administrator..........116
         Section 8.08.              Successor Trustee and Trust Administrator...................................118
         Section 8.09.              Merger or Consolidation of Trustee or Trust Administrator...................119
         Section 8.10.              Appointment of Co-Trustee or Separate Trustee...............................119
         Section 8.11.              Trust Administrator Records.................................................120
         Section 8.12.              Appointment of Office or Agency.............................................120
         Section 8.13.              Exercise of Trustee Powers by Certificateholders............................121
         Section 8.14.              Representations and Warranties..............................................121

                                                    ARTICLE IX
                                 CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER

         Section 9.01.              Certain Rights of the Certificate Insurer...................................123
         Section 9.02.              Trustee To Act Solely with Consent of the Certificate Insurer...............123
         Section 9.03.              REMIC I and Accounts Held for Benefit of the Certificate Insurer and
                                    the Certificateholders......................................................124
         Section 9.04.              Effect of Payments by the Certificate Insurer; Subrogation..................124
         Section 9.05.              Notices to the Certificate Insurer..........................................125
         Section 9.06.              Third-Party Beneficiary.....................................................125
         Section 9.07.              Trust Administrator to Hold the Policy......................................125
         Section 9.08.              Certificate Insurer Right to Waive Overcollateralization Requirements.......125

                                                     ARTICLE X

                                                    TERMINATION

         Section 10.01.             Termination.................................................................127
         Section 10.02              Additional Termination Requirements.........................................129

                                       iv

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                                                    ARTICLE XI

                                                 REMIC PROVISIONS

11.01.            REMIC Administration..........................................................................130
11.02.            Prohibited Transactions and Activities........................................................133
11.03.            Servicer, Trust Administrator and Trustee Indemnification.....................................133

                                                    ARTICLE XII

                                             MISCELLANEOUS PROVISIONS

         Section 12.01.             Amendment...................................................................134
         Section 12.02.             Recordation of Agreement; Counterparts......................................135
         Section 12.03.             Limitation on Rights of Certificateholders..................................135
         Section 12.04.             Governing Law; Jurisdiction.................................................136
         Section 12.05.             Notices.....................................................................136
         Section 12.06.             Severability of Provisions..................................................137
         Section 12.07.             Article and Section References..............................................137
         Section 12.08.             Notice to the Rating Agencies...............................................137
         Section 12.09.             Further Assurances..........................................................139
         Section 12.10              Benefits of Agreement.......................................................139
         Section 12.11.             Acts of Certificateholders..................................................139
</TABLE>

EXHIBITS:
---------
Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Forms of Class P Certificate
Exhibit A-3       Form of Class R Certificate
Exhibit B         [Reserved]
Exhibit C         Form of Mortgage Loan Purchase Agreement
Exhibit C-2       Form of Lost Note Affidavit
Exhibit D-1       Request for Release
Exhibit D-2       Request for Release (Mortgage Loans Paid in Full)
Exhibit E-1       Form of Trust Administrator's Initial Certification
Exhibit E-2       Form of Trust Administrator's Final Certification
Exhibit E-3       Form of Trust Administrator's Quarterly Certification
Exhibit F         Form of Liquidation Report
Exhibit G         Forms of Transfer Certification
Exhibit H         Form of Class R Certificate Transferor Affidavit and Transfer
                  Affidavit and Agreement
Exhibit I         Form of Certificate Insurance Policy
Exhibit J         Mortgage Loan Schedule
Exhibit K         Prepayment Charge Schedule

                                        v

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Exhibit L         Projected Principal Balance
Schedule 1        PMI Mortgage Loans

                                       vi

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                  This Pooling and Servicing Agreement is dated as of July 1,
2000 (the "Agreement"), among NEW CENTURY MORTGAGE SECURITIES, INC. as depositor
(the "Depositor"), COUNTRYWIDE HOME LOANS, INC. as servicer (in such capacity,
the "Servicer" or "Countrywide"), FIRSTAR BANK, N.A. as trustee (the "Trustee"),
and U.S. BANK NATIONAL ASSOCIATION as trust administrator (the "Trust
Administrator").

                             PRELIMINARY STATEMENT:

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

                                     REMIC I
                                     -------

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Servicer Prepayment
Charge Payment Amount, the Reserve Fund and the Yield Maintenance Agreement) as
a REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC I." The Class R Certificates will be the sole class of
"residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the
Pass-Through Rate, the initial aggregate Certificate Principal Balance and,
solely for purposes of satisfying Treasury regulation Section 1.860G-
1(a)(4)(iii), the "latest possible maturity date" for each of the Class A
Certificates (as defined herein).

<TABLE>
<CAPTION>
                                                                 Initial Aggregate                Latest Possible
         Designation                Pass-Through Rate      Certificate Principal Balance         Maturity Date(1)
         -----------                -----------------      -----------------------------         ----------------
<S>                                 <C>                    <C>                                   <C>
           Class A                         (2)                      $383,040,000                  August 25, 2030
           Class P                         (3)                              $100                  August 25, 2030
</TABLE>

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

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

(3)     The Class P will not accrue interest.

<PAGE>

                                    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.

                  "Accepted Servicing Procedures": The servicing procedures set
forth in Section 3.01.

                  "Account": Either the Collection Account or the Certificate
Account.

                  "Accrual Period": With respect to any Distribution Date after
the first Distribution Date, the period commencing on the immediately preceding
Distribution Date and ending on the day immediately preceding such Distribution
Date. With respect to the first Distribution Date, the period commencing on the
Closing Date and ending on the day immediately preceding such Distribution Date.

                  "Accrued Certificate Interest": With respect to the Class A
Certificates and each Distribution Date, interest accrued during the related
Accrual Period at the Pass-Through Rate for such Certificate for such
Distribution Date on the Certificate Principal Balance of such Certificate
immediately prior to such Distribution Date. All distributions of interest on
the Class A Certificates will be calculated on the basis of a 360-day year and
the actual number of days in the applicable Accrual Period. The Class P
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest. Accrued Certificate Interest with respect
to each Distribution Date shall be reduced by an amount equal to the portion
allocable to such Certificate pursuant to Section 1.03 hereof of the sum of (a)
the aggregate Prepayment Interest Shortfall, if any, for such Distribution Date
to the extent not covered by payments pursuant to Section 3.23 and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date.

                  "Additional Servicing Compensation": As defined in Section
3.17 hereof.

                  "Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.

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

                                        2

<PAGE>

                  "Administrative Fee": The amount payable to the Trustee on
each Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Administrative Fee
Rate, multiplied by (ii) the Aggregate Loan Balance of the Mortgage Loans and
any REO Properties as of the second preceding Due Date (or, in the case of the
initial Distribution Date, as of the Cut-off Date). The fee payable to the Trust
Administrator for all services rendered (other than those services rendered by
it as custodian to the Trustee, in compensation for which the Trust
Administrator shall be entitled to the Custodial Fee) by it in the exercise and
performance of any of the powers and duties of the Trust Administrator hereunder
will be paid by the Trustee out of the Administrative Fee.

                  "Administrative Fee Rate":  0.0875% per annum.

                  "Advancing Person":  As defined in Section 3.29 hereof.

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

                  "Aggregate Loan Balance": With respect to any date of
determination, the aggregate of the Loan Balances of the Mortgage Loans,
calculated as of such date of determination; provided, however, that the
Aggregate Loan Balance with respect to the Distribution Date on which the
Termination Price is to be paid will be deemed to have been equal to zero as of
the last day of the related Due Period.

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

                  "Annual Loss Percentage": With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate of all Realized Losses for the twelve months ending on the last day of
the preceding month and the denominator of which is the Aggregate Loan Balance
of the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.04 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale or transfer of the Mortgage to
the assignee thereof (or, if such sale or transfer is to the Trustee, then to
the Trustee for the benefit of

                                        3

<PAGE>

Certificateholders), which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.

                  "Available Funds": With respect to any Distribution Date, an
amount equal to (1) the sum of the following amounts (a) the aggregate of the
amounts on deposit in the Collection Account and Certificate Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Certificate Account for such Distribution Date pursuant to
Section 3.22, (c) the aggregate of any amounts deposited in the Certificate
Account by the Servicer in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.23, (d) the aggregate of any Delinquency
Advances made by the Servicer for such Distribution Date pursuant to Section
4.06, (e) the aggregate of any advances made by the Trust Administrator for such
Distribution Date pursuant to Section 7.02(b) and (f) amounts deposited from the
Reserve Fund to the Certificate Account pursuant to Section 4.10 and, reduced
(to not less than zero) by (2) the sum of the following amounts (x) the portion
of the amount described in clause (1)(a) above that represents (i) Monthly
Payments on the Mortgage Loans received from a Mortgagor on or prior to the
Determination Date but due during any Due Period subsequent to the related Due
Period, (ii) Principal Prepayments on the Mortgage Loans received after the
related Prepayment Period (together with any interest payments received with
such Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Servicer, the Trustee, the
Seller, the Originator or any Subservicer pursuant to Section 3.11 or Section
3.12, (v) Stayed Funds, (vi) amounts deposited in the Collection Account or the
Certificate Account in error, (vii) the amount of any Prepayment Charges
collected by the Servicer in connection with the Principal Prepayment of any of
the Mortgage Loans or any Servicer Prepayment Charge Payment Amount and (y)
amounts reimbursable to the Trust Administrator for an advance made pursuant to
Section 7.02(b) which advance the Trust Administrator has determined to be
nonrecoverable from the Stayed Funds in respect of which it was made.

                  "Available Funds Shortfall": With respect to any Distribution
Date, an amount equal to the sum of (a) the amount, if any, by which the
aggregate of the Interest Distribution Amounts for such Distribution Date
exceeds the amount available, pursuant to Section 4.04(a) hereof and before
giving effect to any payment by the Certificate Insurer under the Policy, to pay
the Interest Distribution Amounts for such Distribution Date and (b) the OC
Deficit for such Distribution Date.

                  "Bankruptcy Code": The Bankruptcy Code, as amended (Title 11
to the United States Code).

                  "Basic Principal Distribution Amount": With respect to the
Class A Certificates and any Distribution Date, the excess of (i) the Principal
Remittance Amount for such Distribution Date over (ii) the OC Release Amount, if
any, for such Distribution Date.

                                        4

<PAGE>

                  "BIF":  The Bank Insurance Fund of the FDIC.

                  "Book-Entry Certificates": Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06 hereof). On the Closing
Date, the Offered Certificates shall be Book-Entry Certificates.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.05.

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

                  "Call Option Date": The first Distribution Date on which the
Aggregate Loan Balance as of the end of the immediately preceding Due Period is
less than or equal to 10% of the Cut-off Date Pool Balance.

                  "Certificate": Any Class A Certificate, Class P Certificate or
Class R Certificate.

                  "Certificate Account": The trust account or accounts created
and maintained by the Trust Administrator pursuant to Section 4.01 hereof which
shall be entitled "Certificate Account, U.S. Bank National Association, as Trust
Administrator for Firstar Bank, N.A., as Trustee, in trust for the registered
Certificateholders of New Century Asset Backed Pass-Through Certificates, Series
2000-NCB", and which must be an Eligible Account.

                  "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 a Class R
Certificate for any purpose hereof.

                  "Certificate Insurer": Financial Security Assurance Inc., a
stock insurance company organized and created under the laws of the State of New
York, and any successor thereto.

                  "Certificate Insurer Default": The existence and continuance
of a failure by the Certificate Insurer to make a payment required under the
Policy in accordance with its terms.

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

                  "Certificate Principal Balance": With respect to Class A
Certificates or Class P Certificates and any date of determination, the Original
Certificate Principal Balance reduced by the

                                        5

<PAGE>

sum of all amounts actually distributed in respect of principal on such
Certificates on all prior Distribution Dates.

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

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

                  "Class": Collectively, Certificates which have the same
priority of payment and bear the same class designation and the form of which is
identical except for variation in (i) the Initial Certificate Principal Balance
and (ii) the Percentage Interest evidenced thereby.

                  "Class A Certificates": Any one of the Class A Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed, authenticated and delivered by the Trustee or the Trust
Administrator, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in REMIC
I for purposes of the REMIC Provisions.

                  "Class P Certificates": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed, authenticated and delivered by the Trustee or the Trust
Administrator, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in REMIC
I for purposes of the REMIC Provisions

                  "Class R Certificate": The Class R Certificates, substantially
in the form annexed hereto as Exhibit A-3, executed, authenticated and delivered
by the Trustee or the Trust Administrator, representing the right to
distributions as set forth herein and therein, and evidencing an interest
designated as a "residual interest" in REMIC I for purposes of the REMIC
Provisions.

                  "Closing Date":  July 28, 2000.

                  "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 pursuant to Section 3.10(a) hereof, which shall be entitled
"Collection Account, U.S. Bank National Association, as Trust Administrator for
Firstar Bank, N.A., as Trustee, in trust for the registered Certificateholders
of New Century Home Equity Loan Certificates, Series 2000-NCB", and which must
be an Eligible Account.

                  "Corporate Trust Office": The principal corporate trust office
of the Trust Administrator or the Trustee at which at any particular time its
corporate trust business with respect to the Certificates shall be administered,
which office (a) in the case of the Trust Administrator is located at 180 East
Fifth Street, St. Paul, Minnesota 55101, Attention: Structured Finance/New
Century 2000-NCB, or at such other address as the Trust Administrator may
designate from time to time by notice to the Certificateholders, the Depositor,
the Servicer, the Trustee and the Certificate

                                        6

<PAGE>

Insurer and (b) in the case of the Trustee is located at 1555 N. Rivercenter
Drive, Milwaukee, Wisconsin 53212, or such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor,
the Servicer, the Trust Administrator and the Certificate Insurer.

                  "Cram Down Loss": With respect to a Mortgage Loan, the amount
of reduction of such Mortgage Loan's Loan Balance resulting from an order issued
by a court of appropriate jurisdiction in an insolvency proceeding. A "Cram Down
Loss" shall be deemed to have occurred on the date of issuance of such order.

                  "Cumulative Loss Percentage": As of any Distribution Date, the
fraction, expressed as a percentage, whose numerator is the aggregate of all
Realized Losses during the period beginning with the Startup Date and ending on
the last day of the calendar month preceding such Distribution Date and whose
denominator is the Cut-off Date Pool Balance.

                  "Custodial Fee": The fee paid by the Depositor to the Trust
Administrator for the performance of its obligations as custodian on behalf of
the Trustee under this Agreement, which fee shall be set forth in a separate
agreement between the Depositor and the Trust Administrator and which shall not
be an obligation of the Trust.

                  "Cut-off Date": With respect to any Mortgage Loan other than a
Qualified Substitute Mortgage Loan, the later of (i) the date of origination of
such Mortgage Loan or (ii) the close of business on July 1, 2000. With respect
to any Qualified Substitute Mortgage Loan, the date designated as such on the
Mortgage Loan Schedule (as amended).

                  "Cut-off Date Loan Balance": As to any Mortgage Loan, the
outstanding, unpaid principal balance thereof as of the close of business on the
applicable Cut-off Date after giving effect to all scheduled principal payments
due, whether or not received, on or prior to the Cut-off Date.

                  "Cut-off Date Pool Balance": The aggregate of the Cut-off Date
Loan Balances of the Mortgage Loans which is $384,965,204.91.

                  "Definitive Certificates":  As defined in Section 5.05 hereof.

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Qualified Substitute Mortgage Loans.

                  "Delinquency Advance": As to any Mortgage Loan or REO Property
and any Distribution Date, the sum of (i) the aggregate amount of Monthly
Payments (with each interest portion thereof net of the related Servicing Fee),
due on the related Due Date in respect of the Mortgage Loans, which Monthly
Payments were delinquent as of the close of business on the related
Determination Date and (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the

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<PAGE>

REO Imputed Interest on such REO Property for the most recently ended calendar
month, over the net income from such REO Property transferred to the Certificate
Account for distribution on such Distribution Date.

                  "Delinquency Percentage": With respect to any Distribution
Date, the fraction, expressed as a percentage, the numerator of which is the
Aggregate Loan Balance of all Mortgage Loans that are 60 or more days
Delinquent, in foreclosure or relating to REO Properties as of the close of
business on the last day of the preceding calendar month, and the denominator of
which is the Aggregate Loan Balance of the Mortgage Loans as of the close of
business on the last day of the preceding calendar month.

                  "Delinquency Statistic Date":  June 30, 2000.

                  "Delinquent": A Mortgage Loan is "Delinquent" if any Monthly
Payment due thereon is not made by the close of business on the day such Monthly
Payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such
Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due, or, if there is no such corresponding day (E.G., as
when a 30- day month follows a 31-day month in which a payment was due on the
31st day of such month) then on the last day of such immediately succeeding
month, and similarly for "60 days Delinquent," "90 days Delinquent" and so on.

                  "Depositor": New Century Mortgage Securities, Inc., 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 Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.

                  "Depository Agreement": With respect to any Book-Entry
Certificates, the agreement among the Depositor, the Trust Administrator and the
initial Depository, to be dated on or about July 28, 2000.

                  "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 close of business on the 15th day of the calendar month in which such
Distribution Date occurs or, if such 15th day is not a Business Day, the close
of business on the Business Day immediately preceding such 15th day.

                                        8

<PAGE>

                  "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
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Servicer on behalf of the
Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.

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

                  "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 August 2000.

                  "Due Date": With respect to each Mortgage Loan, the day of the
calendar month on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any days of grace.

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

                  "Eligible Account": Either (A) a segregated account or
accounts maintained with an institution whose deposits are insured by the BIF or
the SAIF of the FDIC, the unsecured and uncollateralized long-term debt
obligations of which shall be rated "A" or better by Fitch, "A" or better by S&P
and "A2" or better by Moody's or the short-term debt obligations of which shall
be rated "F-1+" by Fitch, "P-1" by Moody's and in one of S&P's two highest
short-term rating categories by S&P, and which is any of (i) a federal savings
association duly organized, validly

                                        9

<PAGE>

existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company and (v) approved in
writing by the Certificate Insurer or (B) a segregated trust account maintained
with the trust department of a federal or state chartered depository institution
or trust company, having capital and surplus of not less than $100,000,000,
acting in its fiduciary capacity. Any Eligible Account maintained by the Trustee
or the Trust Administrator shall comply with the provisions of clause (B)
hereof.

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

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

                  "Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (x) the General Excess Available Amount for
such Distribution Date and (y) the OC Deficiency Amount for such Distribution
Date.

                  "Fannie Mae": Federal National Mortgage Association or any
successor thereto.

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

                  "Final Recovery Determination": A determination by the
Servicer with respect to any defaulted Mortgage Loan or REO Property (other than
a Mortgage Loan purchased or replaced by the Seller or the Servicer pursuant to
Section 2.06 or 3.15(c) hereof) that all Net Recovery Proceeds and other
payments or recoveries that the Servicer, in its reasonable judgment, expects to
be finally recoverable have been recovered or that the Servicer, in its
reasonable judgment as evidenced by an Officers' Certificate which accompanies
the related Liquidation Report, believes the cost of obtaining any additional
recoveries would exceed the amount of such recoveries. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination.

                  "Fitch": Fitch, Inc., a corporation organized and existing
under the laws of the State of Delaware, and its successors, and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "Fitch" shall be deemed to refer to any other "nationally
recognized rating organization," as set forth on the most current list of such
organizations released by the Securities and Exchange Commission and designated
by the Certificate Insurer, notice of which designation shall be given to the
Trustee, the Trust Administrator and the Servicer by the Certificate Insurer.

                  "Fixed Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
fixed.

                  "Freddie Mac": Federal Home Loan Mortgage Corporation or any
successor thereto.

                                       10

<PAGE>

                  "General Excess Available Amount": With respect to the Class A
Certificates and each Distribution Date, the amount, if any, by which the
Available Funds for such Distribution Date exceeds the aggregate amount
distributed on such Distribution Date pursuant to subclauses (i) through (vi) of
Section 4.04(a).

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

                  "Independent": When used with respect to any specified Person,
any such Person who (i) is in fact independent of the Depositor, the Servicer,
the Subservicer and the Underwriters, (ii) does not have any direct financial
interest or any material indirect financial interest in the Depositor, the
Servicer, the Underwriters, the Subservicer or in any affiliate of any of them,
and (iii) is not connected with the Depositor, the Servicer, the Subservicer or
the Underwriters as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.

                  "Independent Contractor": Either (i) any Person (other than
the Servicer and the Depositor) that would be an "independent contractor" with
respect to the Trust within the meaning of Section 856(d)(3) of the Code if the
Trust 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 does not receive or derive any income from such Person and
provided that the relationship between such Person and the Trust 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 Servicer and the Depositor), if the
Trustee, the Trust Administrator and the Certificateholders have each received
an Opinion of Counsel to the effect that the taking of any action in respect of
any REO Property by such Person, subject to any conditions therein specified,
that is otherwise herein contemplated to be taken by an Independent Contractor
will not cause such REO Property to cease to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code (determined without regard
to the exception applicable for purposes of Section 860D(a) of the Code), or
cause any income realized in respect of such REO Property to fail to qualify as
Rents from Real Property.

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

                  "Initial Certificate Principal Balance": With respect to the
Class A Certificates, the amount so indicated on the face thereof.

                                       11

<PAGE>

                  "Insurance Agreement": The Insurance and Indemnity Agreement
dated as of July 28, 2000 among the Certificate Insurer, the Depositor, the
Seller and New Century.

                  "Insurance Premium": With respect to any Distribution Date the
product of (x) the aggregate Certificate Principal Balance of the Class A
Certificates, after taking into account all distributions to be made on such
Distribution Date, and (y) one-twelfth of the Premium Rate for such Class A
Certificates.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.

                  "Insured Distribution Amount": With respect to any
Distribution Date, the sum of (i) the aggregate of the Interest Distribution
Amounts and (ii) the OC Deficit, if any for such Distribution Date.

                  "Insured Payment": As of any Distribution Date, any Available
Funds Shortfall.

                  "Interest Determination Date": With respect to the Class A
Certificates and each Accrual Period after the initial Accrual Period, the
second LIBOR Business Day preceding the commencement of such Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and the Class A Certificates, the Accrued Certificate
Interest, plus any Interest Distribution Amount remaining unpaid from the
previous Distribution Date.

                  "Interest Remittance Amount": With respect to any Distribution
Date and related Servicer Remittance Date, the aggregate amount of all scheduled
interest payments due on the Mortgage Loans during the related Due Period, which
were either collected or advanced, net of the Servicing Fee thereon, plus the
aggregate amount of the Prepayment Interest Shortfalls resulting from Principal
Prepayments during the related Prepayment Period to the extent required to be
paid by the Servicer pursuant to Section 3.23.

                  "Late Collection": With respect to any Mortgage Loan and the
Monthly Payment due thereon during any Due Period, all amounts received
subsequent to the Determination Date immediately following such Due Period,
whether as a late payment of such Monthly Payment or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent the late payment or
collection of such Monthly Payment.

                  "Late Payment Rate": For any date of determination, the lesser
of (i) the greater of (a) the highest rate of interest on any outstanding Class
of Certificates, and (b) the rate of interest set forth in the Eastern Edition
of THE WALL STREET JOURNAL in its "Money Rates" section as the "prime

                                       12

<PAGE>

rate" on the first Business Day preceding such date of determination that such
rate is so published plus 2% and (ii) the maximum rate permissible under any
applicable law limiting interest rates. The Late Payment Rate shall be computed
on the basis of a year of 360 days calculating the actual number of days
elapsed.

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

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds) received by the Servicer or Subservicer 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
Loan through a trustee's sale, foreclosure sale, REO Disposition or otherwise.

                  "Liquidation Report": The report in the form of Exhibit F
annexed hereto delivered by the Servicer pursuant to Section 3.15(e) hereof.

                  "Loan Balance": With respect to each Mortgage Loan and any
date of determination, the Cut-off Date Loan Balance of such Mortgage Loan minus
all payments of scheduled principal due on or prior to such date of
determination, to the extent received or advanced, and all payments of
unscheduled principal received prior to the month of such date of determination,
minus the aggregate amount of any Cram Down Losses relating to such principal
balance and allocated thereto prior to such date; provided, however, that the
Loan Balance for any Mortgage Loan for which a Final Recovery Determination has
been made shall be zero as of the end of the month in which such Final Recovery
Determination was made, and at all times thereafter.

                  "Loan-to-Value Ratio": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan Balance
of the related Mortgage Loan on the date of origination of such Mortgage Loan or
the Loan Balance of such Mortgage Loan at the time of purchase of such Mortgage
Loan by the Depositor, and the denominator of which is the Value of the related
Mortgaged Property.

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

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

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

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor from time

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<PAGE>

to time under the related Mortgage Note, determined after giving effect to any
reduction in the amount of interest collectible from the related Mortgagor as a
result of the application of the Civil Relief Act.

                  "Moody's": Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
successors, and, if such corporation shall for any reason no longer perform the
functions of a securities rating agency, "Moody's" shall be deemed to refer to
any other "nationally recognized rating organization," as set forth on the most
current list of such organizations released by the Securities and Exchange
Commission and designated by the Certificate Insurer, notice of which
designation shall be given to the Trustee, the Trust Administrator and the
Servicer by the Certificate Insurer.

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

                  "Mortgage File": The mortgage documents listed in Section 2.04
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.

                  "Mortgage Loan": Each mortgage loan sold, transferred and
assigned to the Trustee and delivered to the Trust Administrator pursuant to
Section 2.02 and Section 2.06 hereof as from time to time is held as a part of
REMIC I, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule. Any mortgage loan which, although intended by the parties hereto to
have been, and which purportedly was, sold to the Trustee by the Depositor (as
indicated by the Mortgage Loan Schedule), that in fact was not transferred and
assigned to the Trustee and delivered to the Trust Administrator for any reason
whatsoever, shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement. As applicable, "Mortgage Loan" shall be deemed to refer to
the related REO Property.

                  "Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated July 27, 2000, among the Seller, the Originator and the
Depositor, a form of which is attached hereto as Exhibit C.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in the Trust on such date, separately identifying the Fixed Rate
and Adjustable Rate Mortgage Loans, attached hereto as Exhibit J (as such list
may be amended from time to time), which list shall set forth the following
information with respect to each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgagor's name;

                  (iii)    the street address of the Mortgaged Property,
                           including the city, state and five-digit ZIP code;

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<PAGE>

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

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

                  (vi)     the occupancy status;

                  (vii)    the original term to stated maturity;

                  (viii)   as of the Cut-off Date, the remaining number of
                           months to stated maturity;

                  (ix)     the original principal balance of the Mortgage Loan;

                  (x)      as of the Delinquency Statistic Date, the paid
                           through date;

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

                  (xii)    the Cut-off Date Loan Balance;

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

                  (xiv)    the stated maturity date;

                  (xv)     with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the Adjustment Date;

                  (xvi)    with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the Gross Margin

                  (xvii)   with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the Maximum Mortgage
                           Rate;

                  (xviii)  with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the Minimum Mortgage
                           Rate;

                  (xix)    with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the Periodic Rate Cap
                           and the maximum first Adjustment Date Mortgage Rate
                           adjustment;

                  (xx)     with respect to each Mortgage Loan that is an
                           Adjustable Rate Mortgage Loan, the first Adjustment
                           Date immediately following the Cut-off Date;

                  (xxi)    with respect to each Mortgage Loan that is a Fixed
                           Rate Mortgage Loan, the Mortgage Rate

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<PAGE>

                  (xxii)   the Due Date;

                  (xxiii)  the Value, if available;

                  (xxiv)   the first payment date;

                  (xxv)    the purpose of the Mortgage Loan, if available;

                  (xxvi)   the Originator's loan grade;

                  (xxvii)  the type and term of the related Prepayment Charge.

Such schedule shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedule may be in the form of more than one list, which list or lists may have
one or more attachments, collectively setting forth all of the information
required. Such list of information contained in a Mortgage Loan Schedule shall
also be provided to the Trustee and the Trust Administrator in a
computer-readable format on a tape or disk. The Mortgage Loan Schedule shall be
amended from time to time by the Trust Administrator in accordance with Sections
2.06 and 2.12 hereof. With respect to any Qualified Substitute Mortgage Loan,
the amounts described in clauses (viii) and (xii), shall also be set forth as of
the date of substitution.

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

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

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan (subject to any
reduction in such rate resulting from an order issued by a court of appropriate
jurisdiction in an insolvency proceeding), as provided in the related Mortgage
Note and as shown or described on the Mortgage Loan Schedule, which rate in the
case of the Mortgage Loans that are Adjustable Rate Mortgage Loans (A) as of any
date of determination until the first Adjustment Date following the Cut-off Date
shall be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate
in effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Mortgage Loan on
any Adjustment Date shall never be more than the lesser of (i) the sum of the
Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage Rate,
and shall never be less than the greater of (i) the Mortgage Rate in effect
immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and
(ii) the related Minimum Mortgage Rate.

                                       16

<PAGE>

                  "Mortgagor":  The obligor or obligors on a Mortgage Note.

                  "Net Mortgage Rate": With respect to each Mortgage Loan, a
rate of interest per annum equal to the Mortgage Rate minus the Servicing Fee
Rate.

                  "Net Recovery Proceeds": The amount of any gross Insurance
Proceeds or Liquidation Proceeds received with respect to any Mortgage Loan
minus the sum of (i) all unreimbursed Servicing Advances and Delinquency
Advances, if any, with respect to such Mortgage Loan, (ii) without duplication,
all accrued and unpaid Servicing Fees, if any, and (iii) without duplication,
liquidation expenses.

                  "Net WAC Cap": With respect to any Distribution Date, an
amount equal to (A) the average of the Mortgage Rates as of the first day of the
month preceding the month of such Distribution Date (or, in the case of the
first Distribution Date, the Closing Date), weighted on the basis of the Loan
Balances as of the first day of the related Prepayment Period (after application
of scheduled payments due on such day whether or not received), MINUS (B) the
sum of (i) the Servicing Fee Rate, (ii) the Administrative Fee Rate, (iii) the
product of (x) the Premium Rate and (y) a fraction, the numerator of which is
the aggregate Certificate Principal Balance of the Certificates immediately
prior to such Distribution Date and the denominator of which is the aggregate
outstanding Loan Balance of the Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date (after application of scheduled
payments due on such day whether or not received), (iv) the fraction, expressed
as a percentage, the numerator of which is 12 times the amount of the premium
due on the PMI Policy in respect of Mortgage Loans (including any premium tax
payable under Section 4.04) and the denominator of which is the aggregate
outstanding Loan Balance of the Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date (after application of scheduled
payments due on such day, whether or not received and (v) 0.50%.

         Notwithstanding the foregoing, the Net WAC Cap for purposes of
calculating the Pass- Through Rate on the Class A Certificates for any
Distribution Date is an amount equal to (i) the Net WAC Cap calculated as
provided above, multiplied by (ii) a fraction, the numerator of which is 30 and
the denominator of which is the actual number of days elapsed in the related
Accrual Period.

                  "New Century": New Century Mortgage Corporation, a corporation
organized under the laws of the State of California, or its successor in
interest, in its capacity as the Originator of the Mortgage Loans.

                  "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 Delinquency Advance": Any Delinquency Advance
(x) previously made and not previously reimbursed to the Servicer or (y)
proposed to be made in respect of a Mortgage Loan or REO Property that the
Servicer determines will not, or, in the case of a proposed

                                       17

<PAGE>

Delinquency Advance, would not, be recovered from Late Collections, Insurance
Proceeds, Liquidation Proceeds or purchase or repurchase proceeds on such
Mortgage Loan or REO Property.

                  "Nonrecoverable Servicing Advance": Any Servicing Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed to
be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Servicing Advance, would not,
be recovered from Late Collections, Insurance Proceeds, Liquidation Proceeds,
purchase or repurchase proceeds on such Mortgage Loan or REO Property.

                  "Notice":  As defined in Section 4.02.

                  "OC Deficiency Amount": With respect to any Distribution Date,
the amount, if any, by which the OC Target Amount exceeds Overcollateralized
Amount on such Distribution Date (after giving effect to distributions in
respect of the Basic Principal Distribution Amount on such Distribution Date.

                  "OC Deficit": With respect to any Distribution Date, the
amount by which (a) the aggregate Certificate Principal Balance of the Offered
Certificates (after giving effect to all distributions to be made thereon on
such Distribution Date other than any portion thereof consisting of an Insured
Payment in respect of an OC Deficit) exceeds (b) the sum of (i) the Aggregate
Loan Balance on the last day of the immediately preceding Due Period and (ii)
any amounts on deposit in the Reserve Fund in respect of the Yield Maintenance
Agreement.

                  "OC Release Amount": With respect to any Distribution Date,
the lesser of (x) the Principal Remittance Amount for such Distribution Date and
(y) the excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on such Distribution Date over (ii) the OC Target
Amount for such Distribution Date.

                  "OC Stepdown Date":  The Distribution Date in January 2003.

                  "OC Target Amount": With respect to any Distribution Date, an
amount equal to 3.50% of the Cut-off Date Pool Balance, plus the Spread Squeeze
Amount, if any, subject to the following:

                  (A) if the Step Up Trigger has occurred, the OC Target Amount
                  for such Distribution Date will be the greater of the amount
                  calculated as set forth above and the aggregate of the Loan
                  Balances of all Mortgage Loans 60 days or more Delinquent and

                  (B) if the Step Down Trigger has occurred, the OC Target
                  Amount for such Distribution Date will be an amount equal to
                  the product of

                           (I) the greater of (1) the greater of (x) 0.50% of
                           the Cut-off Date Pool Balance and (y) the aggregate
                           Loan Balance, as of such Distribution Date, of the
                           three

                                       18

<PAGE>

                           largest outstanding Mortgage Loans and (2) the lesser
                           of (x) the amount calculated pursuant to clause (i)
                           above and (y) the Stepped Down Required
                           Overcollateralized Amount for such Distribution Date.

                  "Offered Certificates":  The Class A Certificates.

                  "Officers' Certificate": With respect to the Depositor or the
Servicer, a certificate signed by the Chairman of the Board, the President or a
Vice President (however denominated), and by the Treasurer, the Secretary, an
assistant treasurer or an assistant secretary (however denominated) of the
Depositor or the Servicer, as the case may be.

                  "One-Month LIBOR": With respect to any Distribution Date after
the first Distribution Date and the related Accrual Period for the Class A
Certificates, will equal the interbank offered rate for one-month United States
dollar deposits in the London market as quoted on Telerate Page 3750 as of 11:00
A.M., London time, on the related Interest Determination Date. "Telerate Page
3750" means the display designated as page 3750 on the Telerate Service (or such
other page as may replace page 3750 on that service for the purpose of
displaying London interbank offered rates of major banks). If such rate does not
appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the Trust
Administrator after consultation with the Depositor), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. dollars are offered by the reference
banks (which shall be three major banks that are engaged in transactions in the
London interbank market, selected by the Trust Administrator after consultation
with the Depositor) as of 11:00 A.M., London time, on the applicable Interest
Determination Date to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the Class A Certificates. The Trust Administrator will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations. If on such date fewer than two quotations are
provided, the rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Trust Administrator after
consultation with the Depositor, as of 11:00 A.M., New York City time, on such
date for loans in U.S. dollars to leading European banks for a period of one
month in amounts approximately equal to the aggregate Certificate Principal
Balance of the Class A Certificates. If no such quotations can be obtained, the
rate will be equal to One-Month LIBOR for the prior Distribution Date; provided
that if One-Month LIBOR for an Accrual Period would be based on One-Month LIBOR
for the previous Accrual Period for three consecutive Accrual Periods, then the
Trust Administrator shall select a comparable alternative index (over which the
Trust Administrator has no control) used for determining one-month Eurodollar
lending rates that is calculated and published (or otherwise made available) by
an independent third party.

                  With respect to the first Distribution Date and the related
Accrual Period for the Class A Certificates, 6.62% per annum.

                                       19

<PAGE>

                  "Opinion of Counsel": A written opinion of counsel, who
(unless such Opinion of Counsel is required to be an Independent Opinion of
Counsel) may be counsel for the Depositor, the Trustee, the Trust Administrator,
a Certificateholder, the Servicer, the Seller, the Originator or the Certificate
Insurer (including, except as otherwise expressly provided in this Agreement,
the in- house general counsel for the Depositor, the Trustee, the Trust
Administrator, a Certificateholder, the Servicer, the Seller, the Originator or
the Certificate Insurer, as the case may be), and who shall be reasonably
acceptable to the parties to which such opinion is addressed; except that any
opinion of counsel relating to (a) qualification of REMIC I as a REMIC or
compliance with the REMIC Provisions must be an opinion of counsel who is a tax
counsel experienced in REMIC matters, and (b) the qualification of any account
required to be maintained pursuant to this Agreement as an Eligible Account or
the resignation of the Servicer pursuant to 6.04 hereof must be delivered by an
Independent counsel who is counsel experienced in federal income tax matters.

                  "Order":  As defined in Section 4.02(e).

                  "Original Certificate Principal Balance": With respect to the
Class A Certificates, $383,040,000..

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

                  "OTS":  The Office of Thrift Supervision or any successor.

                  "Overcollateralized Amount": For any Distribution Date, the
amount (which may be negative) by which (i) the Pool Balance on the last day of
the immediately preceding Due Period exceeds (ii) the aggregate of the
Certificate Principal Balances of the Class A Certificates and the Class P
Certificates as of such Distribution Date after giving effect to distributions
of the Basic Principal Distribution Amount on such Distribution Date.

                  "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 any Distribution Date on
or before the Call Option Date, the rate per annum equal to the lesser of (a)
One-Month LIBOR plus 0.28% and (b) the Net WAC Cap. With respect any
Distribution Date after the Call Option Date, a rate per annum equal to the
lesser of (a) One-Month LIBOR plus 0.56% and (b) the Net WAC Cap.

                  "Percentage Interest": With respect to any Certificate (other
than a Class R Certificate), a fraction, expressed as a percentage, the
numerator of which is the Initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the Original Certificate
Principal Balance of the related Class. With respect to a Class R 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 the Class R Certificates totals 100%.

                                       20

<PAGE>

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

                  "Permitted Investments": As used herein, Permitted Investments
shall include the following:

         (i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the 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,
Federal Housing Administration debentures, Freddie Mac senior debt obligations,
and Fannie Mae senior debt obligations, but excluding any of such securities
whose terms do not provide for payment of a fixed dollar amount upon maturity or
call for redemption;

         (ii) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (in each case having original maturities of not more
than 365 days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition thereof
have been rated "F-1+" by Fitch, if rated by Fitch, "A-1+" by S&P and "Prime-1"
or better by Moody's;

         (iii) deposits of any bank or savings association which has combined
capital, surplus and undivided profits of at least $100,000,000 which deposits
are held up to the applicable limits insured by the BIF or the SAIF of the FDIC
and a rating, with respect to its long-term, unsecured debt obligations, of "A"
or better by Fitch, if rated by Fitch, "A" or better by S&P and "A2" or better
by Moody's;

         (iv) commercial paper (having original maturities of not more than 180
days) rated "F-1+" by Fitch, if rated by Fitch, "A-1+" by S&P and "Prime-1" or
better by Moody's;

         (v) investments in money market funds rated "AAA" by Fitch, if rated by
Fitch, "AAAm" or "AAAm-G" by S&P and "Aaa" by Moody's;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to 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; and
provided, further, that no instrument described hereunder may be purchased at a
price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity. Permitted Investments
shall mature not later than the Business Day prior to the earliest date on which
such monies may be needed to make payments.

                                       21

<PAGE>

                  "Permitted Transferee": Any United States Person other than a
Disqualified Organization or an "electing large partnership" as defined in
Section 775 of the Code.

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

                  "PMI Insurer": Mortgage Guaranty Insurance Corporation, a
monoline private insurance company organized and created under the laws of the
State of Wisconsin, or its successors in interest.

                  "PMI Mortgage Loans": The list of Mortgage Loans insured by
the PMI Insurer attached hereto as Schedule 1.

                  "PMI Policy": Collectively, the Primary Mortgage Insurance
Policy No. 48-460-4- 0520 with respect to the PMI Loans listed on Schedule 1 of
the Mortgage Loan Purchase Agreement and the binder issued with respect the PMI
Loans listed on Schedule 2 of the Mortgage Loan Purchase Agreement and all
endorsements thereto dated the Closing Date, issued by the PMI Insurer.

                  "Policy": The Financial Guaranty Insurance Policy No. 50966-N
and all endorsements thereto, dated the Closing Date, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Offered
Certificates, in the form attached hereto as Exhibit I.

                  "Policy Payments Account": As defined in Section 4.02(b)
hereof.

                  "Pool Balance": As of any date of determination, the aggregate
of the Loan Balances as of such date.

                  "Preference Amount": Any amount previously distributed to the
Offered Certificates that is avoided as a preference pursuant to a final,
non-appealable order of a court of competent jurisdiction under applicable
bankruptcy, insolvency, receivership or similar law and that has been recovered,
or is sought to be recovered from the related Certificateholder by the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, as the case may be.

                  "Premium Letter": The side letter among the Certificate
Insurer, the Depositor and New Century, dated the Closing Date.

                  "Premium Rate": For each class of Class A Certificates, the
rate set forth in the Premium Letter, plus the rate at which any Premium
Supplement (as defined in the Insurance Agreement) is due.

                  "Prepayment Assumption": As defined in the Prospectus
Supplement.

                                       22

<PAGE>

                  "Prepayment Charge": With respect to any Prepayment Period,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note.

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

                (i)        the Mortgage Loan identifying number;

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

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

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

                (v)        the term of the related Mortgage Loan;

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

               (vii)       the term of the Prepayment Charge.

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

                  "Prepayment Interest Shortfall": With respect to any Servicer
Remittance Date, for each Mortgage Loan that was the subject during the
preceding calendar month of a Principal Prepayment, an amount equal to the
excess, if any, of (i) a full month's interest on the amount of such Principal
Prepayment at a rate per annum equal to the Mortgage Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act) minus the Servicing Fee Rate over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment
less the Servicing Fee for such Mortgage Loan in such month.

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

                  "Principal Distribution Amount": With respect to the Class A
Certificates and any Distribution Date, the sum of (i) the Basic Principal
Distribution Amount and (ii) the Extra Principal Distribution Amount.

                                       23

<PAGE>

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

                  "Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) each scheduled payment of principal collected
or advanced on the related Mortgage Loans by the Servicer that were due during
the related Due Period, (ii) the principal portion of all partial and full
principal prepayments of such Mortgage Loans applied by the Servicer during the
related Prepayment Period, (iii) the principal portion of all related Net
Recovery Proceeds received during such Prepayment Period, (iv) that portion of
the Purchase Price, representing principal of any repurchased Mortgage Loan,
deposited to the Collection Account during such Prepayment Period, (v) the
principal portion of any related Substitution Shortfall Amount deposited in the
Collection Account during such Prepayment Period, and (vi) on the Distribution
Date on which the Trust is to be terminated pursuant to Section 10.01, that
portion of the Termination Price, in respect of principal.

                  "Projected Principal Balance": The amount set forth on Exhibit
L hereto.

                  "Prospectus Supplement": That certain Prospectus Supplement
dated July 27, 2000 relating to the public offering of the Class A Certificates.

                  "Purchase Price": With respect to any Mortgage Loan required
to be purchased pursuant to Section 2.06 hereof or Section 3.15(c) hereof and as
confirmed by an Officers' Certificate, an amount equal to the sum, without
duplication, of (i) 100% of the Loan Balance as of the end of the previous Due
Period (or, if such purchase occurs on the first day of any calendar month, as
of the end of such day), (ii) any unreimbursed Servicing Advances or Delinquency
Advances (and any previously reimbursed Non-Recoverable Advances) allocable to
such Mortgage Loan, (iii) interest from the date interest was last paid by the
Mortgagor through the day before the Due Date in the Due Period relating to the
Distribution Date in which the Purchase Price will be remitted at a rate per
annum equal to the applicable Mortgage Rate, to the extent such amounts are not
already counted in (ii), (iv) in the event the Mortgage Loan is required to be
purchased pursuant to Section 2.06 hereof, expenses reasonably incurred or to be
incurred by the Servicer, the Trust Administrator or the Trustee in respect of
the breach or defect giving rise to the purchase obligation, including any
reasonable expenses arising out of the enforcement of the purchase obligation
and (v) the principal portion of any scheduled monthly payment which was due
during any previous Due Period for which a Delinquency Advance was not made.

                  "Purchaser":  New Century Mortgage Securities, Inc.

                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
or the Mortgage Loan Purchase Agreement which must, on the date of such
substitution, (i) have an outstanding Loan Balance (when taken

                                       24

<PAGE>

together with any other Qualified Substitute Mortgage Loan substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
Loan Balance of the Deleted Mortgage Loan or Loans as of the date of
substitution, (ii) have a Mortgage Rate not less than (and not more than one
percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) in the case of any Mortgage Loan that is an Adjustable Rate Mortgage Loan,
have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the
Deleted Mortgage Loan, (iv) in the case of any Mortgage Loan that is an
Adjustable Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) in the case of any
Mortgage Loan that is an Adjustable Rate Mortgage Loan, have a Gross Margin
equal to the Gross Margin of the Deleted Mortgage Loan, (vi) in the case of any
Mortgage Loan that is an Adjustable Rate Mortgage Loan, have a next Adjustment
Date not more than two months later than the next Adjustment Date on the Deleted
Mortgage Loan, (vii) have a remaining term to maturity not more than two years
greater than nor more than two years less than that of the Deleted Mortgage Loan
(and in any event, not later than July 2030, (viii) have a Loan-to-Value Ratio
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan,
(ix) satisfy the criteria set forth from time to time in the definition of
"qualified replacement mortgage" at Section 860G(a)(4) of the Code, (x) have the
same lien priority as the Deleted Mortgage Loan, (xi) comply as of the date of
substitution with each representation and warranty set forth in Section
3.01(i)(q) and 3.01(ii)(l) of the Mortgage Loan Purchase Agreement (xii) have
the same or better property type (determined in accordance with the definition
of Residential Dwelling herein) as the Deleted Mortgage Loan, (xiii) have the
same or better occupancy status, (xiv) be of the same or of a better credit
quality (determined in accordance with the New Century's credit underwriting
guidelines) as the Mortgage Loan being replaced, (xv) with respect to any
Mortgage Loan, have a fixed Mortgage Rate and (xvi) be covered by the PMI Policy
if the Deleted Mortgage Loan was covered by the PMI Policy. In the event that
one or more mortgage loans are proposed to be substituted for one or more
Deleted Mortgage Loans, the Certificate Insurer may allow the tests set forth in
clauses (i), (ii), (vii) and (viii) above to be met on a weighted average basis
or other aggregate basis (based on the mortgage loans substituted in any one Due
Period) acceptable to the Certificate Insurer provided that any such
substitution shall not adversely affect the status of REMIC I as a REMIC.

                  "Rating Agency":  Each of Fitch, S&P and Moody's.

                  "Realized Loss": As to any Mortgage Loan on which a Final
Recovery Determination has been made, the amount, if any, by which the Loan
Balance of such Mortgage Loan as of the end of the previous Due Period (or, if
such Final Recovery Determination is made on the first day of any calendar
month, as of the end of such day) exceeds the Net Recovery Proceeds allocable to
such Loan Balance for such Mortgage Loan.

                  "Record Date": With respect to each Distribution Date and the
Class A Certificates, the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs. Notwithstanding the foregoing,
with respect to each Distribution Date for so long as the Class A Certificates
are Book-Entry Certificates, the Business Day immediately preceding such
Distribution Date.

                                       25

<PAGE>

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

                  "Reimbursement Amount": As of any Distribution Date, the sum
of (x) (i) the aggregate of all Insured Payments previously received by the
Trust Administrator and not previously repaid to the Certificate Insurer
pursuant to pursuant to Section 4.04(a)(I)(v) or (II)(v) hereof plus (ii)
interest accrued on each Insured Payment not previously repaid calculated at a
rate equal to the Late Payment Rate from the date the Trust Administrator
received such Insured Payment, (y) (i) the amount of any Insurance Premium not
paid on the date due and (ii) interest on such amount at the Late Payment Rate
from the date such Insurance Premium was due to be paid and (z) (i) the amount
of any amounts owing and unpaid under the Insurance Agreement plus (ii) interest
on such amount from the date such amount became due at a rate equal to the Late
Payment Rate. The Certificate Insurer shall notify the Trustee, the Trust
Administrator and the Depositor of the amount of any Reimbursement Amount.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction, resulting from the
application of the Civil Relief Act, in the amount of interest collectible on
such Mortgage Loan for the interest accrual period for such Mortgage Loan that
ended in the related Due Period.

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

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

                  "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

                                       26

<PAGE>

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.

                  "Remittance Report": A report prepared by the Servicer
pursuant to Section 4.07(a) hereof.

                  "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 receipt by the Servicer of all
Liquidation Proceeds, Insurance Proceeds and other payments or recoveries
(including proceeds of a final sale) which the Servicer expects to be finally
recoverable from the sale or other disposition of the related REO Property.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Loan Balance of
such REO Property as of the close of business on the Due Date in such calendar
month.

                  "REO Property": A Mortgaged Property acquired by the Servicer
in the name of the Trustee on behalf of the Certificateholders through
foreclosure or deed in lieu of foreclosure, as described in Section 3.22 hereof.

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

                  "Reserve Fund Addition": With respect each Distribution Date,
all amounts paid by Swapco under the Yield Maintenance Agreement.

                  "Reserve Fund": A fund created pursuant to Section 4.10 of
this Agreement which shall be an asset of the Trust but which shall not be an
asset of REMIC I.

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

                                       27

<PAGE>

                  "Residential Dwelling": Any one of the following: (i) a
detached or semi-detached single-family dwelling, (ii) a two- to four-unit
dwelling, (iii) a townhouse, or (iv) a unit in a condominium or a planned unit
development, none of which is a co-operative unit or a mobile home, but which
may be a pre-fabricated or manufactured unit affixed to a permanent foundation,
all in accordance with the New Century's underwriting guidelines.

                  "Responsible Officer": When used with respect to the Trustee
or the Trust Administrator, the Chairman or Vice Chairman of the Board of
Directors, the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer, the
Controller and any assistant controller or any other officer of the Trustee or
the Trust Administrator, as the case may be, customarily performing functions
similar to those performed by any of the above designated officers and also to
whom, with respect to a particular matter, such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.

                  "Rolling Delinquency Percentage": With respect to any
Distribution Date, the average of the Delinquency Percentages as of the last day
of each of the three (or one or two, in the case of the first and second
Distribution Dates, respectively) preceding Due Periods.

                  "S&P": Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors, and, if such division shall for any reason
no longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other "nationally recognized rating organization," as set
forth on the most current list of such organizations released by the Securities
and Exchange Commission and designated by the Certificate Insurer, notice of
which designation shall be given to the Trustee, the Trust Administrator and the
Servicer by the Certificate Insurer.

                  "SAIF": The Savings Association Insurance Fund of the FDIC.

                  "Seller": NC Capital Corporation, a corporation organized
under the laws of the State of California, or its successor in interest, in its
capacity as seller of the Mortgage Loans.

                  "Servicer": Countrywide Home Loans, Inc., a corporation
organized under the laws of the State of New York, or its successor in interest,
in its capacity as servicer of the Mortgage Loans, which term shall also include
any successor servicer appointed hereunder.

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

                  "Servicer Information": Any information contained in a
Remittance Report.

                  "Servicer Loss Test": With respect to any Distribution Date, a
test that is satisfied if the Cumulative Loss Percentage for such Distribution
Date does not exceed the percentage below that corresponds to the period
(including the beginning and ending dates thereof) in which the last day of the
calendar month preceding such Distribution Date falls:

                                       28

<PAGE>

                              Period                            Cumulative Loss
                              ------                               Percentage
                                                                ----------------
         July 1, 2001    -    June 31, 2002                          1.25%
         July 1, 2001    -    June 31, 2002                          2.25%
         July 1, 2002    -    June 30, 2003                          2.50%
         July 1, 2003    -    June 30, 2004                          2.85%
         July 1, 2004 and thereafter                                 3.45%

                  "Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer in respect of any waived Prepayment Charges pursuant to
Section 2.07.

                  "Servicer Remittance Date": With respect to any Distribution
Date, the 18th day of the month of such Distribution Date (or, if such day is
not a Business Day, the next following Business Day).

                  "Servicer Termination Test": With respect to any Distribution
Date, a test which is satisfied if (x) the Rolling Delinquency Percentage is
less than 14.00%, (y) the Servicer Loss Test for such Distribution Date is
satisfied and (z) the Annual Loss Percentage is not greater than 1.50%.

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

                  "Servicing Advances": The costs and expenses incurred by or on
behalf of the Servicer in connection with (i) the preservation, restoration and
protection of a Mortgaged Property or REO Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the payment of any taxes, assessments or insurance premiums, and the
performance of its obligations under Sections 3.01(b)(ii), 3.09, 3.13, 3.15(a)
and 3.22 hereof.

                  "Servicing Fee": With respect to each Mortgage Loan and any
Due Period, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the Loan Balance of such
Mortgage Loan at the beginning of such Due Period. A portion of such Servicing
Fee may be paid to any Subservicer as its servicing compensation.

                  "Servicing Fee Rate":  A rate per annum equal to 0.50%.

                  "Servicing Officer": Any officer of the Servicer or any
Subservicer involved in, or responsible for, the administration and servicing of
the Mortgage Loans, whose name and specimen signature appear on a list of
servicing officers furnished to the Trustee and the Trust Administrator by the
Servicer or such Subservicer, as such list may from time to time be amended.
There shall at no time be fewer than two Servicing Officers.

                                       29

<PAGE>

                  "Spread Percentage": For any Distribution Date, the product of

         (a) the average for the Distribution Date and the two preceding
         Distribution Dates of (x) the amount, if any, by which the Available
         Funds for such Distribution Dates exceed the aggregate amount
         distributed on such Distribution Dates pursuant to subclauses (i)
         through (vi) of Section 4.04(a), minus (y) any OC Release Amount for
         such Distribution Dates and

         (b) twelve, divided by

         (c) the Pool Balance as of the first day of the related Prepayment
         Period (after application of scheduled payments due on such day whether
         or not received).

                  "Spread Squeeze Amount": For any Distribution Date, the
greater of (a) zero and (b) the product of (i) 0.00%, in the case of the 1st
through the 12th Distribution Dates, 1.90%, in the case of the 13th through the
18th Distribution Dates, 2.10%, in the case of the 19th through the 24th
Distribution Dates and 3.00% thereafter minus the Spread Percentage for such
Distribution Date, (ii) three and (iii) the Pool Balance as of the first day of
the related Prepayment Period (after application of scheduled payments due on
such day whether or not received).

                  "Startup Date":  July 28, 2000.

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

                  "Step Down Cumulative Loss Test": The Step Down Cumulative
Loss Test will be met with respect to a Distribution Date as follows: (i) for
the 31st through the 41st Distribution Dates, if the Cumulative Loss Percentage
for such Distribution Date is 1.60% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 2.20% or less; (iii) for the 54th through the 65th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.60% or less; and (iv)
for any Distribution Date after the 65th Distribution Date, if the Cumulative
Loss Percentage for such Distribution Date is 3.00% or less.

                  "Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 10.00% or less.

                  "Step Down Rolling Loss Test": The Step Down Rolling Loss Test
will be met with respect to a Distribution Date if the Annual Loss Percentage is
less than 1.00%.

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<PAGE>

                  "Step Down Trigger": For any Distribution Date after the OC
Stepdown Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step Down
Rolling Loss Test is met. In no event will the Step Down Trigger be deemed to
have occurred prior to the OC Stepdown Date.

                  "Step Up Claims Denial Test": The Step Up Claims Denial Test
will be met with respect to any Distribution Date if any of the following events
occurs (i) the PMI Insurer's financial strength is rated below "A" or is not
rated by S&P or the PMI Insurer's financial strength is rated below "A2"or is
not rated by Moody's, (ii) the cumulative losses as a result of claims denials
under the PMI Policy for the twelve calendar months preceding the Distribution
Date exceed 0.25% of the aggregate of the Loan Balances of the PMI Mortgage
Loans, as of the beginning of such twelve month period or (iii) the cumulative
losses as a result of claims denials under the PMI Policy exceed $850,000.

                  "Step Up Cumulative Loss Test": The Step Up Cumulative Loss
Test will be met with respect to a Distribution Date as follows: (i) for the 1st
through the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 1.00%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.65%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 2.20%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 2.75% and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.50%.

                  "Step Up Rolling Delinquency Test": The Step Up Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 13.5% or higher.

                  "Step Up Rolling Loss Test": The Step Up Rolling Loss Test
will be met with respect to a Distribution Date, if the Annual Loss Percentage
is equal to or more than 1.25%.

                  "Step Up Trigger": For any Distribution Date, the Step Up
Trigger will have occurred if any one of the Step Up Claims Denial Test, the
Step Up Cumulative Loss Test, the Step Up Rolling Delinquency Test or the Step
Up Rolling Loss Test is met.

                  "Stepped Down Required Overcollateralized Amount": For any
Distribution Date for which the Step Down Trigger has occurred, the sum of

         (i) the product of

                  (a) the OC Target Amount for such Distribution Date determined
                  as if the Step Down Trigger had not occurred, and

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<PAGE>

                  (b) a fraction, the numerator of which is six minus the number
                  of consecutive Distribution Dates through and including the
                  Distribution Date for which the Stepped Down Required
                  Overcollateralized Amount is being calculated, up to a maximum
                  of six, for which the Step Down Trigger has occurred, and the
                  denominator of which is six,

         (ii) the product of

                  (a) 7.0% of the Pool Balance and

                  (b) one minus the fraction set forth in clause (i)(b) and

         (iii) the Spread Squeeze Amount.

                  "Subservicer": Any Person with which the Servicer has entered
into a Subservicing Agreement and which meets the qualifications of a
Subservicer pursuant to Section 3.02 hereof.

                  "Subservicing Account": An account established by a
Subservicer which meets the requirements set forth in Section 3.08 hereof and is
otherwise acceptable to the Servicer.

                  "Subservicing Agreement": The written contract between the
Servicer and a Subservicer or any successor Subservicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02 hereof.

                  "Substitution Shortfall Amount": As defined in Section 2.06(d)
hereof.

                  "Swapco":  Salomon Swapco Inc.

                  "Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust due to its classification as a REMIC 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.

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

                  "Trust": New Century Home Equity Loan Trust, Series 2000-NCB,
the trust created hereunder, which shall include the assets of the REMIC, the
Reserve Fund and the Yield Maintenance Agreement.

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<PAGE>

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

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

                  "Underwriters": Salomon Smith Barney Inc. and Countrywide
Securities Corporation, as underwriters with respect to the Offered
Certificates.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
application of the proceeds of the hazard insurance policies required to be
maintained pursuant to Section 3.13 hereof.

                  "United States Person or U.S. Person": A citizen or resident
of the United States, a corporation or partnership (including an entity treated
as a corporation or partnership for federal income tax purposes) created or
organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more such United States Persons have the authority to
control all substantial decisions of the trust. To the extent prescribed in
regulations by the Secretary of the Treasury, which have not yet been issued, a
trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter 1 of
the Code), and which was treated as a United States Person on August 20, 1996
may elect to continue to be treated as a United States Person notwithstanding
the previous sentence.

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

                                       33

<PAGE>

for the Originator, at the time of origination if the "lease option purchase
price" was set 12 months or more prior to origination.

                  "Voting Percentage": With respect to a Class A Certificate, a
fraction, expressed as a decimal, the numerator of which is the Certificate
Principal Balance represented by such Class A Certificate and the denominator of
which is the Certificate Principal Balance of the related Class. With respect to
a Class R Certificate, the Percentage Interest set forth on such Certificate.

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein. At all times, the Class A Certificates shall have
98% of the Voting Rights, the Class P Certificates shall have 1% of the Voting
Rights and the Class R Certificates shall have 1% of the Voting Rights;
provided, however, that any Certificate registered in the name of the Servicer,
the Depositor, the Trust Administrator or the Trustee or any of their respective
affiliates shall not be included in the calculation of Voting Rights; when none
of the Class A Certificates are outstanding, 100% of the Voting Rights shall be
allocated to the Holders of the Class R Certificates in accordance with such
Holders' respective Percentage Interests in the Certificates of such Class.

                  "Yield Maintenance Agreement": The yield maintenance
agreement, dated as of the Closing Date, between Swapco and the Trust
Administrator on behalf of the Trust.

                  "Yield Maintenance Purchase Price": $1,039,500 to be used by
the Depositor to purchase the Yield Maintenance Agreement.

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

         Section 1.03.              Allocation of Certain Interest Shortfalls.

                  For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates for any Distribution Date, the aggregate amount of any Prepayment
Interest Shortfalls (to the extent not covered by payments by the Servicer
pursuant to Section 3.23) and any Relief Act Interest Shortfall incurred in
respect of the Mortgage Loans for any Distribution Date shall be allocated to
the Class A Certificates on a PRO RATA basis based on, and to the extent of,
interest for the related Accrual Period at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance of each such
Certificate.

                                       34

<PAGE>

                                   ARTICLE II

                           ESTABLISHMENT OF THE TRUST;
                      PURCHASE AND SALE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01.              Establishment of the Trust.

                  The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "New Century Home Equity Loan Trust,
Series 2000-NCB" and does hereby appoint Firstar Bank, N.A., as Trustee in
accordance with the provisions of this Agreement and does hereby appoint U.S.
Bank National Association, as Trust Administrator to performance certain duties
in accordance with the provisions of this Agreement, in such capacity on behalf
of and as custodian or agent for the Trustee.

         Section 2.02.              Purchase and Sale of Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby sell, transfer, assign, set over and otherwise convey to the
Trustee without recourse, but subject to the terms of this Agreement, all right,
title and interest of the Depositor, including any security interest therein for
the benefit of the Depositor, in and to (i) the Mortgage Loans identified on the
Mortgage Loan Schedule delivered on the Closing Date, including, without
limitation, all scheduled principal and interest payments due after the
applicable Cut-off Date, (ii) the rights of the Depositor under the Mortgage
Loan Purchase Agreement (iii) the other assets of REMIC I.

                  In consideration of such sale of the Mortgage Loans, the
Trustee shall issue to or upon the order of the Depositor, the Certificates.

         Section 2.03.              Grant of Security Interest.

                  In the event that any conveyance pursuant to Section 2.02
hereof is deemed by a court of competent jurisdiction to be a loan, the parties
intend that the Depositor shall be deemed to have granted to the Trustee on
behalf of the Certificateholders and the Certificate Insurer a security interest
in the related Mortgage Loans, including, without limitation, all interest
accrued thereon and that this Agreement shall constitute a security agreement
under applicable law. The Depositor, the Trust Administrator and the Trustee
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.

                                       35

<PAGE>

                  In furtherance of the foregoing, the Depositor hereby delivers
or causes to be delivered to the Trust Administrator, as custodian for the
Trustee, two Uniform Commercial Code Financing Statements covering REMIC I and
executed, in the first case, by the Seller as debtor in favor of the Depositor
as secured party and the Trustee as its assignee and, in the second case, by the
Depositor as debtor in favor of the Trustee. The Trust Administrator shall file,
or cause the Originator to file, such financing statements promptly after the
Closing Date. The Trust Administrator, or the Trustee shall, at the expense of
the Originator, prepare and file or cause the Originator to prepare and file,
all things necessary to maintain the effectiveness of such financing statements,
including (i) continuation statements and (ii) such other statements as may be
occasioned by any change of name of the Depositor, the Originator or the Trustee
or the change of location of the place of business or chief executive office of
the Depositor or the Seller.

                  Except as may otherwise expressly be provided herein, none of
the Depositor, the Servicer, the Trust Administrator or the Trustee shall (and
the Servicer shall ensure that no Subservicer shall) assign, sell, dispose of or
transfer any interest in REMIC I or any portion thereof, or permit REMIC I or
any portion thereof to be subject to any lien, claim, mortgage, security
interest, pledge or other encumbrance of any other Person.

                  In the event that the parties hereto have failed to transfer
the entire legal ownership in and to each Mortgage Loan to the Trustee on behalf
of the Certificateholders and the Certificate Insurer, the parties hereto intend
that this document operate to transfer the entire equitable ownership interest
in and to each Mortgage Loan to the Trustee on behalf of the Certificateholders.

         Section 2.04.              Document Delivery Requirements.

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

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

                         (i) the original Mortgage Note, endorsed in blank or in
                  the following form: "Pay to the order of Firstar Bank, N.A.,
                  as Trustee under the applicable agreement, without recourse,"
                  with all prior and intervening endorsements showing

                                       36

<PAGE>

                  a complete chain of endorsement from the originator to the
                  Person so endorsing to the Trustee;

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

                       (iii) an original Assignment of the Mortgage executed in
                  the following form: "Firstar Bank, N.A., as Trustee under the
                  applicable agreement" or in blank;

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

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

                        (vi) the original lender's title insurance policy,
                  together with all endorsements or riders that were issued with
                  or subsequent to the issuance of such policy, insuring the
                  priority of the Mortgage as a first lien on the Mortgaged
                  Property represented therein as a fee interest vested in the
                  Mortgagor, or in the event such original title policy is
                  unavailable, a written commitment or uniform binder or
                  preliminary report of title issued by the title insurance or
                  escrow company.

                  The Trust Administrator shall promptly upon receipt thereof
(and in any event no longer than 30 days following the Closing Date), with
respect to each Mortgage Note and Assignment delivered in blank in accordance
with Section 2.01(a)(i) and (iii) above, respectively, cause the Trustee to
endorse each such Mortgage Note and assign each such Assignment in the form
described therein.

                  The Trust Administrator, at the expense of the Originator,
shall promptly (within sixty Business Days following the later of the Closing
Date and the date of receipt by the Trust Administrator of the recording
information for a Mortgage, but in no event later than ninety days following the
Closing Date) submit or cause to be submitted for recording, at no expense to
the Trust, the Trustee, the Trust Administrator, the Certificate Insurer, the
Servicer or the Depositor, in the appropriate public office for real property
records, each Assignment referred to in Sections 2.04(iii) and (iv) above. In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Originator shall promptly prepare or cause to be prepared a
substitute Assignment or cure or cause to be cured such defect, as the case may
be, and thereafter cause each such Assignment to be duly recorded.

                                       37

<PAGE>

                  With respect to a maximum of 1.0% of the Mortgage Loans, by
outstanding Loan Balance as of the Cut-off Date, if any original Mortgage Note
referred to in Section 2.04(i) above cannot be located, the obligations of the
Depositor to deliver such documents shall be deemed to be satisfied upon
delivery to the Trust Administrator of a photocopy of such Mortgage Note, if
available, with a lost note affidavit substantially in the form of Exhibit C-2
attached hereto. If any of the original Mortgage Notes for which a lost note
affidavit was delivered to the Trust Administrator is subsequently located, such
original Mortgage Note shall be delivered to the Trust Administrator within
three Business Days. If any of the documents referred to in Sections 2.04(ii),
(iii) or (iv) above has as of the Closing Date been submitted for recording but
either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Depositor to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Trust Administrator of a copy
of each such document certified by the Originator 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 Originator, delivery to the Trust Administrator
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. Notice shall be provided to the Servicer, the Trustee, the
Trust Administrator, the Certificate Insurer and the Rating Agencies by the
Depositor if delivery pursuant to clause (2) above will be made more than 180
days after the Closing Date. If the original lender's title insurance policy was
not delivered pursuant to Section 2.04(vi) above, the Depositor shall deliver or
cause to be delivered to the Trust Administrator, promptly after receipt
thereof, the original lender's title insurance policy. The Depositor shall
deliver or cause to be delivered to the Trust Administrator promptly upon
receipt thereof any other original documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Mortgage
Loan.

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

                  The Depositor herewith delivers to the Trustee and the Trust
Administrator an executed copy of the Mortgage Loan Purchase Agreement. In
addition to the foregoing, the Depositor shall cause the Certificate Insurer to
deliver the Policy to the Trust Administrator for the benefit of the
Certificateholders.

         Section 2.05.              Acceptance by the Trustee.

                                                        38

<PAGE>

                  The Trust Administrator, on behalf of the Trustee, agrees to
acknowledge (i) receipt by it on the Closing Date, in good faith without notice
of adverse claims, subject to the provisions of Sections 2.02 and 2.04 hereof
and to any exceptions noted on the Trust Administrator's certification in the
form annexed hereto as Exhibit E-1 to be delivered to the Depositor, the
Servicer, the Trustee and the Certificate Insurer on the Closing Date, of (x)
the documents referred to in Section 2.04(i), (ii), (iii) and (iv) above (except
that the documents referred to in Sections 2.04(i) and (iii) may be endorsed or
assigned in blank upon receipt) with respect to the Mortgage Loans listed on the
Mortgage Loan Schedule to be delivered to the Trust Administrator on the Closing
Date and (y) the Certificate Account and the amounts on deposit therein and (ii)
the assignment to the Trustee of all the other assets included in the definition
of "REMIC I" herein, and the Trust Administrator declares that it will hold such
documents and such other documents constituting the Mortgage Files as are
delivered to it, and all such assets and such other assets included in the
definition of "REMIC I" as are delivered to it, in trust for the exclusive use
and benefit of all present and future Certificateholders and the Certificate
Insurer.

                  Within 10 Business Days after the Closing Date the Trust
Administrator shall deliver to the Depositor, the Servicer, the Trustee and the
Certificate Insurer a Final Certification of delivery of all of the documents
referred to in Section 2.04 in the form annexed hereto as Exhibit E-2, with any
applicable exceptions noted thereon.

                  After the delivery of the final certification, the Trust
Administrator shall provide to the Servicer, the Depositor, the Originator, the
Trustee and the Certificate Insurer, no less frequently than quarterly, updated
certifications, a form of which is attached hereto as Exhibit E-3, indicating
the then current status of exceptions until all such exceptions have been
eliminated; provided that the delivery of the final certification shall not act
as a waiver of any of the rights the Certificate Insurer may have with respect
to such exceptions, and all rights are reserved with respect thereto.

                  If, in the process of reviewing the Mortgage Files and making
or preparing the certifications referred to above, the Trust Administrator finds
any document or documents constituting a part of a Mortgage File to be missing
or defective in any material respect, at the conclusion of its review the Trust
Administrator shall so notify the Depositor, the Certificate Insurer, the
Originator the Trustee and the Servicer. In performing any such review, the
Trust Administrator may conclusively rely on the Depositor as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trust Administrator's review of the items delivered to the
Trust Administrator pursuant to this Section 2.05, unless otherwise expressly
stated, shall be limited solely to confirming that the documents listed in this
Section 2.05 have been executed and received, relate to the Mortgage Loans
listed in the Mortgage Loan Schedule and conform as to the loan number and
address and description thereof in the Mortgage Loan Schedule.
In addition, upon the discovery by the Depositor, the Servicer, the Certificate
Insurer, the Trust Administrator or the Trustee of a breach of any of the
representations and warranties made by the Servicer or the Depositor pursuant to
Sections 2.07 and 2.08 hereof in respect of any Mortgage Loan which materially
adversely affects the value of such Mortgage Loan or the interests of the

                                       39

<PAGE>

Certificateholders in such Mortgage Loan, the Person discovering such breach
shall give prompt written notice to the other Persons set forth in this
sentence.

                  The Trust Administrator shall, upon the written request of the
Certificate Insurer and, at the expense of such requesting party, provide a
written report to the Certificate Insurer of each Mortgage File released to the
Servicer for servicing purposes.

         Section 2.06.              Repurchase or Substitution of Mortgage Loans
                                    by the Seller, the Depositor or the
                                    Originator.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a required document is missing from, a Mortgage
File, or of the breach by the Seller and the Originator, of any representation,
warranty or covenant under the Mortgage Loan Purchase Agreement in respect of
any Mortgage Loan that in either such case materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders
and the Certificate Insurer, the Trust Administrator shall promptly notify the
Seller, the Originator, the Depositor, the Certificate Insurer, the Trustee and
the Servicer of such defect, missing document or breach and request that the
Depositor, the Seller or the Originator, as the case may be, deliver such
missing document or cure such defect within 90 days after the date on which the
Depositor, the Seller or the Originator, as the case may be, was notified of
such missing or defective document or that the Seller or the Originator, cure
such breach within 60 days after the date on which the Seller or the Originator
was notified of such breach (which period may be extended by the Certificate
Insurer if in its reasonable judgment it believes that the Depositor, the Seller
or the Originator, as the case may be, is proceeding diligently to cure any such
breach or missing document).

                  To the extent that the Depositor would otherwise be required
to remedy a defect or missing document under this Agreement and such obligation
results from the breach of any of the obligations of the Seller or Originator
under the Mortgage Loan Purchase Agreement with respect to document delivery or
defective or missing documents or any of the representations or warranties made
by the Seller and the Originator under the Mortgage Loan Purchase Agreement,
then the Seller and the Originator (and not the Depositor) shall be required to
remedy the affected Mortgage Loans in the manner set forth in this Agreement,
and the Purchaser shall have no remedy against the Depositor therefor. To the
extent that the Seller would otherwise be required to remedy a defect or missing
document or a breach of any of the representations and warranties made by it
under the Mortgage Loan Purchase Agreement and such obligation results from the
breach of any of the obligations of the Originator under the Mortgage Loan
Purchase Agreement with respect to document delivery or defective or missing
documents or any of the representations or warranties made by the Originator
under the Mortgage Loan Purchase Agreement, then the Originator (and not the
Seller) shall be required to remedy the affected Mortgage Loans in the manner
set forth in this Agreement, and the Purchaser shall have no remedy against the
Seller therefor.

                                       40

<PAGE>

                  In the case of any defect or missing document that is the
responsibility of the Depositor as set forth above, the Depositor shall deliver
such missing document or cure such defect in all material respects during such
period or shall repurchase the related Mortgage Loan from the Trust at the
Purchase Price within 90 days after the date on which the Depositor was first
notified of such missing document or defect. In the case of any defect, missing
document or breach that is the responsibility of the Seller as set forth above,
and the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Servicer (or the Trust
Administrator), in accordance with Section 3.02(b), shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to
repurchase the related Mortgage Loan from the Trust at the Purchase Price within
90 days after the date on which the Seller was first notified of such missing
document, defect or breach, if and to the extent that the Seller is obligated to
do so under the Mortgage Loan Purchase Agreement. In the case of any breach that
is the responsibility of the Originator as set forth above, and the Originator
does not deliver such missing document or cure such defect or breach in any
material respect during such period, the Trust Administrator, in accordance with
Section 3.02(b), shall enforce the obligations of the Originator under the
Mortgage Loan Purchase Agreement to repurchase the related Mortgage Loan from
the Trust at the Purchase Price within 90 days after the date on which the
Originator was first notified of such missing document, defect or breach, if and
to the extent that the Originator is obligated to do so under the Mortgage Loan
Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be deposited by the Servicer upon receipt into the Collection Account and the
Trust Administrator, upon (i) receipt of an Officers' Certificate of the
Servicer as to the making of such deposit and (ii) confirmation that such
deposit has been made, shall release or cause to be released to the Originator,
the Seller or the Depositor, as the case may be, the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or assignment
as are furnished by the Originator, the Seller or the Depositor (as applicable),
in each case without recourse, as shall be reasonably necessary to vest in the
Originator, the Seller or the Depositor, as applicable, any Mortgage Loan
released pursuant hereto, and neither the Trustee nor the Trust Administrator
shall have any further responsibility or liability (except as to its own
negligence or willful misconduct) with regard to such Mortgage File and such
Mortgage Loan.

                  In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the Seller and/or
the Originator may cause such Mortgage Loan to be removed from the Trust (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.06(d) hereof. It is understood and agreed that the
obligation of the Seller and/or the Originator, to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which a breach has occurred and
is continuing shall constitute the sole remedy respecting such omission, defect
or breach available to the Trustee or the Trust Administrator on behalf of the
Certificateholders and the Certificate Insurer.

                  In lieu of repurchasing any such Mortgage Loan as provided
above, the Depositor may cause such Mortgage Loan to be removed from the Trust
(in which case it shall become a Deleted

                                       41

<PAGE>

Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.06(d) hereof.
It is understood and agreed that the obligation of the Depositor to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing or a material defect in a constituent document exists shall constitute
the sole remedy respecting such defect or missing document available to the
Trustee or the Trust Administrator on behalf of the Certificateholders and the
Certificate Insurer.

                  (b) Except as otherwise provided in Section 2.06(e) hereof,
within 90 days after the earlier of discovery by the Depositor or receipt of
notice by the Depositor of the breach of the substance of any representation or
warranty of the Depositor set forth in Section 2.08 hereof with respect to any
Mortgage Loan (without giving effect to any qualification contained in such
representation and warranty relating to the Depositor's knowledge) which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Depositor shall (x) cure such breach in
all material respects, (y) subject to the restrictions set forth in Section
2.06(d) hereof repurchase the Mortgage Loan from the Trustee at the Purchase
Price or (z) remove such Mortgage Loan from the Trust (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in Section
2.06(d) hereof. The Purchase Price for any repurchased Mortgage Loan shall be
deposited into the Collection Account and the Trust Administrator, upon (x)
receipt of an Officers' Certificate of the Servicer as to the making of such
deposit and (y) confirmation that such deposit has been made, shall release or
cause to be released to the Depositor the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment as
furnished by the Depositor, in each case without recourse, as shall be necessary
to vest in the Depositor title to any Mortgage Loan released pursuant hereto,
and neither the Trustee nor the Trust Administrator shall have any further
responsibility or liability (except as to its own negligence or willful
misconduct) with regard to such Mortgage File and such Mortgage Loan.

                  (c) Within 90 days after the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of any
representation, warranty or covenant of the Servicer set forth herein, which
breach materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders and the Certificate Insurer therein, the
Servicer shall cure such breach in all material respects. In addition, the
Servicer shall indemnify the Trust for any costs, expenses, losses or
liabilities arising from the failure of a PMI Mortgage Loan to be covered by the
PMI Policy if such loss arises from the breach of any representation, warranty
or covenant of the Servicer set forth herein.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.06(a) or Section 2.06(b)
hereof must be effected prior to the date that is two years after the Startup
Date or such other period as may be specified therefor in the REMIC Provisions.

                  With respect to any Deleted Mortgage Loan for which the
Seller, the Depositor or the Originator substitutes a Qualified Substitute
Mortgage Loan or Loans, such substitution shall be

                                       42

<PAGE>

effected by the Seller, the Depositor or the Originator, as the case may be, by
delivering to the Trust Administrator for such Qualified Substitute Mortgage
Loan or Loans the Mortgage Note, the Mortgage, the related Assignment, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.04 hereof (or, in the case of a substitution by the Seller
or the Originator, as are required under the Mortgage Loan Purchase Agreement),
together with an Officers' Certificate providing that each such Qualified
Substitute Mortgage Loan satisfies the definition thereof herein (or, in the
case of a substitution by the Seller or the Originator, in the Mortgage Loan
Purchase Agreement) and specifying the Substitution Shortfall Amount as
described below (or, in the case of a substitution by the Seller or the
Originator, as described in the Mortgage Loan Purchase Agreement), if any, in
connection with such substitution. The Trust Administrator, on behalf of the
Trustee, shall acknowledge receipt of such Qualified Substitute Mortgage Loan or
Loans and, within 10 Business Days thereafter, shall review such documents (or
shall cause such documents to be reviewed) as specified in Section 2.04 hereof
and shall deliver to the Seller, the Depositor, the Servicer, the Originator,
the Trustee and the Certificate Insurer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially similar to that
made by the Trust Administrator in the second paragraph of Section 2.05 hereof.
Within one year after the date of substitution, the Trust Administrator shall
deliver to the Seller, the Depositor, the Servicer, the Originator, the Trustee
and the Certificate Insurer a certification in the form of Exhibit E-3 hereto
with respect to such Qualified Substitute Mortgage Loan or Loans pursuant to
Section 2.05 hereof.
For the Distribution Date relating to the month in which a substitution
occurred, Monthly Payments due with respect to Qualified Substitute Mortgage
Loans during the related Due Period are not part of REMIC I and will be retained
by the Seller, the Depositor or the Originator, as the case may be.
For the Distribution Date relating to the month in which such of substitution
occurred, distributions to Certificateholders will reflect the Monthly Payment
due on such Deleted Mortgage Loan during the related Due Period and the Seller,
the Depositor or the Originator, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Trust Administrator shall give or cause to be given written
notice to the Certificate Insurer that such substitution has taken place, and
the Trust Administrator shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the Trust and the substitution of the
Qualified Substitute Mortgage Loan or Loans. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject in all respects to
the terms of this Agreement and, in the case of a substitution effected by the
Seller or the Originator, the Mortgage Loan Purchase Agreement, including, in
the case of a substitution effected by the Seller or the Originator, all
applicable representations and warranties thereof included in the Mortgage Loan
Purchase Agreement, and in the case of a substitution effected by the Depositor,
all applicable representations and warranties set forth in the Mortgage Loan
Purchase Agreement as if the Depositor had made such representations, in each
case as of the date of substitution.

                  For any month in which the Seller, the Depositor or the
Originator substitutes one or more Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the Trust Administrator will determine, based
upon information supplied by the Servicer, and inform the Seller, the Depositor
or the Originator, as the case may be, of, the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Loan Balance of all such
Qualified Substitute Mortgage

                                       43

<PAGE>

Loans as of the date of substitution is less than the aggregate Loan Balance of
all such Deleted Mortgage Loans as of such date plus the aggregate amount of all
unreimbursed Servicing Advances and Delinquency Advances relating to such
Deleted Mortgage Loans as of such date. On the date of such substitution, the
Seller, the Depositor or the Originator, as the case may be, will deliver or
cause to be delivered to the Servicer for deposit into the Collection Account
pursuant to Section 3.10(a)(vii) hereof an amount equal to the Substitution
Shortfall Amount, if any, without any right of reimbursement therefor, and the
Trust Administrator, upon (i) receipt of (A) the related Qualified Substitute
Mortgage Loan or Loans and (B) an Officers' Certificate of the Servicer as to
the deposit of such Substitution Shortfall Amount into the Collection Account
and (ii) confirmation that such deposit has been made, shall release or cause to
be released to the Seller, the Depositor or the Originator, as the case may be,
the related Mortgage File or Files and the Trustee shall execute and deliver
such instruments of transfer or assignment as are furnished by the Seller, the
Depositor or the Originator in each case without recourse, as shall be necessary
to vest in the Seller, the Depositor or the Originator, as the case may be,
title to any Deleted Mortgage Loan released pursuant hereto and neither the
Trustee nor the Trust Administrator shall have any further responsibility or
liability (except as to its own acts) with regard to such Mortgage Loan.

                  Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan, no substitution pursuant to this Section 2.06
shall be made unless the Seller, the Depositor or the Originator, as the case
may be, obtains an Independent Opinion of Counsel, addressed to the Trustee, the
Seller, the Originator, the Depositor, the Servicer, the Trust Administrator and
the Certificate Insurer, to the effect that such substitution would not (i)
result in the imposition of taxes on "prohibited transactions" of the REMIC, as
defined in Section 860F of the Code, (ii) result in the imposition of taxes on
contributions to the Trust under Section 860G(d) of the Code, or (iii) cause the
Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

                  (e) Upon discovery by the Depositor the Servicer, the Trustee
or the Trust Administrator that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall, within two Business Days, give written notice
thereof to the other parties. In connection therewith, the Servicer or the Trust
Administrator, in accordance with Section 3.02(b), shall enforce the obligations
of the Seller, the Originator or the Depositor to repurchase or, subject to the
limitations set forth in Section 2.06(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Such repurchase or substitution shall be made by (i) the Seller
or the Originator if the affected Mortgage Loan's status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Seller or the Originator under the Mortgage Loan Purchase Agreement,
or (ii) the Depositor, if the affected Mortgage Loan's status as a non-qualified
mortgage is a breach of any representation or warranty of the Depositor set
forth in Section 2.08 hereof, or if its status as a non-qualified mortgage is a
breach of no representation or warranty. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.06(a), if made by the
Seller or the Originator, or Section 2.06(b), if made by the Depositor. The
Trustee and the

                                       44

<PAGE>

Trust Administrator shall reconvey to the Depositor, the Seller or the
Originator, as the case may be, the Mortgage Loan to be released pursuant hereto
in the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty.

         Section 2.07.              Representations, Warranties and Covenants of
                                    the Servicer.

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

                  (i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is
duly authorized and qualified to transact any and all business contemplated by
this Agreement to be conducted by the Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing business
laws of any such State, to the extent necessary to ensure its ability, or to
cause a Subservicer, to enforce each Mortgage Loan and to service the Mortgage
Loans in accordance with the terms of this Agreement;

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

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

                                       45

<PAGE>

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

                  (v) [reserved];

                  (vi) The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant made
by it and contained in this Agreement, it being understood that certain of such
covenants may be performed by a Subservicer pursuant to a Subservicing Agreement
between the Servicer and such Subservicer in accordance with Section 3.02;

                  (vii)    [Reserved];

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

                  (ix) As of the date of the Prospectus Supplement, the
information under the caption "The Servicer" in the Prospectus Supplement will
contain no untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;

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

                  (xi)     [Reserved]; and

                  (xii) The Servicer will not waive any Prepayment Charge unless
it is waived in accordance with the standard set forth in Section 3.01.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.07 shall survive delivery
of the respective Mortgage Files to the Trust Administrator and shall inure to
the benefit of the Depositor, each Subservicer, the Certificateholders, the
Trustee, the Trust Administrator and the Certificate Insurer. Upon discovery by
any of the Depositor, the Servicer, the Trustee, the Trust Administrator or the
Certificate Insurer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value

                                       46

<PAGE>

of any Mortgage Loan, Prepayment Charge or the interests of the
Certificateholders or the Certificate Insurer therein, 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. The Servicer shall
remedy such breach in the manner set forth in Section 2.06(c). Notwithstanding
the foregoing, within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of the covenant of the Servicer
set forth in Section 2.07(xii) above which materially and adversely affects the
interests of the Holders of the Class P Certificates in any Prepayment Charge,
the Servicer shall remedy such breach as follows: the Servicer must remedy such
breach by paying the amount of the Prepayment Charge as to which such covenant
was breached, for the benefit of the Holders of the Certificates and the
Certificate Insurer, by depositing such amount into the Collection Account.

         Section 2.08.              Representations and Warranties of the
                                    Depositor.

                  The Depositor hereby represents and warrants to the Servicer,
each Subservicer, the Trust Administrator, the Trustee, the Certificateholders
and the Certificate Insurer, as of the Closing Date or as of such date
specifically provided herein, that:

                  (a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has,
and had at all relevant times, full power to own its property, to carry on its
business as currently conducted, to enter into and perform its obligations under
this Agreement and to create the Trust pursuant hereto;

                  (b) The execution and delivery of this Agreement by the
Depositor and its performance of and compliance with the terms of this Agreement
will not violate the Depositor's certificate of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;

                  (c) The Depositor has the full power and authority to enter
into and consummate the transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Trustee, the Trust Administrator
and the Servicer, constitutes a valid, legal and binding obligation of the
Depositor, enforceable against it in accordance with the terms hereof, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

                  (d) The Depositor is not in violation of, and the execution
and delivery of this Agreement by the Depositor and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or

                                       47

<PAGE>

regulation of any federal, state, municipal or other governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or materially and adversely affect the performance of its duties
hereunder;

                  (e) There are no actions or proceedings against, or
investigations of, the Depositor pending with regard to which the Depositor has
received service of process, or, to the knowledge of the Depositor, pending or
threatened, before any court, administrative agency or other tribunal (A) that,
if determined adversely, would prohibit its entering into this Agreement or
render the Certificates invalid, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or (C) that, if determined adversely, would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates;

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

                  (g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or its obligations hereunder; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against the
Depositor prior to the date hereof;

                  (h) The Depositor did not sell the Mortgage Loans to the Trust
with any intent to hinder, delay or defraud any of its creditors; the Depositor
will not be rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust;

                  (i) As of the Closing Date, the Depositor had good title to,
and was the sole owner of, each Mortgage Loan free and clear of any lien other
than any such lien released simultaneously with the sale contemplated herein,
and, immediately upon each transfer and assignment herein contemplated, the
Depositor will have taken all steps necessary so that the Trust will have good
title to, and will be the sole owner of, each Mortgage Loan free and clear of
any lien;

                  (j) The Depositor acquired title to each of the Mortgage Loans
in good faith, without notice of any adverse claim;

                  (k) No Officers' Certificate, statement, report or other
document prepared by the Depositor and furnished or to be furnished by it
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;

                                       48

<PAGE>

                  (l) The Depositor is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as amended;

                  (m) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Depositor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction;

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

                  (o) With respect to each Mortgage Loan, the Servicer or the
Originator is in possession of a complete Mortgage File, except for any
documents as have been delivered to the Trust Administrator and if the
Originator is in possession of the Mortgage File, it will be delivered to the
Servicer as soon as customary with the transfer of the servicing to the
Servicer.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.08 shall survive delivery
of the respective Mortgage Files to the Trust Administrator and shall inure to
the benefit of the Servicer, each Subservicer, the Trustee, the Trust
Administrator, the Certificateholders and the Certificate Insurer. Upon
discovery by any of the Depositor, the Servicer, each Subservicer, the
Certificate Insurer, the Trust Administrator or the Trustee of a breach of any
of the representations and warranties set forth in this Section 2.08 with
respect to any Mortgage Loan which materially and adversely affects the value of
any Mortgage Loan or the interests of the Certificateholders or the Certificate
Insurer therein, 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. In the case of any of the representations and warranties
set forth in Section 2.08, a breach thereof shall not be deemed discovered by
the Trustee or the Trust Administrator in the absence of actual knowledge of a
Responsible Officer thereof.

         Section 2.09.              Issuance of Certificates.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it (or the Trust Administrator on its behalf) of the
Mortgage Files, subject to the provisions of Section 2.04, together with the
assignment to it of all other assets included in REMIC I, the receipt of which
is hereby acknowledged. Concurrently with such assignment and delivery and in
exchange therefor, the Trust Administrator, pursuant to the written request of
the Depositor executed by an officer of the Depositor, has executed,
authenticated and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in REMIC I. The
rights of the Certificateholders to receive distributions from the proceeds of
REMIC I in respect of the Certificates and all ownership interests evidenced or
constituted by the Certificates shall be as set forth in this Agreement.

                                       49

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING

                                  OF THE TRUST

         Section 3.01.              Administration of the Trust; Servicing of
                                    the Mortgage Loans.

                  (a) The Servicer shall service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the respective Mortgage
Loans and in accordance with the instructions of the Trustee, the Trust
Administrator and the Certificate Insurer and, upon receipt of any such
instructions from the Trust Administrator, the Trustee and the Certificate
Insurer, shall be fully protected against any liability arising from, and shall
be allowed to conclusively rely upon, such instructions. Unless otherwise
specified herein with respect to specific obligations of the Servicer, the
Servicer shall service and administer the Mortgage Loans in the best interests
of and for the benefit of the Holders and the Certificate Insurer in the same
manner in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

                  (A) any relationship that the Servicer, any Subservicer or any
                  Affiliate of the Servicer or any Subservicer may have with the
                  related Mortgagor;

                  (B) the ownership or non-ownership of any Certificate by the
                  Servicer or any affiliate of the Servicer;

                  (C) the Servicer's obligation to make Delinquency Advances or
                  Servicing Advances; or

                  (D) the Servicer's or any Subservicer's right to receive
                  compensation for its services hereunder or with respect to any
                  particular transaction.

                  To the extent consistent with the foregoing, the Servicer (i)
shall seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes and (ii) shall waive (or permit a subservicer to
waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans and (ii)
such waiver would, in the reasonable judgement of the Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan and, if such waiver is made in connection
with a refinancing of the related Mortgage Loan, such refinancing is related to
a default or a reasonably foreseeable default. Subject only to the
above-described servicing standards and the terms of this Agreement and the
respective Mortgage Loans, the Servicer shall have full power and authority,
acting alone and/or through Subservicers as provided in Section 3.02 hereof, to
do or cause to be done any and all things in connection with such servicing and

                                       50
<PAGE>

administration which it may deem necessary or desirable. The Servicer shall
promptly notify the Depositor, the Trustee, the Trust Administrator, the
Certificate Insurer and each Rating Agency in writing of (A) any event,
circumstance or occurrence which may materially and adversely affect the ability
of the Servicer to service any Mortgage Loan or otherwise to perform and carry
out its duties, responsibilities and obligations under and in accordance with
this Agreement and (B) any attempt by a court or by a regulatory authority of
which it has actual knowledge to assert jurisdiction over the Trust.

                  Without limiting the generality of the foregoing, the
Servicer, in its own name or in the name of a Subservicer, is hereby authorized
and empowered, when the Servicer believes it appropriate in its best judgment
and subject to the requirements of Section 3.07 hereof, to execute and deliver,
on behalf of the Certificateholders and the Trust or any of them, and upon
notice to the Trustee and the Trust Administrator, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a deed
in lieu of foreclosure so as to convert the ownership of such properties, and to
hold or cause to be held title to such properties, on behalf of the Trust and
Certificateholders. The Servicer shall service and administer the Mortgage Loans
in accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.16 hereof, the Trustee shall execute, at the written
direction of the Servicer, and furnish to the Servicer and any Subservicer any
limited or special powers of attorney and other documents reasonably acceptable
to the Trustee to enable the Servicer or any Subservicer to carry out their
servicing and administrative duties hereunder, including, without limitation,
limited or special powers of attorney with respect to any REO Property, and the
Trustee shall not be accountable, or have any liability, for the actions of the
Servicer or any Subservicers under such powers of attorney.

                  (b) Subject to Section 3.24 hereof and in accordance with the
standards of the preceding paragraph, the Servicer shall make, or cause to be
made, Servicing Advances as necessary for the purpose of effecting the payment
of taxes and assessments on the Mortgaged Properties which Servicing Advances
shall be made in a timely fashion so as to not adversely affect the value of the
Mortgaged Property or the interests of the Certificateholders and which
Servicing Advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09 hereof, and further as
provided in Section 3.11 hereof; provided, however, that the Servicer shall not
be required to make any Nonrecoverable Servicing Advance, as determined by the
Servicer in its reasonable good faith business judgment. Any cost incurred by
the Servicer or by Subservicers in effecting the timely payment of taxes and
assessments on a Mortgaged Property shall not, for the purpose of calculating
distributions to Certificateholders, be added to the Loan Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.

                  (c) Notwithstanding anything in this Agreement to the
contrary, the Servicer shall not make any future advances to the Mortgagor with
respect to a Mortgage Loan, and the Servicer

                                       51
<PAGE>

shall not (a) permit any modification with respect to any Mortgage Loan that
would change the Mortgage Rate, reduce or increase the principal balance or
change the maturity date on such Mortgage Loan, unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Servicer, reasonably foreseeable or (b) permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and cause the Trust to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or contributions after the startup date" under the REMIC Provisions.

                  (d) All accounting and loan servicing records pertaining to
each Mortgage Loan shall be maintained in such manner as will permit the
Trustee, the Trust Administrator, the Depositor, the Certificateholders, the
Certificate Insurer or their duly authorized representatives and designees to
examine and audit and make legible reproductions of records during reasonable
business hours. All such records shall be maintained until the termination of
this Agreement or such longer period as is required under applicable law,
including, but not limited to, all transaction registers and loan ledger
histories.

                  The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement and no
delegation that would result in the delegee being a Subservicer is permitted
except pursuant to Section 3.02.

                  (e) Subject to the provisions set forth in this Section 3.01,
from and after the date hereof, neither the Servicer nor any of its affiliates
shall specifically target and solicit, by means of direct mail or telephonic or
personal solicitation or by any other means, the Mortgagors to prepay such
Mortgage Loans. Notwithstanding the foregoing, the following solicitations if
undertaken by the Servicer or any affiliate of the Servicer, shall not be
prohibited under this Section 3.01: (i) solicitations that are directed to the
general public at large, including without limitation, mass mailings based on
commercially acquired mailing lists and newspaper, radio, television and other
mass media advertisements; (ii) solicitations made in response to an inquiry
from a Mortgagor relating to a payoff or information pertaining to a mortgage
loan product; and (iii) solicitations made as a part of a campaign directed to
all mortgagors with mortgage loans meeting certain defined parameters (other
than parameters relating to the Mortgagors or Mortgage Loans specifically).

         Section 3.02.              Subservicing Agreements Between Servicer and
                                    Subservicers.

                  (a) The Servicer may with the consent of the Certificate
Insurer enter into Subservicing Agreements with Subservicers for the servicing
and administration of the Mortgage Loans; provided, however, that such
agreements would not result in a withdrawal or a downgrading by any Rating
Agency of the rating on any Class of Certificates. The Trustee and the Trust
Administrator are hereby authorized to acknowledge, at the request of the
Servicer, any Subservicing

                                       52
<PAGE>

Agreement that meets the requirements applicable to Subservicing Agreements set
forth in this Agreement and that is otherwise permitted under this Agreement.

                  Each Subservicer shall be (i) authorized to transact business
in the state or states where the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) a Freddie Mac or Fannie Mae approved mortgage servicer and (iii)
have equity of at least $5,000,000. Each Subservicing Agreement must impose on
the Subservicer requirements conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans consistent with the terms
of this Agreement and be approved in writing by the Certificate Insurer. The
Servicer will examine each Subservicing Agreement and will be familiar with the
terms thereof. The Servicer and the Subservicers may enter into and make
amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement and be approved in writing by the Certificate Insurer, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the Certificate
Insurer or Certificateholders without the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights; provided, further, that the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights shall not be required (i) to cure any ambiguity or defect in a
Subservicing Agreement, (ii) to correct, modify or supplement any provisions of
a Subservicing Agreement, or (iii) to make any other provisions with respect to
matters or questions arising under a Subservicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Certificate Insurer from the provisions set
forth in Section 3.08 relating to insurance or priority requirements of
Subservicing Accounts, or credits and charges to the Subservicing Accounts or
the timing and amount of remittances by the Subservicers to the Servicer, are
conclusively deemed to be inconsistent with this Agreement and therefore
prohibited. The Servicer shall deliver to the Trustee and the Trust
Administrator copies of all Subservicing Agreements, and any amendments or
modifications thereof, promptly upon the Servicer's execution and delivery of
such instruments.

                  (b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee, the Depositor, the Trust
Administrator, the Certificateholders and the Certificate Insurer, shall enforce
the obligations of each Subservicer under the related Subservicing Agreement and
of the Originator and the Seller under the Mortgage Loan Purchase Agreement
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Subservicing Agreement or to cure,
substitute or repurchase a Mortgage Loan on account of missing or defective
documentation or on account of a breach of a representation, warranty or
covenant, as described in Section 2.06. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing
Agreements and the pursuit of other appropriate remedies, shall be in such form
and carried out to such extent and at such time as the Servicer, in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans. The Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery

                                       53
<PAGE>

exceeds all amounts due in respect of the related Mortgage Loans or (ii) from a
specific recovery of costs, expenses or attorneys' fees against the Person
against which such enforcement is directed.

Notwithstanding anything to the contrary herein, however, enforcement of the
Mortgage Loan Purchase Agreement against the Originator and the Seller shall be
effected by the Servicer to the extent it is not an affiliate of the Originator
and the Seller, and otherwise by the Trust Administrator in accordance with the
foregoing provisions of this paragraph. If such enforcement is conducted by the
Trust Administrator, the Trust Administrator shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement, to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loans
or (ii) from a specific recovery of costs, expenses or attorneys' fees against
the Person against which such enforcement is directed; provided, however, if the
sources of reimbursement described in clauses (i) and (ii) are insufficient, the
Servicer shall reimburse the Trust Administrator for any remaining unreimbursed
costs of such enforcement.

         Section 3.03.              Successor Subservicers, Termination of
                                    Subservicing Agreement.

                  Each Subservicing Agreement shall provide that the Subservicer
will not resign without the consent of the Certificate Insurer. The Servicer
shall be entitled to terminate any Subservicing Agreement and the rights and
obligations of any Subservicer pursuant to any Subservicing Agreement in
accordance with the terms and conditions of such Subservicing Agreement with the
written consent of the Certificate Insurer. In the event of resignation or
termination of any Subservicer, all servicing obligations of such Subservicer
shall be assumed simultaneously by the Servicer without any act or deed on the
part of such Subservicer or the Servicer, and the Servicer shall either service
directly the related Mortgage Loans or shall enter, with the consent of the
Certificate Insurer, into a Subservicing Agreement with a successor Subservicer
pursuant to Section 3.02.

                  Any Subservicing Agreement shall include the provision that
such agreement may be immediately terminated by any successor servicer, the
Trustee or the Trust Administrator (if the Trust Administrator is acting as
Servicer) at the request of the Certificate Insurer, without cost to the Trust,
in the event that the Servicer shall, for any reason, no longer be the Servicer
(including termination due to a Servicer Default).

         Section 3.04.              Liability of the Servicer.

                  Notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer, or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Trust Administrator, the Certificateholders and the Certificate
Insurer for the servicing and administering of the Mortgage Loans in accordance
with the provisions of this Article III without diminution of such obligation or
liability by virtue of such Subservicing Agreements or arrangements, or by
virtue of indemnification from the Subservicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and

                                       54
<PAGE>

administering the Mortgage Loans. The Servicer shall be entitled to enter into
any agreement with a Subservicer for indemnification of the Servicer by such
Subservicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.

         Section 3.05.              No Contractual Relationship Between
                                    Subservicers and Trust Administrator,
                                    Trustee or Certificateholders.

                  Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trust Administrator, the Trustee, the Certificateholders
and the Certificate Insurer shall not be deemed parties thereto and shall have
no claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in Sections 3.03 and 3.06 The Servicer shall be
solely liable for all fees owed by it to any Subservicer, irrespective of
whether the Servicer's compensation pursuant to this Agreement is sufficient to
pay such fees.

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

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

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

                                       55
<PAGE>

         Section 3.07.              Collection of Certain Mortgage Loan
                                    Payments.

                  The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans held for its own account. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge
or, if applicable, any penalty interest, or (ii) extend the due dates for the
Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.06
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the then outstanding Loan Balance in final
satisfaction of such Mortgage Loan (such payment, a "Short Pay- off"), or
consent to the postponement of strict compliance with any such term or otherwise
grant indulgence to any Mortgagor if in the Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders or the Certificate Insurer (taking into
account any estimated Realized Loss that might result absent such action). The
Servicer shall give the Certificate Insurer prompt written notice of any such
action.

         Section 3.08.              Subservicing Accounts.

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

                                       56
<PAGE>

Subservicing Account. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on the Mortgage Loans when the Subservicer
receives such payments.

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

                  The Servicer shall establish and maintain, or cause to be
established and maintained one or more accounts (the "Servicing Accounts"), into
which all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Servicer shall deposit in the clearing account in which it customarily deposits
payments and collections on mortgage loans in connection with its mortgage loan
servicing activities on a daily basis, and in no event more than one Business
Day after the Servicer's receipt thereof, all Escrow Payments collected on
account of the Mortgage Loans and shall thereafter deposit such Escrow Payments
in the Servicing Accounts, in no event more than two Business Days after the
receipt of such Escrow Payments, all Escrow Payments collected on account of the
Mortgage Loans for the purpose of effecting the timely payment of any such items
as required under the terms of this Agreement. Withdrawals of amounts from a
Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, hazard insurance premiums and comparable items; (ii) reimburse the
Servicer (or a Subservicer to the extent provided in the related Subservicing
Agreement) out of related collections for any advances made pursuant to Section
3.01(b) (with respect to taxes and assessments) and Section 3.13 hereof (with
respect to hazard insurance); (iii) refund to Mortgagors any sums as may be
determined to be overages; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Servicing Account or (v) clear and
terminate the Servicing Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Section 10.01 hereof. As part of its servicing duties, the
Servicer or Subservicers shall pay to the Mortgagors interest on funds in
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement thereof. The
Servicer 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 Mortgagor and, to the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Esrcow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes.

         Section 3.10.              Collection Account and Certificate Account.

                  (a) On behalf of the Trust, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts (such
account or accounts, the "Collection Account"), held in the name of the Trustee
for the benefit of the Certificateholders. On behalf of the Trust, the Servicer
shall deposit or cause to be deposited in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage

                                       57
<PAGE>

loan servicing activities on a daily basis, and in no event more than two
Business Days after the Servicer's receipt thereof, and shall thereafter deposit
in the Collection Account, in no event more than two Business Days after the
Servicer's receipt thereof, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal or interest
on the related Mortgage Loans due on or before the Cut-off Date), or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:

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

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

                       (iii) all Insurance Proceeds and Liquidation Proceeds
                  (other than proceeds collected in respect of any particular
                  REO Property and amounts paid in connection with a purchase of
                  Mortgage Loans and REO Properties pursuant to Section 10.01);

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

                         (v) any amounts required to be deposited by the
                  Servicer pursuant to the second paragraph of Section 3.13(a)
                  in respect of any blanket policy deductibles;

                         (vi) all proceeds of any Mortgage Loan repurchased or
                  purchased in accordance with Section 2.06 or Section 10.01;

                         (vii) all amounts required to be deposited in
                  connection with Substitution Shortfall Amounts pursuant to
                  Section 2.06;

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

                         (ix) all payments of claims under the PMI Policy.

                  The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, modification or assumption fees, or insufficient funds charges need not
be deposited by the Servicer in the Collection Account and may be retained by
the Servicer as additional compensation. In the event the 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.

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<PAGE>

                  (b) On behalf of the Trust, the Trust Administrator, as agent
for the Trustee, shall establish and maintain one or more accounts (such account
or accounts, the "Certificate Account"), held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust, the Servicer shall
deliver to the Trust Administrator in immediately available funds for deposit in
the Certificate Account on or before 3:00 p.m. New York time on the Servicer
Remittance Date, that portion of the Available Funds for the related
Distribution Date then on deposit in the Collection Account and the amount of
all Prepayment Charges collected by the Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advancing
Person pursuant to Section 3.29.

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

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

                         (i)        any Delinquency Advances, as required
                  pursuant to Section 4.07;

                        (ii)        any amounts required to be deposited
                  pursuant to Section 3.22(d) or (f) in connection with any REO
                  Property;

                       (iii)        any amounts to be paid in connection with a
                  purchase of Mortgage Loans and REO Properties pursuant to
                  Section 10.01; and

                        (iv)        any amounts required to be deposited
                  pursuant to Section 3.23 in connection with any Prepayment
                  Interest Shortfall.

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

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<PAGE>

                  (e) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, federal bankruptcy court or other source,
the Trust Administrator shall deposit such funds in the Certificate Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder.

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

         Section 3.11.              Withdrawals from the Collection Account and
                                    Certificate Account.

                  (a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.06:

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

                        (ii) subject to Section 3.15(e), to reimburse the
                  Servicer for Delinquency Advances, but only to the extent of
                  amounts received which represent Late Collections (net of the
                  related Servicing Fees) of Monthly Payments on Mortgage Loans
                  with respect to which such Delinquency Advances were made in
                  accordance with the provisions of Section 4.06;

                       (iii) subject to Section 3.15(e), to pay the Servicer or
                  any Subservicer (a) any unpaid Servicing Fees, (b) any
                  unreimbursed Servicing Advances with respect to each Mortgage
                  Loan, but only to the extent of any Late Collections,
                  Liquidation Proceeds and Insurance Proceeds received with
                  respect to such Mortgage Loan and (c) any Nonrecoverable
                  Servicing Advances with respect to the final liquidation of a
                  Mortgage Loan, but only to the extent that Late Collections,
                  Liquidation Proceeds, Insurance Proceeds and any purchase or
                  repurchase proceeds are received with respect to such Mortgage
                  Loan are insufficient to reimburse the Servicer or any
                  Subservicer for Servicing Advances;

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

                         (v) to pay to the Servicer, the Depositor, the
                  Originator or the Seller, as the case may be, with respect to
                  each Mortgage Loan that has previously been purchased or
                  replaced pursuant to Section 2.06 or Section 3.15(c) all
                  amounts

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<PAGE>

                  received thereon subsequent to the date of purchase or
                  substitution, as the case may be;

                        (vi) to reimburse the Servicer for any Delinquency
                  Advance previously made which the Servicer has determined to
                  be a Nonrecoverable Delinquency Advance in accordance with the
                  provisions of Section 4.06;

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

                      (viii) to reimburse the Servicer, the Trustee or the Trust
                  Administrator, as the case may be, for expenses reasonably
                  incurred in connection with any breach or defect giving rise
                  to the purchase obligation under Section 2.06, including any
                  expenses arising out of the enforcement of the purchase
                  obligation;

                       (ix) to pay, or to reimburse the Servicer for Servicing
                  Advances in respect of, expenses incurred in connection with
                  any Mortgage Loan pursuant to Section 3.15(b); and

                       (x) to clear and terminate the Collection Account
                  pursuant to Section 10.01.

         The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above. The Servicer
shall provide written notification to the Trustee and the Trust Administrator,
on or prior to the next succeeding Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclauses (vi) and (vii)
above; provided that an Officer's Certificate in the form described under
Section 4.06(d) shall suffice for such written notification to the Trustee and
the Trust Administrator in respect of clause (vi) hereof.

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

                       (i) to make distributions to Certificateholders in
                  accordance with Section 4.04;

                       (ii) to pay to itself and the Trustee amounts to which
                  each is entitled pursuant to Section 8.05;

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

                       (iv) to reimburse itself or the Trustee pursuant to
                  Section 7.02(b);

                       (v) to pay any amounts in respect of taxes pursuant to
                  Section 3.01(a);

                       (vi) to pay to an Advancing Person reimbursements for
                  Delinquency Advances and/or Servicing Advances pursuant to
                  Section 3.29; and

                       (vii) to clear and terminate the Certificate Account
                  pursuant to Section 10.01.

         Section 3.12.              Investment of Funds in the Accounts.

                  (a) The Servicer may direct in writing any depository
institution maintaining the Collection Account or the Certificate Account to
invest the funds held therein in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) if
such Permitted Investments are not obligations of the institution maintaining
the account from which the funds are required to be withdrawn, no later than the
Business Day immediately preceding the earliest date on which such funds may be
required to be withdrawn from such account pursuant to this Agreement but in no
event later than the Business Day immediately preceding the next Servicer
Remittance Date or Distribution Date, as applicable and (ii) if such Permitted
Investments are obligations of the institution maintaining the account from
which the funds are required to be withdrawn, no later than the earliest date on
which such funds may be required to be withdrawn from such account pursuant to
this Agreement. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds on deposit in any Account shall be
made in the name of the Trust Administrator (in its capacity as such), as agent
for the Trustee, or in the name of a nominee of the Trust Administrator, in each
case in trust for the benefit of the Certificateholders. With respect to any
Account held by the Trust Administrator, the Trust Administrator shall have sole
control (except with respect to investment direction) over each such investment,
and any certificate or other instrument evidencing any such investment shall be
delivered directly to the Trust Administrator or its agent, together with any
document of transfer necessary to transfer title to such investment to the Trust
Administrator or its nominee. In the event amounts from funds on deposit in any
Account are at any time invested in a Permitted Investment payable on demand,
the Trust Administrator shall:

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

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                  (ii)     demand payment of all amounts due thereunder promptly
                           by a Responsible Officer of the Trust Administrator
                           having actual knowledge that such Permitted
                           Investment would not constitute a Permitted
                           Investment.

                  If the Servicer, with respect to the Collection Account or the
Certificate Account, does not provide investment directions to the depository
institution with respect to the funds on deposit therein, such funds shall be
invested in the Permitted Investments specified in clause (v) of the definition
thereof, which may be administered by an affiliate of such depository
institution.

                  (b) All net income and net gain realized from investment of
funds deposited in the Collection Account and the Certificate Account shall be
for the benefit of the Servicer and shall be subject to its withdrawal in
accordance with Section 3.11 hereof. The Servicer shall deposit in the
Collection Account, the Certificate Account or any REO Account, as applicable,
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon realization of such
loss.

                  (c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee or the Trust Administrator shall take such
action as it is directed in writing by the Servicer, as appropriate, to take in
order to enforce such payment or performance, including the initiation and
prosecution of appropriate proceedings; provided, however, that the Trustee and
the Trust Administrator shall be indemnified and reimbursed for any related
costs, expenses, losses or liabilities as provided in Section 8.05 hereof.

         Section 3.13.              Maintenance of Hazard Insurance and Errors
                                    and Omissions and Fidelity Coverage.

                  (a) The Servicer shall cause to be maintained for each
Mortgage Loan hazard insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the Loan Balance
of such Mortgage Loan and the amount necessary to fully compensate for any
damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case in an amount not less than such amount as
is necessary to avoid the application of any co-insurance clause contained in
the related hazard insurance policy. The Servicer shall also cause to be
maintained hazard insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the improvements which are part of such property and (ii) the Loan Balance of
the related Mortgage Loan at the time it became an REO Property, plus accrued
interest at the Mortgage Rate and related Servicing Advances. The Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the related Mortgaged Property or
amounts to be released to the Mortgagor in accordance with the procedure that
the Servicer would follow in servicing loans for its own

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account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11 hereof. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the Loan Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is located at
any time in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Servicer will cause to be maintained a flood insurance
policy in respect thereof. Such flood insurance shall be in an amount equal to
the lesser of (i) the Loan Balance of the related Mortgage Loan and, (ii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program).

                  In the event that the Servicer shall obtain and maintain (at
its own expense) a blanket policy with an insurer having a General Policy Rating
of A:X or better in Best's Key Rating Guide (or such other rating that is
comparable to such rating) insuring against hazard losses on all of the Mortgage
Loans, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first two sentences of this Section 3.13, it being understood and
agreed that such policy may contain a deductible clause in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.13, and there shall have been one or more losses
which would have been covered by such policy, deposit into the Collection
Account from its own funds without any right of reimbursement therefor the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee and the Certificateholders, claims under any such blanket policy in
a timely fashion in accordance with the terms of such policy.

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

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Administrator and the Certificate Insurer. The Servicer shall also cause each
Subservicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet the requirements set forth above.

         Section 3.14.              Enforcement of Due-on-Sale Clauses;
                                    Assumption Agreements.

                  The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Servicer shall not be required to take such action if in its sole
business judgment the Servicer believes it is not in the best interests of REMIC
I and shall not exercise any such rights if prohibited by law from doing so. If
the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on- sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note; provided, that no such substitution shall be effective unless such person
satisfies underwriting criteria similar to that used for the related Mortgage
Loan of the Servicer. In connection with any assumption or substitution, the
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification agreement,
however, unless (to the extent practicable in the circumstances) it shall have
received confirmation, in writing, of the continued effectiveness of any
applicable hazard insurance policy. Any fee collected by the Servicer in respect
of an assumption, modification or substitution of liability agreement shall be
retained by the Servicer as additional servicing compensation. In connection
with any such assumption, no material term of the Mortgage Note (including, but
not limited to, the related Mortgage Rate and the amount of the Monthly Payment)
may be amended or modified, except as otherwise required pursuant to the terms
thereof. The Servicer shall notify the Trustee and the Trust Administrator that
any such substitution, modification or assumption agreement has been completed
by forwarding to the Trust Administrator (with a copy to the Trustee) the
executed original copy of such substitution, modification or assumption
agreement, which shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of

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<PAGE>

the Mortgage Note or any assumption which the Servicer may be restricted by law
from preventing, for any reason whatever. For purposes of this Section 3.14, the
term "assumption" is deemed to also include a sale of the Mortgaged Property
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.

         Section 3.15.              Realization upon Defaulted Mortgage Loans.

                  (a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Procedures, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07 hereof. The Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Section 3.11. The
foregoing is subject to the provision that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to expend its own funds toward the restoration of such property
unless it shall determine in its discretion that such restoration will increase
the proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.

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

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

                  (2) there are no circumstances present at such Mortgaged
                  Property relating to the use, management or disposal of any
                  hazardous substances, hazardous materials, hazardous wastes,
                  or petroleum-based materials for which investigation, testing,
                  monitoring, containment, clean-up or remediation could be
                  required under any federal, state or local law or regulation,
                  or that if any such materials are present for

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<PAGE>

                  which such action could be required, that it would be in the
                  best economic interest of REMIC I to take such actions with
                  respect to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.15 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11, such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account to the extent
provided in Section 3.11.

                  If the Servicer determines, as described above, that it is in
the best economic interest of REMIC I to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of REMIC I; provided that any amounts disbursed by the Servicer pursuant to this
Section 3.15(b) shall constitute Servicing Advances, (to the extent such amounts
do not constitute Nonrecoverable Servicing Advances). The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11, such right of reimbursement
being prior to the rights of Certificateholders to receive any amount in the
Collection Account to the extent provided in Section 3.11.

                  (c) The Originator may at its option purchase from REMIC I any
Mortgage Loan that is 90 days or more delinquent, subject to the limitations set
forth in this paragraph, which the Servicer determines in good faith will
otherwise become subject to foreclosure proceedings (evidence of such
determination to be delivered in writing to the Trustee and the Trust
Administrator prior to purchase), at a price equal to the Purchase Price;
provided, however, that if the Originator purchases any such Mortgage Loans on
the basis of delinquency, the Originator must purchase the most delinquent
Mortgage Loans first, unless the Certificate Insurer otherwise agrees. The
Purchase Price for any Mortgage Loan purchased hereunder shall be remitted to
the Servicer for deposit in the Collection Account, and the Trust Administrator,
upon receipt of written certification from the Servicer of such deposit, shall
release or cause to be released to the Originator the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Originator shall furnish and
as shall be necessary to vest in the Originator title to any Mortgage Loan
released pursuant hereto. The total amount of Mortgage Loans that may be
purchased by the Originator pursuant to this Section 3.15(c) (not including
Mortgage Loans repurchased due to a breach of a representation or warranty) may
not exceed 5% of the Cut-off Date Pool Balance, unless the Certificate Insurer
otherwise agrees in writing. Upon ultimate disposition of any such Mortgage
Loans, the Servicer shall provide to the Certificate Insurer a report of such
disposition, which report shall contain the information that would have been
included in the Liquidation Report had the Mortgage Loan remained in REMIC I.

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                  (d) The Servicer may also, with the consent of the Certificate
Insurer, sell to a third party any Mortgage Loan that is 90 days or more
delinquent which the Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee and the Trust Administrator prior to
purchase). Each such Mortgage Loan shall be sold at a market price as determined
by the Servicer.

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

         Section 3.16.              Trustee and Trust Administrator to
                                    Cooperate; Release of Mortgage Files.

                  Upon the payment in full of any Mortgage Loan or the receipt
by the Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Servicer will immediately notify or
cause to be notified the Trustee, the Trust Administrator and the Certificate
Insurer by a certification in the form of Exhibit D-2 (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trust Administrator shall
promptly release the related Mortgage File to the Servicer. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to any Account or shall be otherwise chargeable to the Trust, the
Trustee, the Trust Administrator , the Certificateholders or the Certificate
Insurer.

                  From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trust Administrator shall, upon request of
the Servicer and delivery to the Trust Administrator of a Request for Release in
the form of Exhibit D-1, release the related Mortgage File to the Servicer, and
the Trustee shall, at the direction of the Servicer, execute such documents as
shall be necessary to the prosecution of any such proceedings. Such Request for
Release shall obligate the Servicer to return each and every document previously
requested from the Mortgage File to the Trust Administrator when the need
therefor by the Servicer no longer exists, unless the

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Mortgage Loan has been liquidated and the Liquidation Proceeds or Insurance
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Servicer
has delivered to the Trustee and the Trust Administrator a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation which are required to be deposited
into the Collection Account have been so deposited, a copy of the Request for
Release shall be released by the Trust Administrator to the Servicer.

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

         Section 3.17.              Servicing Compensation.

                  As compensation for the activities of the Servicer hereunder,
the Servicer shall be entitled to retain the Servicing Fee with respect to each
Mortgage Loan, payable solely from payments of interest on the related Mortgage
Loan, in respect of such Mortgage Loan. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds, Liquidation
Proceeds or purchase or repurchase proceeds to the extent permitted by Section
3.11(a)(iii) and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.22. The right to receive the
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Servicer's responsibilities and obligations
under this Agreement, as applicable, although any portion thereof may be paid to
a Subservicer as provided in the related Subservicing Agreement.

                  Additional servicing compensation in the form of Net Recovery
Proceeds in excess of the Loan Balance of the related Mortgage Loan plus any
accrued and unpaid interest thereon that was not advanced as part of a
Delinquency Advance (if permitted by applicable law), penalty interest,
assumption fees, modification fees, insufficient-funds charges, late payment
charges (other then Prepayment Charges) or otherwise shall be retained by the
Servicer only to the extent such fees or charges are received by the Servicer
(such amounts, "Additional Servicing Compensation"). The

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Servicer shall also be entitled pursuant to Section 3.11(a)(ii) hereof to
interest or other investment income earned from the investment of funds on
deposit in the Collection Account and the Certificate Account, respectively, as
additional servicing compensation. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including, without limitation, (x) payment of premiums for the insurance
required by Section 3.13 hereof, to the extent such premiums are not paid by the
related Mortgagors or by a Subservicer and (y) servicing compensation of each
Subservicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

         Section 3.18.              Reports to the Trust Administrator and the
                                    Trustee; Collection Account Statements.

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

                  (b) If funds in the Collection Account during a Due Period
have been invested in investments other than bank deposits of the depository
institution maintaining the Collection Account or money market funds (as
described in the definition of Permitted Investments), then, on or before the
related Distribution Date, the Servicer shall forward to the Trustee, the Trust
Administrator, the Certificate Insurer and the Depositor a statement setting
forth the activity in the Collection Account during the preceding calendar
month.

         Section 3.19.              Statement as to Compliance and Financial
                                    Statements.

                  The Servicer will deliver to the Trustee, the Trust
Administrator, the Depositor and the Certificate Insurer not later than 90 days
following the end of each fiscal year (beginning with the fiscal year ending
February 28, 2001) of the Servicer, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding year and of performance under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.

                  Contemporaneously with the submission of the Officers'
Certificate required by the preceding paragraph, the Servicer shall deliver to
the Trustee, the Trust Administrator and the Certificate Insurer a copy of its
annual audited financial statements prepared in the ordinary course of business.
The Servicer shall, upon the request of the Depositor, deliver to such party any
unaudited quarterly financial statements of the Servicer.

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                  The Servicer shall forward to the Certificate Insurer a copy
of any audited annual financial statements, as well as any unaudited quarterly
financial statements, of any Sub-Servicer received by the Servicer, both at the
Servicer's expense.

                  Copies of any such Officers' Certificate and financial
statements shall be provided by the Trust Administrator to the Certificate
Insurer, any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trust Administrator.

         Section 3.20.              Independent Public Accountants' Servicing
                                    Report.

                  Not later than 90 days following the end of each fiscal year
(beginning with the fiscal year ending February 28, 2001) of the Servicer, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal year and (ii) on the basis of an examination conducted by such
firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report, such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Subservicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Subservicers. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Certificate Insurer, the Trustee, the Trust
Administrator, the Depositor and each Rating Agency. Copies of such statement
shall be provided by the Trust Administrator to any Certificateholder upon
request at the Servicer's expense, provided that such statement is delivered by
the Servicer to the Trust Administrator.

         Section 3.21.              Access to Certain Documentation.

                  The Servicer shall provide to the OTS, the FDIC and any other
federal or state banking or insurance regulatory authority that may exercise
authority over any Certificateholder or the Certificate Insurer, access to the
documentation regarding the Mortgage Loans required by applicable state and
federal laws and regulations. The Servicer shall similarly provide to the
Trustee, the Trust Administrator, the Depositor and the Certificate Insurer such
access to the documentation regarding the Mortgage Loans as such Persons may
reasonably require. Such access shall in each case be afforded without charge,
but only upon reasonable request and during normal business hours at the offices
of the Servicer or of a Subservicer, as applicable, designated by it. The
Servicer shall also, upon request of the Trustee, the Trust Administrator, the
Depositor or the Certificate Insurer,

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provide such Person with any information concerning the Mortgage Loans or the
Prepayment Charges as is requested by such person and reasonably available to
the Servicer.

         Section 3.22.              Title, Management and Disposition of REO
                                    Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trust on behalf of the Certificateholders. The
Servicer, on behalf of the Trust, shall sell any REO Property within three years
after the Trust acquires ownership of such REO Property for purposes of Section
860G(a)(8) of the Code, unless the Servicer has delivered to the Trust
Administrator, the Trustee, the Depositor and the Certificate Insurer an
Independent Opinion of Counsel, addressed to the Trust Administrator, the
Trustee, the Depositor, the Servicer and the Certificate Insurer, to the effect
that holding such REO Property for more than three years after its acquisition
will not result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or cause the Trust to fail to
qualify as a REMIC under federal law at any time that any Certificates are
outstanding. The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Certificate Insurer solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by REMIC I of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions.

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

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

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

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

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

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

                  Notwithstanding the foregoing, the Servicer shall not:

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

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

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

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

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

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

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

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

                           (iii) none of the provisions of this Section 3.22(c)
relating to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders with respect to
the operation and management of any such REO Property; and

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

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

                  (d) In addition to the withdrawals permitted under Section
3.22(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Subservicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Subservicer for unreimbursed Servicing Advances and Delinquency
Advances made in respect of such REO Property or the related Mortgage Loan. On
the Servicer Remittance Date, the Servicer shall withdraw from each REO Account
maintained by it and deposit into the Collection Account, for distribution on
the related Distribution Date in accordance with Section 4.04, the income from
the related REO Property received during the prior calendar month, net of any
withdrawals made pursuant to Section 3.22(c) or this Section 3.22(d).

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

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                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer or any Subservicer as
provided above, shall be deposited in the Collection Account in no event more
than two Business Days after the Servicer's receipt thereof for distribution on
the related Distribution Date in accordance with Section 4.04. Any REO
Disposition shall be for cash only (unless changes in the REMIC Provisions made
subsequent to the Startup Day allow a sale for other consideration).

                  (g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

         Section 3.23.              Prepayment Interest Shortfalls.

                  The Servicer shall deposit into the Collection Account on or
before 12:00 noon, New York time, on each Servicer Remittance Date an amount
equal to the lesser of (i) the aggregate of the Prepayment Interest Shortfalls
resulting from Principal Prepayments during the related Prepayment Period and
(ii) its aggregate Servicing Fee received with respect to the related Due
Period.

         Section 3.24.              [Reserved].

         Section 3.25.              [Reserved].

         Section 3.26.              Certain Procedures Relating to Successor
                                    Subservicers and Successor Servicers.

                  (a) In the event that any Subservicer is to be terminated, the
Certificate Insurer and the Servicer shall consult among themselves with respect
to the appointment of a successor Sub- Servicer (it being acknowledged that the
Servicer is obligated to service the Mortgage Loan directly pursuant to Section
3.03 hereof if no successor Subservicer is appointed pursuant to this Section
3.26(a)). In the event that such parties cannot, with reasonable promptness (but
in no event later than 30 days), agree on the identity of the successor
Sub-Servicer (or whether the Servicer shall be required to service directly the
Mortgage Loans) the decision of the Certificate Insurer shall control.

                  (b) In connection with any change in the Servicer's servicing
software, the Servicer shall promptly deliver to the Trustee, the Trust
Administrator and the Certificate Insurer an Officers' Certificate detailing the
substance of such change and the Servicer shall cooperate fully with the Trustee
and the Trust Administrator in any manner that the Trustee or the Trust

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Administrator reasonably deems necessary with respect to such change, to the
extent such change affects the ability of the Trustee or the Trust Administrator
to perform its obligations hereunder.

         Section 3.27.              Reports to the Securities and Exchange
                                    Commission.

                  The Trust Administrator shall, on behalf of the Trust, cause
to be filed with the Securities and Exchange Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder. Upon the request of the Trust Administrator, each of the
Servicer, the Depositor, the Trustee and the Certificate Insurer shall cooperate
with the Trust Administrator in the preparation of any such report and shall
provide to the Trust Administrator in a timely manner all such information or
documentation as the Trust Administrator may reasonably request in connection
with the performance of its duties and obligations under this Section.

         Section 3.28.              Servicing Termination.

                  The Servicer hereby covenants and agrees to act as the
Servicer under this Agreement for an initial term, commencing on the Closing
Date and ending on September 30, 2000, which term shall be extendable by the
Certificate Insurer for successive terms of three calendar months thereafter,
until the termination of REMIC I pursuant to Article X. Each such notice of
extension ("a Servicer Extension Notice") shall be delivered by the Certificate
Insurer to the Trustee, the Trust Administrator and the Servicer. The Servicer
hereby agrees that, upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound for the duration of the term covered by such
Servicer Extension Notice to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. The Trust Administrator
agrees that if as of the fifteenth (15th) day prior to the last day of any term
of the Servicer the Trust Administrator shall not have received any Servicer
Extension Notice from the Certificate Insurer, the Trust Administrator will
within five (5) days thereafter, give written notice of such non-receipt to the
Certificate Insurer and the Servicer.
The failure of the Certificate Insurer to deliver a Servicer Extension Notice by
the end of a calendar term shall result in the termination of the Servicer. If
the term of the Servicer shall expire without the Certificate Insurer having
delivered to the Servicer a Servicer Extension Notice, but the Servicer shall
continue without objection from the Trustee, the Trust Administrator or the
Certificate Insurer to perform the functions of servicer hereunder (and in the
absence of ground for termination under the Insurance Agreement), the Servicer
shall be entitled to receive a prorated portion of the Servicing Fee specified
hereunder for the time during which it shall so act; provided, that it is
understood and agreed that the foregoing provision for payment of the prorated
Servicing Fee is intended solely to avoid unjust enrichment of REMIC I and does
not contemplate or give rise to any implicit renewal of the Servicer's term. The
foregoing provisions of this paragraph shall not apply to the Trustee or Trust
Administrator in the event the Trustee or Trust Administrator succeeds to the
rights and obligations of the Servicer and the Trustee or Trust Administrator
shall continue in such capacity until the earlier of the termination of this
Agreement pursuant to Article X or the appointment of a successor servicer.

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         Section 3.29.              Advance Facility.

                  (a) The Trustee or the Trust Administrator on behalf of the
Trust, is hereby authorized, with the consent of the Servicer and the
Certificate Insurer, to enter into a facility with any Person which provides
that such Person (an "Advancing Person") may fund Delinquency Advances and/or
Servicing Advances under this Agreement, although no such facility shall reduce
or otherwise affect the Servicer's obligation to fund such Delinquency Advances
and/or Servicing Advances. To the extent that an Advancing Person funds any
Delinquency Advance or any Servicing Advance and provides the Trust
Administrator and the Certificate Insurer with notice acknowledged by the
Servicer that such Advancing Person is entitled to reimbursement, such Advancing
Person shall be entitled to receive reimbursement pursuant to this Agreement for
such amount to the extent provided in Section 3.29(b). Such notice from the
Advancing Person must specify the amount of the reimbursement and must specify
which Section of this Agreement permits the applicable Delinquency Advance or
Servicing Advance to be reimbursed. The Trust Administrator shall have no duty
or liability to the Servicer with respect to any calculation of any
reimbursement to be paid to an Advancing Person and shall be entitled to rely
without independent investigation on the Advancing Person's notice provided
pursuant to this Section 3.29. An Advancing Person whose obligations hereunder
are limited to the funding of Delinquency Advances and/or Servicing Advances
shall not be required to meet the qualifications of a Subservicer pursuant to
Section 3.02 hereof.

                  (b) If an Advancing Person is entitled to reimbursement for
any particular Delinquency Advance or Servicing Advance, then the Servicer shall
not be permitted to reimburse itself therefor under Section 3.11(a)(ii), Section
3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), but instead the
Servicer shall deposit such amount in the Collection Account as collected and
include such amounts in the applicable remittance to the Trust Administrator
made pursuant to Section 3.10(b) to the extent of amounts on deposit in the
Collection Account on the related Servicer Remittance Date. The Trust
Administrator is hereby authorized to pay to an Advancing Person, reimbursements
for Delinquency Advances and Servicing Advances from the Certificate Account to
the same extent the Servicer would have been permitted to reimburse itself for
such Delinquency Advances and/or Servicing Advances in accordance with Section
3.11(a)(ii), Section 3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix),
as the case may be, had the Servicer made such Delinquency Advance or Servicing
Advance.

         Section 3.30.              PMI Policy; Claims Under the PMI Policy.

                  Notwithstanding anything to the contrary elsewhere in this
Article III, the Servicer shall not agree to any modification or assumption of a
PMI Mortgage Loan or take any other action with respect to a PMI Mortgage Loan
that could result in denial of coverage under the PMI Policy.
The Servicer shall notify the PMI Insurer that the Trustee, on behalf of the
Certificateholders, is the Owner, as that term is defined in the PMI Policy, of
each PMI Mortgage Loan. The Servicer shall, on behalf of the Trust Administrator
and the Trustee, prepare and file on a timely basis with the PMI Insurer, with a
copy to the Trust Administrator, the Trustee and the Certificate Insurer, all

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claims which may be made under the PMI Policy with respect to the PMI Mortgage
Loans. Consistent with all rights and obligations hereunder, the Servicer shall
take all actions required under the PMI Policy as a condition to the payment of
any such claim. Any amount received from the PMI Insurer with respect to any
such PMI Mortgage Loan shall be deposited by the Servicer, no later than two
Business Days following receipt thereof, into the Collection Account.

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                                   ARTICLE IV

                                  FLOW OF FUNDS

         Section 4.01.              Establishment of Accounts.

                  The Trust Administrator, on behalf of the Trust and as agent
for the Trustee, shall establish on the Closing Date, and thereafter maintain,
the Certificate Account and the Policy Payments Account, each of which shall
conform to the definition of Eligible Account and shall be held by the Trust
Administrator for the benefit of the Certificateholders and the Certificate
Insurer, as their interests may appear.

         Section 4.02.              The Certificate Insurance Policy.

                  (a) Not later than 3:00 p.m., New York time, on the third
Business Day immediately preceding each Distribution Date, the Trust
Administrator shall determine the Available Funds for such Distribution Date.

                       To the extent any Available Funds Shortfall will exist
for any Distribution Date after giving effect to the distributions specified in
Section 4.04(a) hereof (calculating such distributions without giving effect to
any Insured Payment to be made on such Distribution Date), the Trust
Administrator shall complete a notice in the form attached to the Policy (the
"Notice") and shall submit such Notice to the Certificate Insurer no later than
10:00 a.m., New York time, on the second Business Day preceding such
Distribution Date. Such Notice may be delivered by electronic facsimile (in
which case the original shall be sent by overnight courier). The Notice shall
constitute a claim for an Insured Payment pursuant to the Policy for an amount
equal to the Available Funds Shortfall. Upon receipt of Insured Payments on
behalf of the Certificateholders, the Trust Administrator shall deposit such
Insured Payments in the Policy Payments Account, and shall thereafter transfer
such Insured Payments to the Certificate Account for distribution solely to the
related Certificateholders in accordance with Section 4.04(a).

                  (b) The Trust Administrator, on behalf of the Trust and as
agent for the Trustee, shall establish a separate special purpose trust account
for the benefit of the Holders of the Offered Certificates and the Certificate
Insurer (the "Policy Payments Account") over which the Trust Administrator shall
have exclusive control and sole right of withdrawal. The Trust Administrator
shall deposit any amount paid under the Policy into the Policy Payments Account
and distribute such amount only for purposes of payment to the Holders of
Offered Certificates of the Insured Payment for which a claim was made and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Trustee, the Trust Administrator or the Trust. Amounts paid under
the Policy shall be transferred to the Certificate Account in accordance with
the next succeeding paragraph and thereafter disbursed by the Trust
Administrator to the Holders of the Offered Certificates in accordance with
Section 4.04(a). It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
any other

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amounts distributed pursuant to Section 4.04(a). However, the amount of any
payment of principal of or interest on the Offered Certificates to be paid from
funds transferred from the Policy Payments Account shall be noted in the
statement to be furnished to related Holders of the Offered Certificates
pursuant to Section 4.06. Funds held in the Policy Payments Account shall not be
invested by the Trust Administrator.

                       On any Distribution Date with respect to which a claim
has been made under the Policy, the amount of any funds received by the Trust
Administrator as a result of such claim, to the extent required to pay amounts
owed to Certificateholders on such Distribution Date, shall be withdrawn from
the Policy Payments Account and deposited in the Certificate Account and applied
by the Trust Administrator, together with the other funds to be deposited in the
Certificate Account, directly to the amounts owed to Certificateholders on the
related Certificates. Funds received by the Trust Administrator as a result of
any claim under the Policy shall be deposited by the Trust Administrator in the
Policy Payments Account and then transferred to the Certificate Account and used
solely for payment to the related Holders of the related Certificates and may
not be applied to satisfy any costs, expenses or liabilities of the Servicer,
the Trustee, the Trust Administrator or the Trust. Any funds remaining in the
Policy Payments Account on the first Business Day following a Distribution Date
shall be remitted to the Certificate Insurer, pursuant to the instructions of
the Certificate Insurer, by the end of such Business Day.

                  (c) The Trust Administrator shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any
Certificate from moneys received under the Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.

                  (d) The Trust Administrator shall receive, as attorney-in-fact
of each Holder of a Class A Certificate, any Insured Payment from the
Certificate Insurer and disburse the same to each Holder of a Class A
Certificate in accordance with the provisions of this Article IV. Insured
Payments disbursed by the Trust Administrator from proceeds of the Policy shall
not be considered payment by the Trust nor shall such payments discharge the
obligation of the Trust with respect to such Offered Certificates, and the
Certificate Insurer shall be subrogated to the rights of the Certificateholders
to the extent of the payment and shall be entitled to receive the Reimbursement
Amount pursuant to Section 4.04(a)(I)(vi) or (II)(vi). By acceptance of a
Certificate, each Holder of a Certificate agrees and recognizes that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be entitled to receive the
Reimbursement Amount pursuant to Section 4.04(a)(I)(vi) and (II)(vi).

                  (e) If the Trust Administrator receives a certified copy of an
order of the appropriate court (an "Order") that any prior distribution made on
the Offered Certificates of principal or current interest has been voided in
whole or in part as a Preference Payment under applicable bankruptcy,
insolvency, receivership or similar law, the Trust Administrator shall so notify
the Certificate Insurer, shall comply with the provisions of the Policy to
obtain payment by the Certificate Insurer

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of such voided distribution and shall, at the time it provides notice to the
Certificate Insurer, notify each Holder of the affected Certificates by mail (i)
that, subject to the terms of the Policy, the Certificate Insurer will disburse
the voided distribution directly to the receiver, conservator, debtor-
in-possession or trustee in bankruptcy named in the Order following such
Certificateholder's making timely delivery to the Trust Administrator of (a) a
certificate of such Certificateholder that such Order has been entered and is
not subject to any stay and (b) an assignment duly executed and delivered by
such Certificateholder, in such form as is reasonably required by the
Certificate Insurer and provided to such Certificateholder by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and claims
of such Certificateholder relating to or arising under the affected Certificates
against the debtor that made such Preference Payment, or otherwise with respect
to such preference payment, and (ii) that, if any such voided distribution
payment is recovered from such Certificateholder pursuant to such Order, such
Certificateholder will be entitled to payment pursuant to the Policy. A copy of
the Policy shall be made available to each affected Certificateholder through
the Trust Administrator, and the Trust Administrator shall furnish to the
Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments that have been made by the Trust Administrator and subsequently
recovered from Certificateholders and the dates on which such payments were
made.

                  (f) The Trust Administrator shall promptly notify the
Certificate Insurer of any proceeding or the institution of any action, of which
a Responsible Officer of the Trust Administrator has actual knowledge, seeking
the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership or similar law (a "Preference Claim") of any
distribution made with respect to the Offered Certificates. Each Holder of a
Class A Certificate, by its purchase of such Certificate, the Servicer, the
Trust Administrator and the Trustee agree that the Certificate Insurer (so long
as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to, and each Holder, the Servicer, the Trust
Administrator and the Trustee hereby delegate and assign to the Certificate
Insurer, to the fullest extent permitted by law, the rights of the Servicer, the
Trustee, the Trust Administrator and each Holder in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to any
adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.

                  (g) It is understood and agreed that the intention of the
parties is that the Certificate Insurer shall not be entitled to reimbursement
on any Distribution Date for amounts previously paid by it unless on such
Distribution Date the Class A Certificateholders shall also have received the
full amount of the Insured Distribution Amount for such Distribution Date.

         Section 4.03.              Deposits into, and Transfers Among, the
                                    Accounts.

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                  (a) The Trust Administrator shall deposit into the Certificate
Account, upon receipt, the amounts referred to in Section 3.10(b) and (d) and
the Termination Price received by the Trust Administrator in connection with a
termination of the Trust pursuant to Article X hereof.

                  (b) Prior to 1:00 p.m. New York time on any Distribution Date,
the Trust Administrator shall make all transfers required in order to make the
payments required pursuant to Section 4.04 hereof.

         Section 4.04.              Flow of Funds and Distributions

                  (a) On each Distribution Date, the Trust Administrator shall
withdraw (a) from the Certificate Account, the Available Funds and (b) from the
Policy Payments Account, the amount of any Insured Payment and shall distribute
the same in the following order of priority:

                       (i) in the following order: first, to pay the PMI Insurer
the premium on the PMI Policy and second, to pay the Trust Administrator the
Administrative Fee attributable to the Mortgage Loans;

                       (ii) to the Certificate Insurer, the Premium Amount for
such Distribution Date (to the extent such payment will not cause an Insured
Payment to be required);

                       (iii) to the holders of the Class A Certificates, the
Interest Distribution Amount for such Distribution Date;

                       (iv) to the holders of the Class A Certificates, an
amount equal to the Basic Principal Distribution Amount;

                       (v) to the Certificate Insurer, the Reimbursement Amount
for the such Distribution Date (to the extent such payment will not cause an
Insured Payment to be required);

                       (vii) to the holders of the Certificates, an amount equal
to the Extra Principal Distribution Amount;

                       (viii) if such Distribution Date follows the Prepayment
Period during which the latest date on which a Prepayment Charge may be required
to be paid in respect of any Mortgage Loan, to the holders of the Class P
Certificates, in reduction of the Certificate Principal Balance thereof, until
the Certificate Principal Balance thereof is reduced to zero.

                  On each Distribution Date, any remaining amounts after giving
effect to the distributions above will be paid to the Holders of the Class R
Certificates.

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                  On each Distribution Date the Trustee shall withdraw from the
Certificate Account an amount equal to the Prepayment Charges and the Servicer
Prepayment Charge Amount and shall pay it to the Class P Certificates.

                  (b) Whenever in the administration of the Trust the Trust
Administrator comes into possession of money or other property not otherwise
required to be paid to the Holders of the Class A Certificates, the Certificate
Insurer, the Servicer or any other Person, or not required to be otherwise
applied at any time pursuant to the provisions of this Agreement, the Trust
Administrator shall promptly distribute such money or other property to the
Class R Certificateholders.

                  (c) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of the respective Class
of record on the Record Date (other than as provided in Section 4.04(f) or
Section 10.01 hereof respecting the final distribution on such Class), and shall
be made to each such Certificateholder (x) by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder is the
registered owner of a Class R Certificate or the registered owner of a Class of
Class A Certificates evidencing a Percentage Interest aggregating at least 10%
hereof, and shall have so notified the Trust Administrator in writing in the
case of the first Distribution Date, by the Closing Date, and, in the case of
all subsequent Distribution Dates, at least five Business Days prior to the
Record Date immediately prior to such Distribution Date; or (y) otherwise by
check mailed by first class mail to the address of such Certificateholder
appearing in the Certificate Register. Payments to the Certificate Insurer on
any Distribution Date will be made by wire transfer of immediately available
funds to the account designated by the Certificate Insurer (initially, in the
Premium Letter).

                  (d) The rights of the Certificateholders to receive
distributions from the proceeds of the Trust in respect of the Certificates, and
all interests of the Certificateholders in and to such distributions, shall be
as set forth in this Agreement. In no event shall the Holders of any Class of
Certificates, the Trustee, the Trust Administrator, the Depositor, the Servicer
or the Certificate Insurer in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.

                  (e) Except as otherwise provided in Section 10.01 hereof,
whenever the Trust Administrator expects that the final distribution with
respect to any Class of Certificates will be made on the next Distribution Date,
the Trust Administrator shall, no later than four days prior to the related
Distribution Date, send, by overnight delivery or by registered mail, to each
Holder on such date of such Class of Certificates and to the Certificate Insurer
a notice to the effect that:

                       (i) the Trust Administrator expects that the final
distribution with respect to such Class of Certificates will be made on such
Distribution Date and requests that such Holder send its Certificates to the
Trust Administrator immediately following such final Distribution Date,

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                       (ii) no interest shall accrue on such Certificates from
and after the end of the related Due Period, and upon the Trust Administrator's
making of such final distribution with respect to such Class of Certificates,
such Certificates will be absolutely null and void and of no further effect
thereafter, and

                       (iii) such final distribution will only be made upon
presentment of the Certificates to the Trust Administrator at its Corporate
Trust Office or at such other address set forth in such notice.

                  (f) Within one Business Day of the Trust Administrator's
receipt of any payment disbursed to it by the Certificate Insurer in respect of
any Preference Amount recovered from Class A Certificateholders, the Trust
Administrator shall distribute such payment to such Certificateholders. If any
such distribution is to be made on a Distribution Date, it shall be so made
before giving effect to any distribution to be made on such date pursuant to
Section 4.04(a). The Trust Administrator shall distribute to the respective
Class A Certificateholder any payment disbursed to it by the Certificate Insurer
in respect of any previous distribution to a Class A Certificateholder that was
avoided as a preference pursuant to a final, non-appealable order of a court of
competent jurisdiction under applicable bankruptcy, insolvency, receivership or
similar law, and that such Certificateholder has repaid to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, as the case may be.

                  (g) With respect to each Account, the Servicer shall deliver
to the Trust Administrator without any right of reimbursement therefor for
deposit into such Account the amount of any losses incurred in connection with
the investment of funds in such Account within one Business Day after receipt
from the Trust Administrator of notice of any such losses. The Trust
Administrator shall not be responsible for and shall be indemnified by the
Servicer against any expenses or liability incurred with respect to such
investment losses.

         Section 4.05.              [Reserved].

         Section 4.06.              Statements to Certificateholders.

                  On each Distribution Date the Trust Administrator shall
forward by mail to each Holder of a Class A Certificate and the Certificate
Insurer a statement, parts of which shall be based upon Servicer Information and
upon which the Trust Administrator shall conclusively rely, without independent
verification, as to the distributions made on such Distribution Date, setting
forth the following information:

                  (a) the amount of the distributions, separately identified,
with respect to the Class A Certificates;

                  (b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments and
monthly scheduled payments of principal or

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other recoveries of principal included therein; and the amount of the
distribution made on such Distribution Date to the Holders of the Class P
Certificates allocable to Prepayment Charges;

                  (c) the amount of such distributions allocable to interest and
the calculation thereof;

                  (d) the Aggregate Loan Balance as of the end of the related
Due Period;

                  (e) the Certificate Principal Balance of each Class of Class A
Certificates after giving effect to any payment of principal on such
Distribution Date;

                  (f) the amount of any Insured Payment included in the amounts
distributed to the Holders of Offered Certificates on such Distribution Date;

                  (g) the Insured Distribution Amount for such Distribution
Date, separately identifying the portions thereof allocable to principal and
interest;

                  (h) the principal amount of each Class A Certificate (based on
a Certificate in the original principal amount of $1,000) which will be
outstanding and the Certificate Principal Balance of each Class of Class A
Certificates, in each case after giving effect to any payment of principal on
such Distribution Date;

                  (i)  the amount of any OC Release Amount;

                  (j)  the amount of any Available Funds Shortfall;

                  (k)  the Net WAC Cap;

                  (l) the amount, if any, of Realized Losses for the previous
calendar month;

                  (m) the Overcollateralized Amount after giving effect to all
distributions on such Distribution Date;

                  (n) the total of any Substitution Shortfall Amounts or
Purchase Price amounts paid or received by the Servicer with respect to the
preceding month;

                  (o) the weighted average Mortgage Rate of the Mortgage Loans
as of the last day of the related Due Period;

                  (p) the current weighted average of the remaining terms of the
Mortgage Loans;

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

                  (r) the amount of Administrative Fee paid to the Trustee and
the Trust Administrator;

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                  (s) the amount of any Delinquency Advances and Servicing
Advances for the related Due Period, the aggregate amount of Delinquency
Advances outstanding after giving effect to such Delinquency Advances and the
aggregate amount of Nonrecoverable Delinquency Advances with respect to such
Distribution Date;

                  (t)  the number of Mortgage Loans outstanding;

                  (u) the cumulative number and Loan Balances of liquidated
Mortgage Loans;

                  (v) the amount of cumulative Realized Losses and its
percentage of the Cut-off Date Pool Balance;

                  (w) the Cut-off Date Loan Balance of each Mortgage Loan which
was modified or extended pursuant to Section 2.11 or 3.07 hereof;

                  (x) the aggregate amount of payments in respect of Prepayment
Interest Shortfalls deposited in the Collection Account by the Servicer on the
related Servicer Remittance Date pursuant to Section 3.23 hereof;

                  (y) the Remittance Report (as defined in Section 4.06 hereof);

                  (z) the Interest Distribution Amount and the Principal
Distribution Amount for such Distribution Date;

                  (aa) the Reimbursement Amount, if any and the amount, if any,
allocable to principal, the amount allocable to interest and the amount
allocable to other amounts due under the Insurance Agreement;

                  (bb) whether the Step Down Trigger or the Step Up Trigger has
occurred and whether the Servicer Termination Test has been violated and the
Rolling Delinquency Percentage and the Annual Loss Percentage for the current
Distribution Date;

                  (cc) the amount of payments received under the PMI Policy and
the number of Mortgage Loans to which such payments related;

                  (dd) the dollar amount of claims made under the PMI Policy
that were denied during the Due Period and the dollar amount of the cumulative
claims made under the PMI Policy denied since the Closing Date;

                  (ee) the Pass-Through Rate for the Class A Certificates for
such Distribution Date;

                  (ff) the Basis Risk Shortfall, if any, for such Distribution
Date and the Unpaid Basis Risk Shortfalls, if any, outstanding after
reimbursements therefor on such Distribution Date;

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<PAGE>

                  (gg) the balance of the Reserve Fund prior to the deposit or
withdrawal of any amounts on such Distribution Date, the amount of any
withdrawal from the Reserve Fund pursuant to Section 4.04(a)(II)(ix) and the
balance of the Reserve Fund after all deposits and withdrawals on such
Distribution Date; and

                  (hh) the amount distributed to the Class R Certificateholders.

         Items (a), (b), (c) and (e) above shall also be presented on the basis
of a certificate having a $1,000 denomination.

         In addition, on each Distribution Date the Trust Administrator shall
distribute to each Holder, together with the information described above, the
following information based solely upon Servicer Information provided to the
Trust Administrator pursuant to Section 4.06 hereof upon which the Trust
Administrator may conclusively rely without independent verification:

                  (A) the number of, and aggregate Loan Balances (including the
                  percent of the aggregate Loan Balances of such Mortgage Loans
                  to the aggregate Loan Balances of all Mortgage Loans) of,
                  Mortgage Loans (i) 30-59 days Delinquent, (ii) 60-89 days
                  Delinquent and (iii) 90 days or more Delinquent (which
                  statistics shall, in each case, include Mortgage Loans in
                  foreclosure and bankruptcy but which shall exclude REO
                  Properties and shall, in each case, show Mortgage Loans in
                  bankruptcy separately as well as aggregated with other
                  Mortgage Loans in that category), as of the close of business
                  on the last day of the calendar month next preceding such
                  Distribution Date and the aggregate Loan Balances of all
                  Mortgage Loans as of such date;

                  (B) the number of, and aggregate Loan Balances of, all
                  Mortgage Loans in foreclosure proceedings (other than any
                  Mortgage Loans described in clause (C) below) and the percent
                  of the aggregate Loan Balances of such Mortgage Loans to the
                  aggregate Loan Balances of all Mortgage Loans, all as of the
                  close of business on the last day of the calendar month next
                  preceding such Distribution Date;

                  (C) the number of, and the Aggregate Loan Balance of, the
                  Mortgage Loans in bankruptcy proceedings and the percent of
                  the Aggregate Loan Balance of such Mortgage Loans to the
                  Aggregate Loan Balance of all Mortgage Loans, all as of the
                  close of business on the last day of the calendar month next
                  preceding such Distribution Date;

                  (D) the number of REO Properties, the Aggregate Loan Balance
                  of the related Mortgage Loans, and the percent of the
                  Aggregate Loan Balance of such Mortgage Loans to the Aggregate
                  Loan Balance of all Mortgage Loans, all as of the close of
                  business on the last day of the calendar month next preceding
                  such Distribution
                  Date;

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<PAGE>

                  (E) for each Mortgage Loan which is an REO Property, the Loan
                  Balance of such Mortgage Loan, the loan number of such
                  Mortgage Loan, the Value of the Mortgaged Property, the value
                  established by any new appraisal, the estimated cost of
                  disposing of the Mortgage Loan and the amount of any
                  unreimbursed Delinquency Advances and Servicing Advances;

                  (F) for each Mortgage Loan which is in foreclosure, the Loan
                  Balance of such Mortgage Loan, the Value of the Mortgaged
                  Property, the Loan-to-Value Ratio and the loan-to-value ratio
                  on the original Value as of the close of business on the last
                  day of the calendar month next preceding such Distribution
                  Date and the last paid-to- date, based; and

                  (G) the principal balance of each Mortgage Loan that was
                  modified or extended pursuant to Section 2.10 or 3.01 hereof.

                  Within a reasonable period of time (which shall not be more
than 45 days) after the end of each calendar year, the Trust Administrator shall
furnish to each Person who at any time during the calendar year was a Holder of
a Class A Certificate a statement containing the information set forth in
subclauses (a) through (c) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trust Administrator shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trust Administrator pursuant to any requirements of the Code as
are from time to time in force.

                  On each Distribution Date the Trust Administrator shall
forward to the Certificate Insurer, the Depositor, the Trustee, each Holder of a
Class R Certificate, the Servicer and Bloomberg (at 499 Park Avenue, New York,
New York 10022, Attention: Sam Chawla, (212) 940-1843) a copy of the reports
forwarded to the Class A Certificateholders on such Distribution Date, and a
report of the amounts, if any, actually distributed with respect to the Class R
Certificates on such Distribution Date.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to any Person who at any
time during the calendar year was a Holder of a Class R Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder.

                  The Trust Administrator shall, upon written request, forward
to any Certificateholder within five Business Days after the furnishing or
receipt thereof by the Trustee, as the case may be, copies of any (i)
directions, notices, certificates, opinions or reports furnished hereunder by
the Trust Administrator to the Certificate Insurer, the Servicer, the Trustee,
the Depositor or the Rating Agencies, (ii) directions, notices, certificates,
reports, opinions or any other information or document furnished to the Trust
Administrator by the Certificate Insurer, the Trustee, the Servicer, the

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<PAGE>

Depositor or the Rating Agencies and (iii) anything requested in writing by any
Certificateholder which the Trust Administrator otherwise sends to some other
Person pursuant to this Agreement (excluding, however, routine items sent to
Mortgagors, taxing or local property records authorities and similar items)
which, in the case of clause (iii), such Certificateholder is not otherwise
receiving; provided, however, that any such documents or information requested
under clause (iii) shall be at the expense of the requesting Certificateholder;
and provided, further, that the Trust Administrator shall not be required to
provide any document or information which it is otherwise legally prohibited
from providing.

                  The Trustee hereby agrees to disclose the Premium Rate to any
Person upon request.

         Section 4.07.              Remittance Reports; Delinquency Advances by
                                    the Servicer and Insurance Claims.

                  (a) On the Business Day following each Determination Date, the
Servicer shall deliver to the Trustee, the Trust Administrator and the
Certificate Insurer by telecopy (or by such other means as the Servicer, the
Trust Administrator and the Trustee (or the Certificate Insurer) may agree from
time to time) a servicing report (the "Remittance Report") with respect to the
related Distribution Date. In addition, the Servicer shall deliver to Bloomberg,
by electronic medium, a copy of the Remittance Report. On the same date, the
Servicer shall forward to the Trustee, the Trust Administrator and the
Certificate Insurer by overnight mail a computer readable magnetic tape
containing the information set forth in such report with respect to the related
Distribution Date. Such report will include (i) the amount of Delinquency
Advances to be made by the Servicer in respect of the related Distribution Date,
the aggregate amount of Delinquency Advances outstanding after giving effect to
such Delinquency Advances, and the aggregate amount of Nonrecoverable
Delinquency Advances in respect of such Distribution Date and (ii) such other
information with respect to the Mortgage Loans as the Trust Administrator may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.04 and to prepare the statements to
Certificateholders contemplated by Section 4.06. The Trust Administrator shall
not be responsible (except with regard to any information regarding the
Prepayment Charges to the extent set forth below) to recompute, recalculate or
verify any information provided to it by the Servicer. Notwithstanding the
foregoing, in connection with any Principal Prepayment on any Mortgage Loan
listed on Schedule 2 hereto, the Trust Administrator shall verify that the
related Prepayment Charge was delivered to the Trust Administrator for deposit
in the Distribution Account in the amount set forth on such Schedule 2 or that
such Prepayment Charge was waived in accordance with the terms hereof.
 .
                  (b) On or before 3:00 p.m. New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trust Administrator for deposit in the Certificate Account an amount equal to
the aggregate amount of Delinquency Advances, if any, to be made in respect of
the Mortgage Loans and REO Properties for the related Distribution Date either
(i) from its own funds or (ii) from the Collection Account, to the extent of
funds held therein for future distribution (in which case it will cause to be
made an appropriate entry in the records of

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Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.06, used by the Servicer in discharge of any such
Delinquency Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of Delinquency Advances to be made by the Servicer
with respect to the Mortgage Loans and REO Properties. Any amounts held for
future distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before the next Servicer Remittance Date. The Trust Administrator
will provide notice to the Trustee, the Certificate Insurer and the Servicer by
telecopy by the close of business on the third Business Day prior to the
Distribution Date in the event that the amount remitted by the Servicer to the
Trust Administrator on such date is less than the Delinquency Advances required
to be made by the Servicer for the related Distribution Date.

                  (c) The obligation of the Servicer to make Delinquency
Advances (other than Nonrecoverable Delinquency Advances) is mandatory with
respect to any Mortgage Loan or REO Property, and shall continue until a Final
Recovery Determination or an REO Disposition in connection therewith or the
purchase or repurchase thereof from the Trust pursuant to any applicable
provision of this Agreement.

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

         Section 4.08.              Compliance with Withholding Requirements.

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

         Section 4.09.              Securities and Exchange Commission;
                                    Additional Information.

                  Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Securities and Exchange Commission via the
Electronic Data Gathering and Retrieval
System,

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a Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an exhibit thereto. Prior to January 30, 2001, the Trust
Administrator shall file a Form 15 Suspension Notification with respect to the
Trust, if applicable. Prior to March 30, 2001, the Trust Administrator shall
file a Form 10-K with respect to the Trust. The Depositor hereby grants to the
Trust Administrator a limited power of attorney to execute and file each such
document on behalf of the Depositor. Such power of attorney shall continue until
the earlier of (i) receipt by the Trust Administrator from the Depositor of
written termination of such power of attorney and (ii) the termination of the
Trust. Upon request, the Trust Administrator shall deliver to the Depositor a
copy of any Form 8-K or Form 10-K filed pursuant to this Section 4.09.

         Section 4.10.              Reserve Fund.

                  (a) The Trust Administrator has entered into the Yield
Maintenance Agreement for the benefit of the Certificate Insurer and the Class R
Certificateholders. In addition, no later than the Closing Date, the Trust
Administrator shall establish and maintain with itself (i) a separate,
segregated trust account titled, "Reserve Fund, Series 2000-NCB, U.S. Bank
National Association, as Trust Administrator, in trust for the Certificate
Insurer and the Class R Certificateholders. No funds will be deposited into the
Reserve Fund on the Closing Date. Upon receipt thereof from SWAPCO pursuant to
the Yield Maintenance Agreement, the Trust Administrator shall deposit into
Reserve Fund an amount equal to the Reserve Fund Addition subject to section (c)
below.

         (b) The Reserve Fund shall be an Eligible Account. Amounts held in the
Reserve Funds from time to time shall continue to constitute assets of the Trust
for benefit of the Certificate Insurer and the Class R Certificateholders until
released from the Reserve Fund pursuant to this Section. The Reserve Funds
constitute "outside reserve funds" within the meaning of Treasury Regulation
ss.1.860G-2(h) and neither the Reserve Funds nor the Yield Maintenance Agreement
are or will be assets of either REMIC at any time. The Holders of the Residual
Certificates are the owners of the Reserve Fund for all federal tax purposes.
The Trust Administrator shall keep records that accurately reflect the funds on
deposit in the Reserve Fund. The Trust Administrator shall invest the Reserve
Funds in Permitted Investments as directed by the Majority Certificateholders of
the Residual Certificates. On each Distribution Date (or as soon as received if
such funds are not available on such Distribution Date), the Trustee shall
distribute any interest on the Reserve Funds to the Holders of the Residual
Certificates.

         (c) (i) On each Distribution Date on which a Realized Loss with respect
to Mortgage Loan occurs, the Trust Administrator shall take from the Reserve
Fund the amount of such Realized Loss and deposit such amount into the
Certificate Account to be included in Available Funds.

                  (ii) The Trust Administrator shall pay to the Certificate
Insurer from the Reserve Fund, any remaining amounts owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Policy and any other amounts owing to the Certificate Insurer under the
Insurance Agreement, in each case, to the extent funds are available in the
Reserve Fund to make such payments and not paid pursuant to Section 4.04(a).

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                  (iii) On each Distribution Date, from amounts available in the
Reserve Fund after taking into account the payments in the preceding two
paragraphs and any distributions pursuant to Section 4.04(a), the Trustee will
(A) withdraw the excess of (i) the sum of amounts on deposit in the Reserve Fund
and the Overcollateralized Amount over (ii) the Overcollateralization Target
Amount, and pay such amount to the Class R Certificateholder or its designee.

                  (iv) Notwithstanding the foregoing, with respect to any
Distribution Date, if the Projected Principal Balance is greater than the Fixed
Rate Mortgage Loans for such Distribution Date, an amount equal to the Reserve
Fund Addition minus an amount equal to the Reserve Fund Addition multiplied by a
fraction, the numerator of which is the aggregate of the Loan Balances of the
Fixed Rate Mortgage Loans and the denominator is the Projected Principal Balance
shall be released to the Class R Certificates on the same date as it is paid.

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                                    ARTICLE V

                                THE CERTIFICATES

         Section 5.01.              The Certificates.

                  The Certificates consist of the Class A Certificates, the
Class P Certificates and the Class R Certificates. The Certificates in the
aggregate will represent the entire beneficial ownership interest in the
Mortgage Loans and all other assets included in REMIC I.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1, A-2 and A-3. The Class A Certificates shall be issued
upon original issuance as Book-Entry Certificates. The Class P Certificates and
the Class R Certificates shall be issued at all times as Definitive
Certificates. The Class A Certificates are issuable only in denominations of
$50,000 and integral multiples of $1.00 in excess thereof. The Class P
Certificates are issuable only in Percentage Interests corresponding to the
initial Certificate Principal Balance of $20 and integral multiples thereof. The
Class R Certificates are issuable only in denominations representing Percentage
Interests of at least 10%.

                  Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or by the Trust Administrator, upon a
written order to authenticate and upon receipt of the documents specified in
Section 2.04 hereof. The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee or the Trust Administrator by an authorized
signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them shall have ceased to hold
such offices prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided herein executed by the Trustee or the Trust
Administrator by manual signature, and such certificate of authentication shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.

                  Interest shall accrue on the Class A Certificates on the
actual number of days in each Accrual Period and a 360-day year, except as
otherwise provided herein.

         Section 5.02.              Registration of Transfer and Exchange of
                                    Certificates.

                  (a) The Trust Administrator shall cause to be kept at the
office or agency appointed by the Trust Administrator in accordance with the
provisions of Section 8.12 hereof a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Trust Administrator

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<PAGE>

shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Depositor, each
Certificateholder, the Trustee and the Certificate Insurer shall have the right
to inspect the Certificate Register or to obtain a copy thereof at all
reasonable times, and to rely conclusively upon a certificate of the Trust
Administrator as to the information set forth in the Certificate Register. The
Trust Administrator shall furnish or cause to be furnished to the Depositor, the
Trustee and the Certificate Insurer and to any Certificateholder a listing of
the names and addresses of the Certificateholders on reasonable request.

                  (b) (i)The Class R Certificates have not been registered or
qualified under the 1933 Act or any state securities laws or "blue sky" laws. No
transfer, sale, pledge or other disposition of any Class R Certificate shall be
made unless such disposition is made pursuant to an effective registration
statement under the 1933 Act and effective registration or qualification under
applicable state securities laws or "blue sky" laws, or is made in a transaction
which does not require such registration or qualification. In the event that a
transfer is to be made in reliance upon an exemption from the 1933 Act, the
Trust Administrator shall require receipt of: (i) if such transfer is
purportedly being made in reliance upon Rule 144A under the 1933 Act, written
certifications from the Certificateholder desiring to effect the transfer and
from such Certificateholder's prospective transferee, substantially in the forms
attached hereto as Exhibit G; and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust or
of the Depositor, the Trust Administrator, the Trustee, the Servicer in its
capacity as such or any Sub-Servicer), together with copies of the written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such Certificateholder's prospective transferee upon which such Opinion of
Counsel is based, if any.
None of the Depositor, the Servicer, the Trust Administrator or the Trustee is
obligated under this Agreement to register the Class R Certificates under the
1933 Act or any other securities law or to take any action not otherwise
required under this Agreement to permit the transfer of Class R Certificates
without such registration or qualification. Any Class R Certificateholder
desiring to effect such transfer shall, and does hereby agree to, promptly
indemnify and reimburse the Trustee, the Depositor, the Trust Administrator and
the Servicer for costs and expenses incurred in connection with any liability
that results if the transfer is not so exempt or is not made in accordance with
such applicable federal and state laws.

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

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<PAGE>

Counsel shall not be an expense of the Depositor, the Servicer, the Trust
Administrator, the Trustee or the Trust. An Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that such affiliate is
not a Plan or a Person investing Plan Assets) and the Trust Administrator shall
be entitled to conclusively rely upon a representation (which, upon the request
of the Trust Administrator, shall be a written representation) from the
Depositor of the status of such transferee as an affiliate of the Depositor.

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

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

                           (B) In connection with any proposed transfer of any
                       Ownership Interest in a Class R Certificate, the Trust
                       Administrator shall require delivery to it, and shall not
                       register the transfer of any Class R Certificate until
                       its receipt of, an affidavit and agreement (a "Transfer
                       Affidavit and Agreement," in the form attached hereto as
                       Exhibit H) from the proposed transferee representing and
                       warranting, among other things, that such transferee is a
                       Permitted Transferee, that it is not acquiring its
                       Ownership Interest in the Class R Certificate that is the
                       subject of the proposed transfer as a nominee, trustee or
                       agent for any Person that is not a Permitted Transferee,
                       that for so long as it retains its Ownership Interest in
                       a Class R Certificate, it will endeavor to remain a
                       Permitted Transferee, and that it has reviewed the
                       provisions of this Section 5.02(c) and agrees to be bound
                       by them.

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

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

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

                    (ii) The Trust Administrator will register the transfer of a
                  Class R Certificate only if it shall have received the
                  Transfer Affidavit and Agreement and all of such other
                  documents as shall have been reasonably required by the Trust
                  Administrator as a condition to such registration.

                   (iii) (A) If any purported transferee shall become a Holder
                  of a Class R Certificate in violation of the provisions of
                  this Section 5.02(c), then the last preceding Permitted
                  Transferee shall be restored, to the extent permitted by law,
                  to all rights as holder thereof retroactive to the date of
                  registration of such transfer of such Class R Certificate. The
                  Trust Administrator shall be under no liability to any Person
                  for any registration of transfer of a Class R Certificate that
                  is in fact not permitted by this Section 5.02(c) or for making
                  any payments due on such Certificate to the holder thereof or
                  for taking any other action with respect to such holder under
                  the provisions of this Agreement.

                           (B) If any purported transferee shall become a holder
                  of a Class R Certificate in violation of the restrictions in
                  this Section 5.02(c) and to the extent that the retroactive
                  restoration of the rights of the holder of such Class R
                  Certificate as described in clause (iii)(A) above shall be
                  invalid, illegal or unenforceable, then the Trust
                  Administrator shall have the right, without notice to the
                  holder or any prior holder of such Class R Certificate, to
                  sell such Class R Certificate to a purchaser selected by the
                  Trust Administrator on such terms as the Trust Administrator
                  may choose. Such purported transferee shall promptly endorse
                  and deliver each Class R Certificate in accordance with the
                  instructions of the Trust Administrator. Such purchaser may be
                  the Trust Administrator itself or any Affiliate of the Trust
                  Administrator. The proceeds of such sale, net of the
                  commissions (which may include commissions payable to the
                  Trust Administrator or its Affiliates), expenses

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                  and taxes due, if any, will be remitted by the Trust
                  Administrator to such purported transferee. The terms and
                  conditions of any sale under this clause (iii)(B) shall be
                  determined in the sole discretion of the Trust Administrator,
                  and the Trust Administrator shall not be liable to any Person
                  having an Ownership Interest in a Class R Certificate as a
                  result of its exercise of such discretion.

                    (iv) The Trust Administrator shall make available to the
                  Internal Revenue Service and those Persons specified by the
                  REMIC Provisions all information necessary to compute any tax
                  imposed (A) as a result of the transfer of an Ownership
                  Interest in a Class R Certificate to any Person who is a
                  Disqualified Organization, including the information described
                  in Treasury regulations sections 1.860D-1(b)(5) and 1.860E-
                  2(a)(5) with respect to the "excess inclusions" of such Class
                  R Certificate and (B) as a result of any regulated investment
                  company, real estate investment trust, common trust fund,
                  partnership, trust, estate or organization described in
                  Section 1381 of the Code that holds an Ownership Interest in a
                  Class R Certificate having as among its record holders at any
                  time any Person which is a Disqualified Organization.
                  Reasonable compensation for providing such information may be
                  accepted by the Trust Administrator.

                     (v) The provisions of this Section 5.02(c) set forth prior
                  to this subsection (v) may be modified, added to or
                  eliminated, provided that there shall have been delivered to
                  the Trust Administrator at the expense of the party seeking to
                  modify, add to or eliminate any such provision the following:

                           (A) written notification from each Rating Agency to
                       the effect that the modification, addition to or
                       elimination of such provisions will not cause such Rating
                       Agency to downgrade its then-current ratings of any Class
                       of Certificates; and

                           (B) an Opinion of Counsel, in form and substance
                       satisfactory to the Trust Administrator, to the effect
                       that such modification of, addition to or elimination of
                       such provisions will not cause the Trust to cease to
                       qualify as a REMIC and will not cause the Trust to be
                       subject to an entity-level tax caused by the transfer of
                       any Class R Certificate to a Person that is not a
                       Permitted Transferee or a Person other than the
                       prospective transferee to be subject to a REMIC tax
                       caused by the transfer of a Class R Certificate to a
                       Person that is not a Permitted Transferee.

                  Notwithstanding anything in this Section 5.02 to the contrary,
no certifications or Opinions of Counsel will be required in connection with the
initial transfer of any such Class R Certificate by the Depositor to an
affiliate of the Depositor or by the Depositor or such affiliate to Greenwich
Capital Markets, Inc.

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                  (d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by an
executed assignment, as specified in the Certificate) at any agency or office
appointed by the Trust Administrator for such purpose pursuant to Section 8.12
hereof, the Trustee, or the Trust Administrator on behalf of the Trustee, shall
execute and the Trustee or the Trust Administrator shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class of a like aggregate Percentage Interest.

                  (e) At the option of the Certificateholders, each Certificate
may be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency appointed by the Trust
Administrator for such purpose pursuant to Section 8.12 hereof. Whenever any
Certificates are so surrendered for exchange the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trust Administrator) be duly endorsed by, or be accompanied by an assignment in
the form attached to the Certificate or by a written instrument of transfer in a
form reasonably satisfactory to the Trust Administrator duly executed by, the
Holder thereof or his attorney duly authorized in writing.

                  (f) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trust Administrator may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

                  (g) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trust Administrator in accordance with
its customary procedures.

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

                  If (i) any mutilated Certificate is surrendered to the Trust
Administrator or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee, the Trust Administrator and the Certificate
Insurer such security or indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee and the Trust
Administrator from a Holder which is an insurance company having long-term
unsecured debt which is rated at least investment grade (or having a comparable
claim-paying ability rating) and having a minimum net worth of $100,000,000
shall satisfy such requirement) as may be required by them to save each of them
harmless, then, in the absence of actual knowledge by a Responsible Officer of
the Trustee or the Trust Administrator that such Certificate has been acquired
by a bona fide purchaser, the Trustee, or the Trust Administrator on behalf of
the Trustee, shall execute and the Trustee or the Trust Administrator shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination and Percentage Interest. Upon the issuance

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of any new Certificate under this Section, the Trust Administrator may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trust Administrator and the Trustee) connected
therewith. Any replacement 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 Certificateholders.

                  The Depositor, the Servicer, the Trust Administrator, the
Trustee and the Certificate Insurer and any agent of any of them may treat the
Person in whose name any Certificate is registered in the Certificate Register
as the Certificateholder for the purpose of receiving distributions pursuant to
Section 4.04 hereof and for all other purposes whatsoever, and none of the
Depositor, the Servicer, the Trust Administrator, the Trustee, the Certificate
Insurer or any agent of any of them shall be affected by notice to the contrary.

         Section 5.05.              Book-Entry Certificates.

                  At such time, if any, as any Class of Class A Certificates
shall be registered on the Certificate Register in the name of the Depository or
its nominee, such Class shall be issued in the form of one or more typewritten
Certificates representing Book-Entry Certificates to be delivered to the
Depository by or on behalf of the Depositor and held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository.
Any Certificate Owner owning a beneficial interest in the Book-Entry
Certificates shall only be entitled to receive definitive, fully registered
Certificates ("Definitive Certificates") representing such Certificate Owner's
interest in such Certificates pursuant to Section 5.07 hereof. Following the
issuance of Book-Entry Certificates with respect to any Class A Certificates and
until such time, if any, as Definitive Certificates shall have been issued to
the Certificate Owners of such Certificates:

                  (a) the provisions of this Section 5.05 shall be in full force
and effect;

                  (b) the Depositor, the Servicer, the Trust Administrator, the
Trustee and the Certificate Insurer may deal with the Depository and the
Depository Participants for all purposes (including the making of distributions)
as the authorized representative of the respective Certificate Owners of such
Certificates;

                  (c) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, with respect to any Book-
Entry Certificates, the Depository will make book-entry transfers among the
Depository Participants and receive and transmit distributions of principal and
interest on such Certificates to such Depository Participants;

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

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

                  (f) to the extent that the provisions of this Section 5.05
conflict with any other provisions of this Agreement, the provisions of this
Section 5.05 shall control.

                  For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing a specified percentage of the Voting Rights, such
consent or direction may be given by a combination of Certificate Owners (acting
through the Depository and the Depository Participants) owning Book-Entry
Certificates, and Certificateholders owning Definitive Certificates, evidencing
in the aggregate such specified percentage of the Voting Rights.

         The Trust Administrator is hereby initially appointed as the Book-Entry
Custodian and hereby agrees to act as such in accordance herewith and in
accordance with the agreement that it has with the Depository authorizing it to
act as such. The Book-Entry Custodian may, and, if it is no longer qualified to
act as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Servicer, the Trustee and, if the Trust
Administrator is not the Book- Entry Custodian, the Trust Administrator, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor trust administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor's duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

         Section 5.06.              Notices to Depository.

                  Whenever any notice or other communication is required to be
given to Holders of any Class of Certificates represented in whole or in part by
Book-Entry Certificates, the Trust Administrator shall, with respect to such
Book-Entry Certificates, give all such notices and communications to the
Depository rather than to the related Certificate Owners.

         Section 5.07.              Definitive Certificates.

                  After any issuance of Class A Certificates as Book-Entry
Certificates, if (a) the Depositor advises the Trustee or the Trust
Administrator that the Depository is no longer willing or

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able to discharge properly its responsibilities under the Depository Agreement
with respect to such Certificates and the Trustee, Trust Administrator or the
Depositor is unable to locate a qualified successor, (b) the Depositor, at its
sole option, advises the Trustee or the Trust Administrator that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of a Servicer Default,
Certificate Owners of any Class of Certificates evidencing at least 51% of the
Percentage Interests represented by the Book-Entry Certificates of such Class
advise the Trustee, the Trust Administrator and the Depository in writing
through the Depository Participants that the continuation of a book-entry system
with respect to such Certificates through the Depository (or its successor) is
no longer in the best interests of the Certificate Owners with respect to such
Certificates, then the Trust Administrator shall notify all Certificate Owners
of the availability of Definitive Certificates to Certificate Owners requesting
the same.

                  The Depositor shall provide the Trust Administrator with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trust Administrator of any
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall authenticate and deliver the Definitive Certificates
that are to replace such Book-Entry Certificates. Neither the Depositor, the
Trustee nor the Trust Administrator shall be liable for any delay in delivery of
such instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the Holders
of such Definitive Certificates as Certificateholders hereunder.

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                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         Section 6.01.              Liability of the Depositor and the Servicer.

                  The Depositor and the Servicer each shall be severally, and
not jointly, liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement and undertaken herein by the Depositor
and the Servicer, respectively.

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

                  Subject to the following paragraph, the Depositor shall keep
in full effect its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation. The Servicer shall keep in full
effect its existence, rights and franchises as a corporation organized under the
laws of the State of California (or under the laws of such other jurisdiction as
may in the future issue a charter for the Servicer). The Depositor and the
Servicer each shall (and the Servicer shall require each Subservicer in the
related Subservicing Agreement to) obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

                  The Depositor or the Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets, or
substantially all of its assets pertaining to the loan origination or servicing
business, respectively, to any Person, in which case any Person resulting from
any merger or consolidation to which the Depositor or the Servicer shall be a
party, or any Person succeeding to the business of the Depositor or the
Servicer, shall be the successor of the Depositor or the Servicer, as the case
may be, hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Servicer shall satisfy the requirements of Sections 6.06 and 7.02 hereof
with respect to the qualifications of a successor Servicer.

         Section 6.03.              Limitation on Liability of the Depositor,
                                    the Servicer, any Subservicer and Others.

                  None of the Depositor or the Servicer, or any of the
directors, officers, employees or agents of the Depositor or the Servicer, any
Subservicer or members or affiliates of the Depositor shall be under any
liability to the Trust or the Certificateholders for any action taken, or for
refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against the
remedies provided herein for the breach of any warranties, representations or

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covenants made herein, or against any specific liability imposed on the
Depositor or the Servicer herein, or against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties of the Depositor or the Servicer, as the case may be, or
by reason of reckless disregard of obligations and duties of the Servicer or the
Depositor, as the case may be, hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer, or any
member or affiliate of the Depositor may rely in good faith on any document of
any kind which, PRIMA FACIE, is properly executed and submitted by any Person
respecting any matters arising hereunder.

                  The Servicer, each Subservicer and the Depositor and any
director, officer, employee or agent of the Servicer or the Depositor and any
member or affiliate of the Depositor shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except to the extent any such loss, liability or expense is
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Except as otherwise provided herein, neither
the Depositor nor the Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not related to its respective
duties under this Agreement; provided, however, that, except as otherwise
provided herein, either the Depositor or the Servicer may, with the prior
consent of the Trustee, the Trust Administrator and the Certificate Insurer, in
its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders and the Certificate
Insurer hereunder. In such event, the legal expenses and costs of such action,
and any liability resulting therefrom, shall be expenses, costs and liabilities
of the Trust, the Depositor and the Servicer shall be entitled to be reimbursed
therefor out of the Collection Account.

         Section 6.04.              Limitation on Resignation of the Servicer;
                                    No Assignment or Delegation of Duties by
                                    Servicer.

                  The Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) by the mutual consent of the Certificate Insurer
(except that if a Certificate Insurer Default has occurred and is continuing,
the decision of the Trustee and the Trust Administrator shall control), the
Trustee and the Trust Administrator and written confirmation from the Rating
Agencies that such resignation would not result in the withdrawal, downgrade or
qualification of their ratings of any Class of Certificates (as they would be
determined without regard to the existence of the Policy) or (b) upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to clause (b) of the preceding
sentence permitting the resignation of the Servicer shall be evidenced by an
Independent Opinion of Counsel to such effect delivered (at the expense of the
Servicer) to the Trustee, the Trust Administrator and the Certificate Insurer.
No resignation of the Servicer shall become effective until the Trustee, the
Trust Administrator or a

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successor servicer, appointed pursuant to the provisions of Section 7.02 hereof
and satisfying the requirements of Sections 6.06 with respect to the
qualifications of a successor Servicer, shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.

                  Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or (except as permitted by Section 3.02 hereof) delegate to or
subcontract with, or authorize or appoint any other Person to perform any of the
duties, covenants or obligations to be performed by the Servicer hereunder,
without the prior written consent of each of the Certificate Insurer, the Trust
Administrator and the Trustee (except that if a Certificate Insurer Default has
occurred and is continuing, the decision of the Trustee and the Trust
Administrator shall control), and, absent such written consent, any agreement,
instrument or act purporting to effect any such assignment, transfer, delegation
or appointment shall be void; provided, however, that Countrywide may assign its
rights and obligations hereunder as the Servicer to any entity that is wholly
owned by Countrywide; provided further, that Countrywide will remain liable
hereunder after any such transfer.

         Section 6.05.              Rights of the Depositor, the
                                    Certificateholders and Others in Respect of
                                    the Servicer.

                  The Servicer shall (and shall require any Subservicer in the
related Subservicing Agreement to) afford the Depositor, the Trustee, the Trust
Administrator, the Certificate Insurer and any Class A Certificateholder which
has a greater than 10% Percentage Interest in the related Class and any
representative or agent of the foregoing, upon reasonable prior notice, during
normal business hours, access to all records maintained by the Servicer in
respect of its rights and obligations hereunder and access to officers of the
Servicer and each Subservicer responsible for such obligations. Upon request and
at such requesting party's expense, the Servicer shall furnish to the Depositor,
any Certificateholder, the Trustee, the Trust Administrator and the Certificate
Insurer, the Servicer's most recent publicly available financial statements and
each Subservicer's most recent financial statements (annual or quarterly
statements, as the case may be) and such other information reasonably relating
to their capacity to perform their obligations under this Agreement as the
Servicer or such Subservicer possesses.

                  To the extent such information is not otherwise available to
the public, the Depositor, the Certificateholders, the Servicer (with respect to
information of any Subservicer), the Trust Administrator, the Trustee and the
Certificate Insurer shall not disseminate any information obtained pursuant to
the preceding two sentences without the written consent of the Servicer or the
Subservicer (only with respect to information of such Subservicer) except as
required pursuant to this Agreement or to the extent that it is necessary to do
so (i) in working with legal counsel, auditors, taxing authorities or other
governmental agencies for reasons consistent with the performance of their
respective duties or (ii) pursuant to any law, rule, regulation, order,
judgment, writ, injunction or decree of any court or governmental authority, or
as may be required in any report submitted to any regulatory body, having
jurisdiction over the Depositor, the Servicer, the Trust

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Administrator, the Trustee, any Certificateholder or REMIC I, as the case may
be, and in any case, the Depositor, the Servicer (with respect to information of
any Subservicer), the Trust Administrator or the Trustee, as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information.

         Section 6.06.              Eligibility Requirements for Servicer.

                  The Servicer hereunder shall at all times be a corporation or
a state-chartered or national bank acceptable to the Certificate Insurer except
that if a Certificate Insurer Default has occurred and is continuing, such
entity shall be acceptable to the Trustee and the Trust Administrator. The
Servicer shall be organized and doing business under the laws of the United
States of America or any state thereof or the District of Columbia and have,
except in the case of the original Servicer, equity of at least $10,000,000 (or
such lower level as may be acceptable to the Certificate Insurer, or, if a
Certificate Insurer Default has occurred and is continuing, to the Trustee and
the Trust Administrator, and to the Rating Agencies, as evidenced by written
confirmation that such lower level would not result in the withdrawal, downgrade
or qualification of their ratings of any Class of Certificates (as they would be
determined without regard to the existence of the Policy).
In case at any time the Servicer shall cease to be eligible in accordance with
the provisions of this Section 6.06, the Servicer shall resign immediately in
the manner and with the effect specified in Section 7.02(a) hereof.

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                                   ARTICLE VII
                                     DEFAULT

         Section 7.01.              Servicer Defaults; Certain Matters Affecting
                                    the Servicer.

                  (a) "Servicer Default", wherever used herein, means any one of
the following events:

                       (i) any failure by the Servicer to deposit into the
Collection Account and the Certificate Account any amount (other than a
Delinquency Advance required to be made from its own funds) that it is required
to deposit under the terms of this Agreement, which failure continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure shall have been given to the Servicer by the Certificate Insurer,
the Trustee or the Trust Administrator; or

                       (ii) any failure on the part of the Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements, or a breach of any representations or warranties, on the part of the
Servicer contained in the Certificates or in this Agreement, which failure or
breach continues unremedied for a period of 30 days after the first date on
which (x) a Servicing Officer has knowledge of such failure or breach or (y)
written notice of such failure or breach, requiring the same to be remedied,
shall have been given to a Servicing Officer by the Majority Certificateholders,
the Depositor, the Trust Administrator or the Trustee; or

                       (iii) a decree or order for relief of a court or agency
or supervisory authority having jurisdiction in the premises in an involuntary
case under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 45 days; or

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

                       (v) the 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

                       (vi) [reserved]; or

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                       (vii) any failure of the Servicer to pay any Delinquency
Advance or any amount in respect of Prepayment Interest Shortfalls on any
Servicer Remittance Date required to be made from its own funds pursuant to
Section 3.23 or 4.06 hereof, respectively, which failure continues unremedied
for a period of one Business Day written notice of such failure shall be given
to the Servicer by the Certificate Insurer, the Trustee or the Trust
Administrator; or

                       (viii) [reserved]; or

                       (ix) [reserved]; or

                       (x) [reserved]; or

                       (xi) a failure of the Servicer to meet the Servicer
Termination Test with respect to any Distribution Date; or

                       (xii) the merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the Servicer is the
surviving entity of such combination or (2) the surviving entity is a
corporation or a national or state-chartered bank or a national banking
association that is organized and doing business under the laws of any state or
the United States or any state thereof or the District of Columbia;

                       (xiii) the Servicer ceases to be an approved servicer of
the PMI Insurer for purposes of the PMI Policy unless arrangements reasonably
satisfactory to the Certificate Insurer are made with respect to the PMI Loans;
or

                       (xiv) a claim is made under the Policy.

                  The Trustee shall give immediate notice in writing to the
Servicer of any failure to make a deposit or payment referred to in clause (i)
or (vi). If a Servicer Default shall occur, then, and in each and every such
case, so long as such Servicer Default shall not have been remedied, (x) the
Certificate Insurer or (y) if a Certificate Insurer Default has occurred and is
continuing, the Trustee, at the direction of the Majority Certificateholders,
may by notice in writing to the Servicer, the Trustee, the Trust Administrator,
the Depositor, each related Certificateholder and the Certificate Insurer,
terminate all of the rights and obligations of the Servicer in its capacity as
Servicer under this Agreement, to the extent permitted by law, and in and to the
related Mortgage Loans and the proceeds thereof.

                  On and after the receipt by the Servicer of any such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates (other than as a Holder of any Certificate) or
the Mortgage Loans or otherwise, shall pass to and be vested in the Trust
Administrator or other successor Servicer appointed pursuant to Section 7.02
hereof and, without limitation, the Trust Administrator or such other successor
Servicer is hereby authorized and empowered, as attorney-in-fact or otherwise,
to execute and deliver, on behalf of and at the expense

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of the Servicer, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the related Mortgage Loans and related documents,
or otherwise.

                  The Servicer agrees promptly (and in any event no later than
ten (10) Business Days subsequent to such notice) to provide the Trust
Administrator or other successor Servicer with all documents and records
requested by it to enable it to assume the functions of the Servicer under this
Agreement and to cooperate with the Trust Administrator or other successor
Servicer in effecting the termination of the Servicer's responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one Business Day, to the Trust Administrator or other successor Servicer or its
designee for administration, of all cash amounts which shall at the time be or
should have been credited by the Servicer to any Account, or which shall
thereafter be received with respect to the related Mortgage Loans or any related
REO Property (provided, however, that the Servicer shall to be entitled to
receive at the time of relinquishing its servicing obligations, a cash payment
equal to all amounts accrued or owing to it under this Agreement on or prior to
the date of such termination, whether in respect of Delinquency Advances or
otherwise and shall continue to be entitled to the benefit of Section 6.03
hereof, notwithstanding such termination).

                  For purposes of this Section 7.01, the Trustee and the Trust
Administrator shall not be deemed to have knowledge of a Servicer Default unless
a Responsible Officer of the Trustee or the Trust Administrator has actual
knowledge thereof or unless written notice of any event which is in fact such a
Servicer Default is received at the notice address of the Trustee or the Trust
Administrator provided herein and such notice references the Certificates, the
Depositor, the Trust or this Agreement.

                  For purposes of this Section 7.01, any consent or
determination by the Certificate Insurer shall be replaced by consent or
determination of the Majority Certificateholders if a Certificate Insurer
Default has occurred and is continuing.

                  (b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Servicer on behalf of Trustee, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Servicer on behalf of Trustee
shall be brought in its name for the benefit of all the Holders of such
Certificates, subject to the provisions of this Agreement.

         Section 7.02.              Trust Administrator or Trustee to Act;
                                    Appointment of Successor.

                  (a) (1) On and after the time the Servicer receives a notice
of termination, or a servicing term expires pursuant to Section 3.28 hereof, a
successor servicer appointed by the Certificate Insurer, or in the absence of
such appointment, the Trust Administrator and in the event the Trust
Administrator fails in its obligation, the Trustee shall be the successor in all
respects to the

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Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein, and all the responsibilities, duties and
liabilities relating thereto and arising thereafter shall be assumed by the
successor servicer, Trust Administrator, the Trust Administrator or the Trustee,
as applicable, (except for any representations or warranties of the Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.06(c) and the obligation to deposit amounts in respect of losses
pursuant to Section 3.10) by the terms and provisions hereof including, without
limitation, the Servicer's obligations to make Delinquency Advances pursuant to
Section 4.06; provided, however, that if the successor servicer, the Trust
Administrator or the Trustee, as applicable, is prohibited by law or regulation
from obligating itself to make advances regarding delinquent mortgage loans,
then the successor servicer, the Trust Administrator or the Trustee, as
applicable, shall not be obligated to make Delinquency Advances pursuant to
Section 4.06; and provided further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the successor
servicer, the Trust Administrator or the Trustee, as applicable, as successor to
the Servicer hereunder. As compensation therefor, the successor servicer, the
Trust Administrator or the Trustee, as applicable, shall be entitled to the
Servicing Fee and all funds relating to the Mortgage Loans to which the Servicer
would have been entitled if it had continued to act hereunder.
Notwithstanding the above and subject to Section 7.02(a)(2) below, the Trust
Administrator or the Trustee, as applicable, may, if it shall be unwilling to so
act, or shall, if it is unable to so act or if it is prohibited by law from
making advances regarding delinquent mortgage loans or if the Certificate
Insurer or if the Holders of Certificates entitled to at least 51% of the Voting
Rights so request in writing to the Trust Administrator or Trustee, as
applicable, promptly appoint or petition a court of competent jurisdiction to
appoint, an established mortgage loan servicing institution selected by the
Certificate Insurer and acceptable to each Rating Agency and having a net worth
of not less than $15,000,000, as the successor to the Servicer under this
Agreement in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer under this Agreement.

                       (2) No appointment of a successor to the Servicer under
this Agreement shall be effective until the assumption by the successor of all
of the Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the successor
servicer, the Trust Administrator or the Trustee, as applicable, may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer as such
hereunder. The Depositor, the Trustee, the Trust Administrator and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the Servicer under this Agreement, the Trust Administrator or the Trustee, as
applicable, shall act in such capacity as hereinabove provided.

                  (b) If the Servicer fails to remit to the Trust Administrator
for distribution to the Certificateholders any payment required to be made under
the terms of this Agreement (for purposes of this Section 7.02(b), a
"Remittance") because the Servicer is the subject of a proceeding under the
federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the

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federal Bankruptcy Code, the Trust Administrator shall (and in the event the
Trust Administrator fails in its obligation, the Trustee) upon notice of such
prohibition, regardless of whether it has received a notice of termination under
Section 7.01, advance the amount of such Remittance by depositing such amount in
the Certificate Account on the related Distribution Date. The Trust
Administrator or the Trustee, as applicable, shall be obligated to make such
advance only if (i) such advance, in the good faith judgment of the Trust
Administrator or the Trustee, as applicable, can reasonably be expected to be
ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or the
Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator for the deposit thereof in the Certificate Account by the
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Certificate Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from the
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Certificate Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.

                  (c) The successor Servicer (other than the Trustee or the
Trust Administrator) shall be solely liable for all costs and expenses
associated with the transfer of servicing to such successor Servicer, other than
the costs and expenses of sending to the successor Servicer any Mortgage Loan
files and records held by the Servicer being replaced, for which costs and
expenses the Servicer being replaced shall have sole responsibility.

         Section 7.03.              Notification to Mortgagors and
                                    Certificateholders.

                  (a) Upon any such termination pursuant to Section 7.02 hereof
or the appointment of a successor to the Servicer, the Trust Administrator
shall, at the expense of the Servicer, give prompt written notice thereof to the
Certificate Insurer and the related Certificateholders at their respective
addresses appearing in the Certificate Register and to the related Mortgagors at
their respective addresses appearing in the Mortgage Loan Schedule.

                  (b) Within three Business Days after the occurrence of any
event which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Default, the Trust Administrator shall transmit by mail,
at the expense of the Servicer, to all Holders of Certificates and the
Certificate Insurer notice of any Servicer Default actually known to a
Responsible Officer of the Trust Administrator.

         Section 7.04.              Additional Remedies of Trustee upon Servicer
                                    Defaults.

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                  Upon any Servicer Default, the Trustee shall have the right to
the extent consistent with the rights reserved to the Certificate Insurer
hereunder, in its own name and as Trustee, to take all actions now or hereafter
existing at law, in equity or by statute to enforce its rights and remedies and
to protect the interests, and enforce the rights and remedies, of the
Certificateholders (including the institution and prosecution of all judicial,
administrative and other proceedings and the filings of proofs of claim and debt
in connection therewith). No remedy provided for by this Agreement shall be
exclusive of any other remedy, and each and every remedy shall be cumulative and
in addition to any other remedy and no delay or omission to exercise any right
or remedy shall impair any such right or remedy or shall be deemed to be a
waiver of any Servicer Default.

         Section 7.05.              Waiver of Servicer Defaults.

                  The Certificate Insurer, for so long as a Certificate Insurer
Default has not occurred and is not continuing, and otherwise Majority
Certificateholders may waive any Servicer Default and its consequences, except
that a default in the making of any required deposit into the Collection Account
or the Certificate Account that would result in a failure by the Trust
Administrator to make any required distribution on the Certificates may be
waived only by all of the Certificateholders. Upon any waiver of a past Servicer
Default, such Servicer Default shall cease to exist, and any Servicer Default
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 Servicer
Default or impair any right consequent thereto except to the extent expressly so
waived. Notice of any such waiver shall be given by the Trust Administrator to
each Rating Agency and to all Certificateholders.

         Section 7.06.              Survivability of Servicer Liabilities.

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

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                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

         Section 8.01.              Duties of Trustee and the Trust
                                    Administrator.

                  Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Servicer Default and after the curing of all Servicer Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. During a Servicer Default, each
of the Trustee and the Trust Administrator shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. Any permissive right
of the Trustee or the Trust Administrator enumerated in this Agreement shall not
be construed as a duty.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the it which are specifically required
to be furnished pursuant to any provision of this Agreement, shall examine them
to determine whether they are in the form specified in this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders

                  Each of the Trustee and the Trust Administrator may, in
accordance with its duties hereunder, do all things necessary and proper as may
be required in connection with any secondary mortgage licensing laws and similar
requirements, including, but not limited, to consenting to jurisdiction, and the
appointment of agents for service of process, in jurisdictions in which the
Mortgaged Properties are located.

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

                       (i) Prior to the occurrence of a Servicer Default, and
after the curing of all such Servicer Defaults which may have occurred, the
duties and obligations of the Trustee and the Trust Administrator shall be
determined solely by the express provisions of this Agreement, the Trustee and
the Trust Administrator 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 or the Trust Administrator and, in the absence of bad faith on the part
of the Trustee and the Trust Administrator, the Trustee and the Trust
Administrator may conclusively rely, as to the truth of the statements and the
correctness of the opinions contained therein (including, but not limited to,
Servicer Information), upon any certificates or opinions

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<PAGE>

furnished to the Trustee and the Trust Administrator that are in the forms
specified in this Agreement;

                       (ii) Neither the Trustee nor the Trust Administrator
shall be personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or the Trust
Administrator, unless it shall be proved that the Trustee or the Trust
Administrator was negligent in ascertaining the pertinent facts; and

                       (iii) Neither Trustee nor the Trust Administrator shall
be 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 issued to the Trustee or the Trust Administrator pursuant to
Section 8.13 hereof.

         Section 8.02.              Certain Matters Affecting the Trustee and
                                    the Trust Administrator.

                  (a)  Except as otherwise provided in Section 8.01 hereof:

                       (i) Each of the Trustee and the Trust Administrator may
request and rely upon and shall be protected in acting or refraining from acting
upon any resolution, Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document (including, but not limited
to, Servicer Information) reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;

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

                       (iii) Neither the Trustee nor the Trust Administrator
shall be under any obligation to exercise any of the trusts or powers vested in
it by this Agreement or to make any investigation of matters arising hereunder
to institute, conduct or defend any litigation hereunder or in relation hereto
at the request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee or the Trust Administrator, as the case may be,
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee or the Trust
Administrator, as the case may be, from a Holder which is an insurance company
having long-term unsecured debt that is rated at least investment grade (or has
a comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement); nothing contained herein shall,
however, relieve the Trustee or the Trust Administrator of the obligation, upon
the occurrence of a Servicer Default of which the Trustee or the Trust
Administrator, as the case may be, has actual knowledge (which has not been
cured or waived), to exercise such of the rights and powers vested in it by this

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<PAGE>

Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs;

                       (iv) Neither the Trustee nor the Trust Administrator
shall be personally liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;

                       (v) Prior to the occurrence of a Servicer Default
hereunder and after the curing of all Servicer Defaults which may have occurred,
neither the Trustee nor the Trust Administrator shall be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Certificate Insurer or by the Majority Certificateholders; provided,
however, that if the payment of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee or the Trust Administrator, not reasonably assured to the Trustee or the
Trust Administrator by the security afforded to it by the terms of this
Agreement, the Trustee or the Trust Administrator may require reasonable
indemnity (provided that an unsecured letter of indemnity in a form reasonably
satisfactory to the Trustee or the Trust Administrator from a Holder which is an
insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) against such
expense or liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Servicer or, if paid by
the Trustee or the Trust Administrator, shall be repaid by the Servicer upon
demand;

                       (vi) The Trustee or the Trust Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys; and

                       (vii) Neither the Trustee nor the Trust Administrator
shall be personally liable for any loss resulting from the investment of funds
at the direction of the Servicer held in any Account or the Reserve Fund;
provided, however, that the Trustee or the Trust Administrator, as applicable,
shall be personally liable on any investment on which the Trustee or the Trust
Administrator or an affiliate thereof, as applicable, is the obligor and has
defaulted.

                  (b) Following the Closing Date, and except as otherwise
provided in this Agreement, neither the Trustee nor the Trust Administrator
shall knowingly accept any contribution of assets to the Trust unless it shall
have been provided with an Opinion of Counsel at the expense of the party
delivering such assets acceptable to it to the effect that the inclusion of such
assets in the Trust will not cause the Trust to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject the Trust to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.

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<PAGE>

                  (c) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

         Section 8.03.              Neither Trustee nor Trust Administrator
                                    Liable for Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.14) shall be taken as the statements of
the Depositor, and the Trustee assumes no responsibility for their correctness.
Neither the Trustee nor the Trust Administrator makes any representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.14) or of the Certificates (other than the
signature of the Trustee, or the Trust Administrator, and authentication of the
Trustee or the Trust Administrator on the Certificates) or of any Mortgage Loan
or related document. Neither the Trustee nor the Trust Administrator shall be
accountable for the use or application by the Depositor, the Servicer of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Servicer in respect of the
Mortgage Loans or for the use or application of any funds deposited into or
withdrawn from the Collection Account by the Servicer.

         Section 8.04.              Trustee and Trust Administrator May Own
                                    Certificates.

                  The Trustee or Trust Administrator in its individual capacity
or any other capacity may become the owner or pledgee of Certificates with the
same rights it would have if it were not Trustee or the Trust Administrator, as
applicable.

         Section 8.05.              Expenses of Trustee, Trust Administrator and
                                    Servicer.

                  (a) The Trust Administrator shall withdraw from the
Certificate Account on each Distribution Date the Administrative Fee as
described in Section 4.04 hereof and shall remit to the Trustee the portion
thereof to which it is entitled. Each of the Trustee and the Trust Administrator
and any director, officer, employee or agent of the Trustee or the Trust
Administrator, as applicable, shall be indemnified by REMIC I and held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee or the Trust Administrator, as
applicable, including the compensation and the expenses and disbursements of its
agents and counsel, in the ordinary course of the Trustee's or Trust
Administrator's, as the case may be, performance in accordance with the
provisions of this Agreement) incurred by the Trustee or the Trust
Administrator, as applicable, in connection with any claim or legal action or
any pending or

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<PAGE>

threatened claim or legal action arising out of or in connection with the
acceptance or administration of its obligations and duties under this Agreement,
other than any loss, liability or expense (i) resulting from any breach of the
Servicer's (and in the case of the Trustee, the Trust Administrator's or in the
case of the Trust Administrator, the Trustee's) obligations in connection with
this Agreement, (ii) that constitutes a specific liability of the Trustee or the
Trust Administrator, as applicable, pursuant to Section 3.01 or (iii) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or in the case of the Trust
Administrator, as a result of a breach of the Trust Administrator's obligations
under Section 3.01 hereof. The Servicer agrees to indemnify the Trustee and the
Trust Administrator, from, and hold each harmless against, any loss, liability
or expense arising in respect of any breach by the Servicer of its obligations
in connection with this Agreement. Such indemnity shall survive the termination
or discharge of this Agreement and the resignation or removal of the Trustee or
the Trust Administrator, as the case may be. Any payment hereunder made by the
Servicer to the Trustee or the Trust Administrator shall be from the Servicer's
own funds, without reimbursement from REMIC I therefor. In addition to the
foregoing, the Trust Administrator shall be entitled to receive from the
Depositor the Custodial Fee.

                  (b) The Servicer shall pay any annual rating agency fees of
the Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

         Section 8.06.              Trustee and Trust Administrator Eligibility
                                    Requirements.

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or a national or state-chartered bank or a
national banking association acceptable to the Certificate Insurer and that is
not an affiliate of the Depositor or the Servicer, organized and doing business
under the laws of the United States of America or any state thereof or the
District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 or a
member of a bank holding company whose capital and surplus is at least
$100,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06
the combined capital and surplus of such corporation, bank or association shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of conditions so published. In case at any time any Trustee or Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee or the Trust Administrator, as the case may be,
shall resign immediately in the manner and with the effect specified in Section
8.07 hereof. The corporation, bank or association serving as Trustee or Trust
Administrator may have normal banking and trust relationships with the Depositor
and the Servicer and the respective affiliates.

         Section 8.07.              Resignation and Removal of the Trustee and
                                    the Trust Administrator.

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<PAGE>

                  Either the Trustee or Trust Administrator may at any time
resign and be discharged from the trusts hereby created by giving written notice
thereof to the Depositor, the Servicer, the Certificate Insurer, to all
Certificateholders and if the Trustee is resigning, to the Trust Administrator,
or, if the Trust Administrator is resigning, to the Trustee. Upon receiving such
notice of any such resignation or of any removal as provided in this Section,
the Certificate Insurer may select, or if the Certificate Insurer elects not to,
the Servicer shall select a successor Trustee or Trust Administrator (which may
be the same Person, if both are being replaced) and shall present such party to
the Certificate Insurer and upon its approval such party shall promptly be
appointed successor trustee or trust administrator by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee or Trust
Administrator and to the successor trustee or trust administrator, as
applicable. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Depositor by the Servicer.
If no successor trustee or trust administrator shall have been so appointed and
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Trust Administrator may petition any court
of competent jurisdiction for the appointment of a successor trustee or trust
administrator.

                  If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 hereof
and shall fail to resign after written request therefor, or if at any time the
Trustee or the Trust Administrator shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or the Trust
Administrator or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or the Trust Administrator or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer shall solicit and present to the Certificate
Insurer a written instrument removing the Trustee or the Trust Administrator, as
applicable, and appointing a successor trustee or trust administrator, as
applicable and, upon its written approval, such instrument shall be delivered to
the Trustee or the Trust Administrator so removed and to the successor trustee
or trust administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Depositor by the Servicer.

                  The Majority Certificateholders, with the written consent of
the Certificate Insurer (which shall only be required if no Certificate Insurer
Default has occurred and is continuing), or the Certificate Insurer (if no
Certificate Insurer Default has occurred and is continuing) may at any time
remove the Trustee or the Trust Administrator and appoint a successor by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee or the Trust
Administrator so removed and one complete set to the successor so appointed.
A copy of such instrument shall be delivered to the Certificateholders, the
Servicer, the Certificate Insurer and the Depositor by the Trustee or the Trust
Administrator, as applicable.

                  Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor trustee or successor trust
administrator pursuant to any of the provisions of this Section 8.07 shall not
become effective until acceptance of appointment by the successor trustee or
successor trust administrator as provided in Section 8.08 hereof.
Notwithstanding anything to the

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contrary contained herein, so long as no Certificate Insurer Default exists and
is continuing, neither the Trustee nor the Trust Administrator may be removed by
the Certificateholders without the prior written consent of the Certificate
Insurer.

                  Notwithstanding the foregoing, in the event the Trust
Administrator advises the Trustee that it is unable to continue to perform its
obligations pursuant to the terms of this Agreement prior to the appointment of
a successor, the Trustee shall be obligated to perform such obligations until a
new trust administrator is appointed. Such performance shall be without
prejudice to any claim by a party hereto or beneficiary hereof resulting from
the Trust Administrator's breach of its obligations hereunder.

         Section 8.08.              Successor Trustee and Trust Administrator.

                  Any successor trustee or successor trust administrator
appointed as provided in Section 8.07 hereof shall execute, acknowledge and
deliver to the Certificateholders, the Certificate Insurer, the Servicer, the
Trustee or the Trust Administrator, as applicable, and to its predecessor
trustee or predecessor trust administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee or predecessor trust administrator shall become effective
and such successor trustee or predecessor trust administrator, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like
effect as if originally named as trustee herein.
The predecessor trustee or predecessor trust administrator, as applicable, shall
deliver to the successor trustee or predecessor trust administrator, as
applicable, all Mortgage Files and related documents and statements held by it
hereunder (other than any Mortgage Files at the time held by a custodian, which
shall become the agent of any successor trustee hereunder), and the Depositor,
the Servicer and the predecessor trustee or the predecessor trust administrator,
as applicable, shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.

                  No successor trustee or successor trust administrator shall
accept appointment as provided in this Section 8.08 unless at the time of such
acceptance such successor trustee or successor trust administrator shall be
eligible under the provisions of Section 8.06 hereof.

                  Upon acceptance of appointment by a successor trustee or
successor trust administrator as provided in this Section 8.08, the Depositor
shall mail notice of the succession of such trustee or trust administrator
hereunder to each Holder of Certificates at their respective addresses as shown
in the Certificate Register and to each Rating Agency. If the Depositor fails to
mail such notice within ten (10) days after acceptance of appointment by the
successor trustee or successor trust administrator, the successor trustee or
successor trust administrator, as applicable, shall cause such notice to be
mailed at the expense of the Depositor.

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                  Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default exists, the appointment of any successor
trustee or successor trust administrator pursuant to any provision of this
Agreement will be subject to the prior written consent of the Certificate
Insurer.

                  Neither the Trustee nor the Trust Administrator shall be
liable for the acts or omissions to act of any successor Trustee or successor
Trust Administrator, as applicable, appointed hereunder.

         Section 8.09.              Merger or Consolidation of Trustee or Trust
                                    Administrator.

                  Any corporation, bank or association into which the Trustee or
the Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator
shall be a party, or any corporation, bank or association succeeding to the
business of the Trustee or the Trust Administrator, shall be the successor of
the Trustee or the Trust Administrator hereunder, provided such corporation,
bank or association shall be eligible under the provisions of Section 8.06
hereof, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.

         Section 8.10.              Appointment of Co-Trustee or Separate
                                    Trustee.

                  Notwithstanding any other provisions hereof, at any time for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Trustee with the consent of the Certificate Insurer shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of REMIC
I, and to vest in such Person or Persons, in such capacity, such title to REMIC
I, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Depositor and
the Trustee may consider necessary or desirable. If the Trustee shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Certificate Insurer 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 hereof and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that, under any law of any jurisdiction
in which any particular act or acts are to be performed by the Trustee (whether
as Trustee hereunder or as successor to the Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title

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to the Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.

                  Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article VIII. Each separate trustee
and co-trustee, upon its acceptance of the 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.

                  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.              Trust Administrator Records.

                  The Trust Administrator and the Trustee shall afford the
Depositor, the Servicer, the Certificate Insurer, the Trustee and each
Certificateholder, upon reasonable notice during normal business hours, access
to all records maintained by the Trust Administrator or the Trustee, as
applicable, in respect of its duties hereunder and access to officers of the
Trust Administrator responsible for performing such duties, such inspection to
take place, in the case of the Trust Administrator, at 180 East Fifth Street,
St. Paul, Minnesota 55101 or such other place as designated by the Trust
Administrator and, in the case of the Trustee, at 1555 North River Center Drive,
Milwaukee, Wisconsin 53212. Upon request, the Trust Administrator and the
Trustee shall each furnish the Servicer, the Certificate Insurer, the Trustee
and any requesting Certificateholder with its most recent financial statements.
The Trust Administrator and the Trustee shall cooperate fully with the
Depositor, the Servicer and such Certificateholder and shall make available to
the Depositor, the Servicer, the Certificate Insurer, the Trust Administrator or
Trustee, as applicable, and such Certificateholder for review and copying such
books, documents or records as may be requested with respect to the Trustee's or
the Trust Administrator's duties hereunder. The Depositor, the Servicer, the
Certificate Insurer and the Certificateholders shall not have any responsibility
or liability for any action or failure to act by the Trustee or by the Trust
Administrator and are not obligated to supervise the performance of the Trustee
and the Trust Administrator under this Agreement or otherwise.

         Section 8.12.              Appointment of Office or Agency.

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                  The Trust Administrator designates its office at 180 East
Fifth Street, St. Paul, Minnesota 55101 as its agency where the Certificates may
be surrendered for registration of transfer or exchange and presented for final
distribution. The Trust Administrator designates its offices at 180 East Fifth
Street, St. Paul, Minnesota 55101, as the office at which notices and demands to
or upon the Trust Administrator in respect of the Certificates may be served and
will notify the Certificateholders of any change in the location of such office
or agency.

         Section 8.13.              Exercise of Trustee Powers by
                                    Certificateholders.

                  Subject to the provisions of this Article VIII, the
Certificate Insurer, or the Majority Certificateholders with the consent of the
Certificate Insurer (provided that such consent of the Certificate Insurer shall
not be required if a Certificate Insurer Default has occurred and is
continuing), may direct the time, method and place of conducting any proceeding
relating to the Trust or the Certificates or for any remedy available to the
Trustee in its capacity as Trustee (and not in its individual capacity) or the
Trust Administrator in its capacity as Trust Administrator (and not in its
individual capacity) with respect to the Certificates or exercising any trust or
power conferred on the Trustee or the Trust Administrator with respect to the
Certificates or the Trust (except that if a Certificate Insurer Default has
occurred and is continuing then the direction of the Majority Certificateholders
shall control and the Certificate Insurer shall have no right to act); provided,
however, that:

                       (i) such direction shall not be in conflict with any rule
of law or with this Agreement; and

                       (ii) each of the Trustee and the Trust Administrator
shall have been provided with indemnity satisfactory to it (provided that an
unsecured letter of indemnity in a form reasonably satisfactory to the Trustee
and the Trust Administrator from a Person which is an insurance company having
long-term unsecured debt that is rated at least investment grade (or having a
comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement).

         Section 8.14.     Representations and Warranties.

                  Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Servicer, the Depositor, the Certificate Insurer
and the Trustee or the Trust Administrator, as applicable, as of the Closing
Date, that:

                  (i) it is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States of America.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its articles of association or bylaws or constitute a
         default (or an event which, with notice or lapse of time, or both,

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         would constitute a default) under, or result in the breach of, any
         material agreement or other instrument to which it is a party or which
         is applicable to it or any of its assets.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

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

                  (v) It is not in violation of, and its execution and delivery
         of this Agreement and its performance and compliance with the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in its good faith and reasonable judgment, is likely
         to affect materially and adversely either the ability of it to perform
         its obligations under this Agreement.

                  (vi) No litigation is pending or, to the best of its
         knowledge, threatened against it, which would prohibit it from entering
         into this Agreement or, in its good faith reasonable judgment, is
         likely to materially and adversely affect either the ability of it to
         perform its obligations under this Agreement.

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                                   ARTICLE IX
                CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER

         Section 9.01.              Certain Rights of the Certificate Insurer.

                  By accepting its Certificate, each Holder of a Class A
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Class A
Certificateholders (except as provided in Section 12.01), including but not
limited to the following rights, without any consent of the Holders of Offered
Certificates:

                  (a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so for any reason, except that in the case of
Section 3.15(b) hereof;

                  (b) the right to require the Seller, the Originator or the
Depositor to repurchase or substitute for, Mortgage Loans pursuant to Section
2.06;

                  (c) the right to give notices of breach or to terminate the
rights and obligations of the Servicer pursuant to Section 7.01;

                  (d) the right to direct the actions of the Trustee and the
Trust Administrator during the continuance of a Servicer Default pursuant to
Sections 7.01 and 7.02; and

                  (e) the right to direct the Trustee to investigate certain
matters pursuant to Section 8.02(a)(v).

                  In addition, each Holder of a Class A Certificate agrees that,
unless a Certificate Insurer Default exists, the right to remove the Trustee and
the Trust Administrator pursuant to Section 8.07 hereof may be exercised by the
Majority Certificateholders only with the prior written consent of the
Certificate Insurer.

         Section 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer.

                  (a) Unless a Certificate Insurer Default exists, neither the
Trustee nor the Trust Administrator shall:

                       (i) terminate the rights and obligations of the Servicer
as Servicer pursuant to Section 7.01 or consent to the resignation of the
Servicer pursuant to Section 6.04;

                       (ii) terminate any Sub-Servicing Agreements pursuant to
Section 3.03;

                       (iii) assume any Sub-Servicing Agreements pursuant to
Section 3.06; or

                       (iv) undertake any litigation pursuant to either Section
7.05 or 8.02(a)(iii);

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without the prior written consent of the Certificate Insurer.

                  (b) Notwithstanding anything herein to the contrary, after the
occurrence of a Servicer Default and until such time as all Servicer Defaults
have been cured, no provision of this Agreement shall require the Trustee or the
Trust Administrator to take any action or omit to take any action at the request
of the Certificate Insurer or any Certificateholder to the extent the Trustee or
Trust Administrator believes in good faith such action or omission would cause
the Trustee or the Trust Administrator to violate any law or regulation
applicable to it or to breach their respective obligations owed by it to the
Certificateholders and to the Certificate Insurer, pursuant to this Agreement or
otherwise.

         Section 9.03.              REMIC I and Accounts Held for Benefit of the
                                    Certificate Insurer and the
                                    Certificateholders.

                  The Trustee and the Trust Administrator shall hold REMIC I and
the Mortgage Files, and shall maintain the Accounts, for the benefit of the
Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.02, 2.04, 3.10 and 4.04)
and in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee and Trust Administrator
shall cooperate in all reasonable respects with any reasonable request by the
Certificate Insurer or the Class A Certificateholders (when other than the
Depositor, the Servicer or any affiliate thereof), for action to preserve or
enforce the respective rights and interests of the Certificate Insurer or the
Class A Certificateholders (when other than the Depositor, the Servicer or any
affiliate thereof) under this Agreement and the Certificates.

                  The Servicer hereby acknowledges and agrees that it shall
service and administer the Mortgage Loans and any REO Properties for the benefit
of the Certificateholders and for the benefit of the Certificate Insurer, and
all references in this Agreement (including, without limitation, in Sections
3.01(b) and 3.10) to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer. Unless a
Certificate Insurer Default exists, the Servicer shall not terminate any
Sub-Servicing Agreements without cause or undertake any litigation pursuant to
Section 3.12(c), without the prior written consent of the Certificate Insurer.
Unless a Certificate Insurer Default exists, neither the Servicer nor the
Depositor shall undertake any litigation pursuant to Section 6.03 (other than
litigation to enforce their respective rights hereunder) without the prior
written consent of the Certificate Insurer.

         Section 9.04.              Effect of Payments by the Certificate
                                    Insurer; Subrogation.

                  Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on the Offered Certificates which is
made with moneys received pursuant to the terms of the Policy shall not be
considered payment of the Offered Certificates from REMIC I and shall not result
in the payment of or the provision for the payment of the principal of or
interest on the Offered Certificates within the meaning of Section 4.04. The
Depositor, the Servicer, the

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Trust Administrator and the Trustee acknowledge, and each Holder by its
acceptance of a Class A Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trust Administrator or the Trustee, to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Offered Certificates to the Holders of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Holders to
receive such principal and/or interest from REMIC I.

                  The Trustee, the Depositor, the Trust Administrator and the
Servicer shall reasonably cooperate in all respects with any reasonable request
by the Certificate Insurer or the Class A Certificateholders (when other than
the Depositor, the Servicer or any affiliate thereof) for action to preserve or
enforce the respective rights or interests of the Certificate Insurer or the
Class A Certificateholders under this Agreement without limiting the rights or
affecting the interests of the Holders as otherwise set forth herein.

         Section 9.05.              Notices to the Certificate Insurer.

                  All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to the
Certificateholders if not otherwise required to be sent to the Certificate
Insurer, shall also be sent to the Certificate Insurer.

         Section 9.06.              Third-Party Beneficiary.

                  The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.

         Section 9.07.              Trust Administrator to Hold the Policy.

                  The Trust Administrator will hold the Policy in trust as agent
for the holders of the Offered Certificates for the purpose of making claims
thereon and distributing the proceeds thereof.
Neither the Policy nor amounts paid on the Policy will constitute part of REMIC
I or assets of the Trust. Each holder of Offered Certificates, by accepting its
Offered Certificates, appoints the Trust Administrator as attorney-in-fact for
the purpose of making claims on the Policy.

         Section 9.08.              Certificate Insurer Right to Waive
                                    Overcollateralization Requirements.

                  The Certificate Insurer shall have the right, in its sole
discretion and without the consent of any Certificateholder, to waive any
Step-Up Trigger or Spread Squeeze Amount; provided, however, that the
Certificate Insurer, the Depositor, the Servicer, the Trust Administrator and
the Trustee shall be provided with an Opinion of Counsel, (which Opinion of
Counsel shall not be an expense of the Trust or of the Depositor, the Trust
Administrator or the Trustee), stating that such waiver will not cause REMIC I
to fail to qualify as a REMIC at any time that any Certificates

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are outstanding and the waiver will not result in the imposition of any tax on
REMIC I, pursuant to the REMIC Provisions.

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                                    ARTICLE X

                                   TERMINATION

         Section 10.01.                     Termination.

                  (a) Subject to Section 10.02 hereof, this Agreement shall
terminate upon notice to the Trustee and the Trust Administrator of either: (i)
the later of the distribution to Certificateholders of the final payment or
collection with respect to the last Mortgage Loan (or advances of same by the
Servicer), or the disposition of all funds with respect to the last Mortgage
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer, the Trustee and the Trust
Administrator or (ii) mutual consent of the Servicer, the Depositor, the
Certificate Insurer and each and every Certificateholder in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of John D. Rockefeller, Sr., the late President of Standard
Oil Corporation, alive as of the date hereof.

                  (b) Subject to Section 10.02 hereof, the Servicer may, at its
option terminate, this Agreement on any Distribution Date following the Call
Option Date by purchasing, on the Servicer Remittance Date preceding such
Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a
price equal to the sum of (x) the greater of (i) 100% of the Loan Balance of
each such outstanding Mortgage Loan and the fair market value of each such REO
Property as of the last day of the preceding Due Period and (ii) the fair market
value (disregarding accrued interest) of such Mortgage Loans and REO Properties,
determined as the average of three written bids (copies of which shall be
delivered to the Trustee, the Trust Administrator, the Certificate Insurer and
the Servicer) made by nationally recognized dealers, (y) 30 days' interest
thereon at a rate equal to the Mortgage Rate (or such lesser rate as may be in
effect due to the application of the Civil Relief Act) and (z) the aggregate
amount of (i) all unreimbursed Delinquency Advances, (ii) all unreimbursed
Servicing Advances relating only to such Mortgage Loans and REO Properties then
held as part of REMIC I and (iii) any accrued and unpaid Servicing Fees (such
sum, the "Termination Price"). Any such purchase which results in unpaid
Reimbursement Amounts shall require the consent of the Certificate Insurer.

                  (c) In connection with any such purchase pursuant to paragraph
(b) above, the Servicer shall deposit into the Certificate Account all amounts
then on deposit in the Collection Account which deposit shall be deemed to have
occurred immediately preceding such purchase.

                       Any such purchase shall be accomplished by the deposit of
the Termination Price into the Certificate Account on the applicable Servicer
Remittance Date, which amount shall be applied to the distributions to be made
on the Distribution Date immediately following such Servicer Remittance Date.
Upon such deposit of the Termination Price, the Trustee shall pay the Servicer
the amount described in clause (z) of the definition of "Termination Price" from
the amounts on deposit in the Certificate Amount.

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                  (d) In connection with any such purchase pursuant to paragraph
(b) above, the party or parties effecting such purchase shall (i) at its or
their own expense, provide to the Trustee and the Trust Administrator an Opinion
of Counsel experienced in federal income tax matters, in form and substance
satisfactory to the Trustee and the Trust Administrator, to the effect that such
purchase constitutes a "Qualified Liquidation" of the Trust, as such term is
defined in the REMIC Provisions, and (ii) give the Trustee, the Trust
Administrator, the Certificate Insurer at least 60 days' prior written notice of
its or their intent to exercise such option. The party or parties effecting the
purchase and the Servicer shall at the time discuss future servicing
arrangements for the Mortgage Loans.

                  (e) Notice of any termination, specifying the Distribution
Date upon which the Trust will terminate shall, after the Trustee's and the
Trust Administrator's receipt of any such notice, be given promptly by the Trust
Administrator by letter to the Certificateholders by first class mail or
overnight delivery during the month of such final distribution two Business Days
after the Determination Date in such month, specifying (i) the Distribution Date
upon which final payment of the Certificates will be made and (ii) the amount of
any such final payment.

                  (f) Each Holder is required, and hereby agrees, to return to
the Trust Administrator any Certificate with respect to which the Trust
Administrator has made the final distribution due thereon. Any such Certificate
as to which the Trust Administrator has made the final distribution thereon
shall be deemed canceled and shall no longer be outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trust
Administrator.

                  (g) In the event that any amount due to any Class A
Certificateholder remains unclaimed, the Trust Administrator shall, at its
expense, use its best efforts to contact each such Class A Certificateholder by
mail or telephone and if such efforts fail shall cause to be published once, in
the eastern edition of THE WALL STREET JOURNAL, notice that such money remains
unclaimed. Such funds shall remain uninvested and shall not accrue any interest.
If, within two years after such publication, such amount remains unclaimed, the
party or parties effecting the purchase pursuant to either clause (b) above
shall be entitled to all unclaimed funds and other assets which remain subject
hereto and the Trust Administrator, upon transfer of such funds, shall be
discharged of any responsibility for such funds, and the Certificateholders
shall look to such party for payment.

                  (h) Following any purchase by the party or parties effecting
the purchase pursuant to clause (b) above, the Trust Administrator shall
promptly release to such party or parties the Mortgage Files for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effect such transfer as are furnished by such
party or parties.

                  (i) The Trust Administrator shall return the Policy to the
Certificate Insurer no later than five Business Days following the termination
of this Agreement.

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         Section 10.02              Additional Termination Requirements.

                  (a) In the event that the purchase of the Mortgage Loans as
provided in Section 10.01 hereof occurs, the Trust shall be terminated in
accordance with the following additional requirements, unless the party or
parties effecting such purchase obtains at its or their own expense and delivers
or deliver to the Trustee, the Trust Administrator and the Certificate Insurer
an Opinion of Counsel, addressed to the Depositor, the Servicer, the Trustee,
the Trust Administrator and the Certificate Insurer, to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (x) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (y) cause the Trust to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

                       (i) Within 90 days prior to the time of the making of the
final payment on the Certificates, the Trustee, on behalf the Trust, shall adopt
a plan of complete liquidation of the Trust, meeting the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder and shall specify the first day of such period in a statement
attached to the Trust's final Tax Returns pursuant to Treasury Regulations ss.
1.860F1;

                       (ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the time of making of the final payment
on the Certificates, the Servicer, with the cooperation of the Trustee, shall
conduct a sale of the assets of REMIC I to the purchasing party or parties for
cash; and

                       (iii) At the time of the making of the final payment on
the Certificate, the Trust Administrator shall distribute or credit, or cause to
be distributed or credited, to the purchasing party or parties all cash on hand
in any Account not required to be paid to the Servicer, the Class A
Certificateholders, or any other Person, and the Trust shall terminate at that
time.

                  (b) By their acceptance of Class R Certificates, the related
Holders thereof hereby agree to authorize the Trustee on behalf of the Trust to
adopt a plan of complete liquidation of the Trust, which authorization shall be
binding upon all successor Class R Certificateholders.

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                                   ARTICLE XI

                                REMIC PROVISIONS

         Section 11.01.                     REMIC Administration.

                  (a) The Trustee shall elect to treat REMIC I as a REMIC under
the Code and, if necessary, under applicable state law. Each such election will
be made on Form 1066 or other appropriate federal tax or information return or
any appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, the Class A Certificates shall be
designated as the "regular interests" in REMIC I and the Class R Certificates
shall be designated as the "residual interests" in REMIC I. Neither the Trustee
nor the Trust Administrator shall permit the creation of any "interests" in
REMIC I (within the meaning of Section 860G of the Code) other than the
interests represented by the Certificates.

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

                  (c) The Trust Administrator shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the Trust (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to REMIC I that involve the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any tax related Opinion of Counsel except as specified herein. The
Trust Administrator, as agent for all of REMIC I's tax matters person, shall (i)
act on behalf of the Trust in relation to any tax matter or controversy
involving REMIC I and (ii) represent the Trust in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. The holder of the largest Percentage Interest of
the Class R Certificates shall be designated, in the manner provided under
Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the REMIC created hereunder. By
their acceptance thereof, the holder of the largest Percentage Interest of the
Class R Certificates hereby agrees to irrevocably appoint the Trust
Administrator or an Affiliate as its agent to perform all of the duties of the
tax matters person for the Trust.

                  (d) The Trust Administrator shall prepare, sign and file all
of the Tax Returns in respect of the REMIC created hereunder. The expenses of
preparing and filing such returns shall be borne by the Trust Administrator
without any right of reimbursement therefor.

                  (e) The Trust Administrator shall perform on behalf of REMIC I
all reporting and other tax compliance duties that are the responsibility of
such REMIC under the Code, the REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trust Administrator shall provide (i) to any
transferor of a Class R

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Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R Certificate to any Person who is not a
Permitted Transferee, (ii) to the Certificateholders such information or reports
as are required by the Code or the REMIC Provisions including reports relating
to interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of REMIC I. The Depositor shall provide or cause to be provided
to the Trust Administrator, within ten (10) days after the Closing Date, all
information or data that the Trust Administrator reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) The Servicer, the Trustee and the Trust Administrator
shall take such action and shall cause the REMIC created hereunder to take such
action as shall be necessary to create or maintain the status thereof as a REMIC
under the REMIC Provisions. The Servicer, the Trustee and the Trust
Administrator shall not take any action, cause the Trust to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of REMIC I as a REMIC or (ii) result in the imposition of a tax upon the
Trust (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code) (either such event, an "Adverse
REMIC Event") unless the Servicer, the Trustee and the Trust Administrator have
received an Opinion of Counsel, addressed to the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer (at the expense of the party
seeking to take such action but in no event at the expense of the Trust
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to REMIC I, endanger such status or result in the imposition
of such a tax, nor shall the Servicer take or fail to take any action (whether
or not authorized hereunder) as to which the Trust Administrator or the Trustee
has advised it in writing that it has received an Opinion of Counsel to the
effect that an Adverse REMIC Event could occur with respect to such action;
provided that the Servicer may conclusively rely on such Opinion of Counsel and
shall incur no liability for its action or failure to act in accordance with
such Opinion of Counsel. In addition, prior to taking any action with respect to
REMIC I or the respective assets of each, or causing REMIC I to take any action,
which is not contemplated under the terms of this Agreement, the Servicer will
consult with the Trustee and the Trust Administrator or their designees, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to REMIC I and the Servicer shall not take any such action
or cause REMIC I to take any such action as to which the Trust Administrator or
the Trustee has advised it in writing that an Adverse REMIC Event could occur;
provided that the Servicer may conclusively rely on such writing and shall incur
no liability for its action or failure to act in accordance with such writing.
The Trust Administrator and the Trustee may consult with counsel to make such
written advice, and the cost of same shall be borne by the party seeking to take
the action not permitted by this Agreement, but in no event shall such cost be
an expense of the Trustee or the Trust Administrator.
At all times as may be required by the Code, the Servicer, the Trust
Administrator and the Trustee will ensure that substantially all of the assets
of REMIC I will consist of "qualified mortgages" as

                                      131
<PAGE>

defined in Section 860G(a)(3) of the Code and "permitted investments" as defined
in Section 860G(a)(5) of the Code.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of the REMIC as defined
in Section 860G(c) of the Code, on any contributions to the REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trust Administrator pursuant to Section
11.03 hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article XI, (ii) to the
Trustee pursuant to Section 11.03 hereof, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article XI,
(ii) to the Servicer pursuant to Section 11.03 hereof, if such tax arises out of
or results from a breach by the Servicer of any of its obligations under Article
III or this Article XI, or (iv) against amounts on deposit in the Certificate
Account and shall be paid by withdrawal therefrom.

                  (h) On or before April 15 of each calendar year, commencing
April 15, 2001, the Trust Administrator shall deliver to each Rating Agency an
Officer's Certificate of the Trust Administrator stating the Trust
Administrator's compliance with this Article XI.

                  (i) The Trust Administrator shall, for federal income tax
purposes, maintain books and records with respect to REMIC I on a calendar year
and on an accrual basis.

                  (j) Following the Startup Day, the Servicer, the Trust
Administrator and the Trustee shall not accept any contributions of assets to
REMIC I other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.06 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
will not cause REMIC I to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject REMIC I to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.

                  (k) Neither the Trust Administrator, the Trustee nor the
Servicer shall enter into any arrangement by which REMIC I will receive a fee or
other compensation for services nor permit REMIC I to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.

                  (l) The Trust Administrator shall treat the Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation Section
1.860G-2(h) that is owned by the Holder of the Class R Certificates and that is
not an asset of any REMIC created hereunder. The Trust Administrator shall treat
the rights of the Class A Certificateholders to receive payments from the
Reserve Fund in the event of a Basis Risk Shortfall as rights in an interest
rate cap contract written by the Holder of the Class R Certificates in favor of
the Class A Certificateholders. Thus, each Class A Certificate shall be treated
as representing not only ownership of regular interests in REMIC I, but

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<PAGE>

also ownership of an interest in an interest rate cap contract. For purposes of
determining the issue prices of the Certificates, the Trust Administrator shall
assume that the interest rate cap contract has a value of $5,000.

         Section 11.02.             Prohibited Transactions and Activities.

                  None of the Depositor, the Servicer, the Trust Administrator
or the Trustee shall sell, dispose of or substitute for any of the Mortgage
Loans (except in connection with (i) the foreclosure of a Mortgage Loan,
including but not limited to, the acquisition or sale of a Mortgaged Property
acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii)
the termination of REMIC I pursuant to Article X of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire any
assets for REMIC I (other than REO Property acquired in respect of a defaulted
Mortgage Loan), nor sell or dispose of any investments in the Collection Account
or the Certificate Account for gain, nor accept any contributions to REMIC I
after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.06), unless it has received an Opinion of
Counsel, addressed to the Trust Administrator, the Trustee and the Certificate
Insurer (at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee or the Trust Administrator) that such sale, disposition, substitution,
acquisition or contribution will not (a) affect adversely the status of REMIC I
as a REMIC or (b) cause REMIC I to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

         SECTION 11.03.             Servicer, Trust Administrator and Trustee
                                    Indemnification.

                  (a) The Trustee agrees to indemnify the Trust, the Depositor,
the Certificate Insurer and the Servicer for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by the
Trust, the Depositor, the Certificate Insurer or the Servicer, as a result of a
breach of the Trustee's covenants set forth in this Article XI.

                  (b) The Trust Administrator agrees to indemnify the Trust, the
Depositor, the Certificate Insurer and the Servicer for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust, the Depositor, the Certificate Insurer or the Servicer,
as a result of a breach of the Trust Administrator's covenants set forth in this
Article XI.

                  (b) The Servicer agrees to indemnify the Trust, the Depositor,
the Certificate Insurer, the Trust Administrator and the Trustee for any taxes
and costs including, without limitation, any reasonable attorneys' fees imposed
on or incurred by the Trust, the Depositor, the Certificate Insurer, the Trust
Administrator or the Trustee, as a result of a breach of the Servicer's
covenants set forth in Article III or this Article XI.

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<PAGE>

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         Section 12.01.                     Amendment.

                  This Agreement may be amended from time to time by the
Depositor, the Servicer, the Trust Administrator and the Trustee with the
consent of the Certificate Insurer and without the consent of the
Certificateholders; (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein or (iii) to make any other provisions with respect to matters
or questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement; provided, however, that any such action listed
in clause (i) through (iii) above shall not, as evidenced by (A) an Independent
Opinion of Counsel delivered to the Servicer, the Certificate Insurer, Trust
Administrator and the Trustee or (B) written confirmation from the Rating
Agencies that such amendment would not result in the withdrawal, downgrade or
qualification of their ratings of any Class of Certificates (as they would be
determined without regard to the existence of the Policy), adversely affect in
any respect the interests of any Certificateholder.

                  In addition, this Agreement may be amended from time to time
by the Depositor, the Servicer, the Trust Administrator and the Trustee with the
consent of the Certificate Insurer with the consent of the majority in interest
of the Holders of any Class of Certificates affected thereby 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
required to be distributed 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 66% 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.

                  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 Independent Opinion of Counsel to the
effect that such amendment will not result in the imposition of a tax on the
Trust pursuant to the REMIC Provisions or cause the Trust to fail to qualify as
a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trust
Administrator shall furnish, at the expense of the Person that requested the
amendment if such Person is the Depositor or the Servicer (but in no event at
the expense of the Trust Administrator), 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 Servicer, the Certificate Insurer and
each Rating Agency, and, if such

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<PAGE>

amendment required the consent of Certificateholders, to the Certificateholders
of the Class or Classes whose consent was required.

                  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.

                  Each of the Trust Administrator and the Trustee may, but shall
not be obligated to, enter into any amendment pursuant to this 11.01 Section
that affects its rights, duties and immunities under this Agreement or
otherwise.

         Section 12.02.             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 Servicer at the expense of the Trust, 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 12.03.             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 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.

                                      135
<PAGE>

                  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 hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee from a Holder which
is an insurance company having long- term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 15 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner 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 12.04.             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 12.05.             Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given (except as otherwise
provided in Section 11.12 hereof) if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service, to (a) in the case
of the Servicer, 4500 Park Granada, Calabasas, California 91302 (telecopy number
(818)

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<PAGE>

225-4015), or such other address or telecopy number as may hereafter be
furnished to the Depositor, the Certificate Insurer, the Trust Administrator and
the Trustee in writing by the Servicer, (b) in the case of the Trust
Administrator, U.S. Bank National Association, 180 East Fifth Street, 2nd Floor,
St. Paul, Minnesota 55101, Attention: Structured Finance/New Century 2000-NCB
(telecopy number (612) 244-0089), or such other address or telecopy number as
may hereafter be furnished to the Depositor, the Certificate Insurer, the Trust
Administrator and the Servicer in writing by the Trustee, (c) in the case of the
Depositor, 18400 Von Karman, Suite 1000, Irvine, CA 92612 (telecopy number (714)
224-5000), or such other address or telecopy number as may be furnished to the
Certificate Insurer, the Servicer, Trust Administrator and the Trustee in
writing by the Depositor, (d) in the case of the Trustee, Firstar Bank, N.A.,
1555 North River Center Drive, Suite 301, Milwaukee, Wisconsin 53212, or such
other address or telecopy number as may be furnished to the Certificate Issuer,
the Servicer, the Trustee and the Depositor in writing by the Trustee and (e) in
the case of the Certificate Insurer, Financial Security Assurance, Inc., 350
Park Avenue, New York, New York 10022, Attention: Surveillance Department, Re:
New Century Asset Backed Pass-Through Certificates, Series 2000-NCB, (212)
826-0100, telecopy number (212) 339-3518 (in each case in which notice or other
communication to the Certificate Insurer refers to a Servicer Default or a claim
on the Policy or with respect to which failure on the part of the Certificate
Insurer to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication shall also be sent to the attention
of each of the General Counsel and the Head -- Financial Guaranty Group and
shall be marked to indicate "URGENT MATERIAL ENCLOSED"), or such other address
or telecopy number as may hereafter be furnished to the Trustee, the Trust
Administrator, the Depositor and the Servicer in writing by the Certificate
Insurer. 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 Default
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 12.06.             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 12.07.             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 12.08.             Notice to the Rating Agencies.

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<PAGE>

                  (a) Each of the Trust Administrator and the Servicer 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 Trust Administrator or Servicer, as the case may be, has actual
knowledge:

                           (i)      any material change or amendment to this
                                    Agreement;

                           (ii)     the occurrence of any Servicer Default that
                                    has not been cured or waived;

                           (iii)    the resignation or termination of the
                                    Servicer or the Trust Administrator;

                           (iv)     the final payment to Holders of the
                                    Certificates of any Class;

                           (v)      any change in the location of any Account;
                                    and

                           (vi)     if the Trust Administrator or the Trustee is
                                    acting as successor Servicer pursuant to
                                    Section 7.02 hereof, any event that would
                                    result in the inability of the Trust
                                    Administrator or the Trustee to make
                                    Delinquency Advances.

                  (b) In addition, (i) the Trust Administrator shall promptly
furnish to each Rating Agency copies of the following:

                  (A)      each annual report to Certificateholders described in
                           Section 4.06 hereof; and

                  (B)      each Statement to Certificateholders described in
                           Section 4.06 hereof; and

                  (ii)     the Servicer shall promptly furnish to each Rating
                           Agency copies of the following:

                  (A)      each annual statement as to compliance described in
                           Section 3.19 hereof;

                  (B)      each annual independent public accountants' servicing
                           report described in Section 3.20 hereof;

                  (C)      each Collection Account Statement described in
                           Section 3.18(b) hereof; and

                  (D)      each notice delivered pursuant to Section 7.01(a)
                           hereof which relates to the fact that the Servicer
                           has not made a Delinquency Advance.

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<PAGE>

                  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
Fitch, Inc., One State Street Plaza, New York, New York 10004; Standard &
Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041, Attention: Mortgage Surveillance Group; and Moody's
Investors Service, Inc., Pass-Through Monitoring Department, 99 Church Street,
New York, New York 10007, Attention: Structured Finance Group.

         Section 12.09.             Further Assurances.

                  Notwithstanding any other provision of this Agreement, neither
the Class A Certificateholders, the Trust Administrator, 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 12.10              Benefits of Agreement.

                  Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders, the
Certificate Insurer and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.

         Section 12.11.             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, the
Trust Administrator, the Servicer, and the Certificate Insurer. 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
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.

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<PAGE>

                  (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.

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<PAGE>

                  IN WITNESS WHEREOF, the Depositor, the Servicer, the Trustee
and the Trust Administrator 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.

                                        NEW CENTURY MORTGAGE SECURITIES, INC.,
                                          as Depositor

                                        By: /s/ Patrick Flanagan
                                           -----------------------------------
                                        Name:   Patrick Flanagan
                                        Title:  President

                                        COUNTRYWIDE HOME LOANS, INC.,
                                          as Servicer

                                        By: /s/ John Kontoulis
                                           -----------------------------------
                                        Name:   John Kontoulis
                                        Title:  Senior Vice President

                                        FIRSTAR BANK, N.A.,
                                          as Trustee

                                        By: /s/ Charles F. Pedersen
                                           -----------------------------------
                                        Name:   Charles F. Pedersen
                                        Title:  Vice President

                                        U.S. BANK NATIONAL ASSOCIATION,
                                          as Trust Administrator

                                        By: /s/ Harry Hall
                                           -----------------------------------
                                        Name:   Harry Hall
                                        Title:  Vice President

<PAGE>

STATE OF ___________________  )
                              ) ss.:
COUNTY OF _________________   )

                  On the ___th day of July, 2000 before me, a notary public in
and for said State, personally appeared __________________, known to me to be a
Vice President of New Century Mortgage Securities, Inc., 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 CALIFORNIA   )
                      ) ss.:
COUNTY OF             )

                  On the ___th day of July, 2000 before me, the undersigned, a
notary public in and for said State, personally appeared ___________________,
known to me (or proved to me on the basis of satisfactory evidence) to be a
___________________________ of Countrywide Home Loans, Inc., a California
corporation that executed the within instrument, and acknowledged to me that he
executed it in his authorized capacity, and that by his signature on the
instrument, such corporation executed the within instrument.

                  WITNESS my hand and affixed my official seal.

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

<PAGE>

STATE OF ____________    )
                         ) ss.:
COUNTY OF __________     )

                  On the ___th day of July, 2000 before me, a notary public in
and for said State, personally appeared _____________, known to me to be a Vice
President of Firstar Bank, N.A., a national banking association that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said association, 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 MINNESOTA     )
                       ) ss.:
COUNTY OF__________    )

                  On the ___th day of July, 2000 before me, a notary public in
and for said State, personally appeared _____________, known to me to be a Vice
President of U.S. Bank National Association, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, 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>
                                   EXHIBIT A-1

                          FORM OF CLASS [A] CERTIFICATE

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

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 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 REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OF
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

New Century Home Equity Loan Trust, Series      Original Certificate Principal
2000-NCB, Class A Certificate Pass-Through      Balance of Class A Certificates:
Rate: [__]%                                     $[__]

Initial Certificate Principal Balance:$[__]

Date of Pooling and Servicing Agreement and     Issue Date:  July __, 2000
Initial Cut-Off Date: July 1, 2000

First Distribution Date: August 25, 2000

No. 1                                           CUSIP No._____________

<PAGE>

                 NEW CENTURY EQUITY LOAN TRUST, SERIES 2000-NCB
                      ASSET BACKED PASS-THROUGH CERTIFICATE
                                     CLASS A

evidencing a beneficial ownership interest in a Trust Estate established by NEW
CENTURY MORTGAGE SECURITIES, INC. consisting primarily of a pool of residential,
fixed-rate and adjustable-rate, first and second lien mortgage loans originated
by, or purchased from others by,

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     This Certificate is payable solely from the assets of the Trust and does
not represent an obligation of or interest in New Century Mortgage Corporation,
NC Capital Corporation, New Century Mortgage Securities, Inc., Countrywide Home
Loans, Inc., the Trustee, the Trust Administrator or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by any
agency or instrumentality of the United States.

     This certifies that _________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Balance of this Certificate as set forth above by $[__],
such amount being the initial aggregate Class A Certificate Principal Balance of
all of the Class A Certificates) in the Trust created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among
Countrywide Home Loans, Inc. as servicer (the "Servicer," which term includes
any successor entity under the Agreement), New Century Mortgage Securities, Inc.
as depositor, U.S. Bank National Association as trust administrator (the "Trust
Administrator") and Firstar Bank , N.A. as trustee (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 are required to 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 at the close of business on the Business Day
immediately preceding the Distribution Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount to be distributed to such Class as of such Distribution Date.

     The Holder of this Certificate is entitled to payments on the applicable
Distribution Date which will fully amortize the Initial Certificate Principal
Balance, as set forth on the front page hereof, from the date of the initial
delivery hereof to the final Distribution Date of the Class A Certificates.
Therefore, the actual outstanding principal amount of this Class A Certificate
on any date subsequent to August 25, 2000 (the first Distribution Date) will be
less than the Initial Certificate Principal Balance set forth on the front page
hereof.

                                                       A-1-2

<PAGE>

     All distributions under the Agreement on the Class A Certificates will be
made or caused to be made by the Trust Administrator by (i) wire transfer of
immediately available funds to the account of the Person entitled thereto at a
bank or other entity having appropriate facilities therefor, if such Person
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class A Certificates evidencing a Percentage Interest
aggregating at least 10% or (ii) 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.

     This Certificate is one of a duly authorized issue of Certificates
designated as New Century Home Equity Loan Trust, Series 2000-NCB, Asset Backed
Pass-Through Certificates of the series specified on the front page hereof
(herein called the "Certificates") and representing the Percentage Interest
specified on the front page hereof in the Class A Certificates.

     The final distribution on this Certificate will be made only upon
presentation and surrender of this Certificate at the office or agency of the
Trust Administrator in St. Paul, Minnesota. The Agreement provides that, in any
event, upon the making of the final distribution due on this Certificate, this
Certificate shall be deemed canceled for all purposes under the Agreement.

     The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. As provided in the Agreement, withdrawals from the
Collection Account and the Certificate 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 Loans.

     The Agreement permits, with certain exceptions therein provided, the
amendment thereof by the Depositor, the Servicer, the Trust Administrator, and
the Trustee with the consent of the Majority Certificateholders; PROVIDED,
HOWEVER, that no such amendment or waiver shall reduce in any manner the amount
of, or delay the timing of, distributions on any Certificate without the consent
of the Holder thereof, or adversely affect in any respect the interests of the
Holders of any Class of Certificates without the consent of the Holders of
Certificates evidencing at least a 66% Percentage Interest in such Class. No
amendment shall reduce the percentage of Voting Rights required in the previous
sentence without the consent of the Holders of all Certificates of such Class
then outstanding. 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.

     As provided in the Agreement and subject to certain limitations therein set
forth and referred to on the face hereof, the transfer of this Certificate is
registrable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the office or agency appointed by the Trust
Administrator as provided in the Agreement, duly endorsed by, or accompanied by
a written instrument of transfer in the form attached hereto duly executed by,
the Holder hereof or such

                                      A-1-3

<PAGE>

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 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, but the Trust Administrator 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 Servicer, the Depositor, the Trust Administrator and the Trustee and
any agent of the Servicer, the Depositor, the Trust Administrator or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Servicer, the Depositor, the Trust
Administrator and the Trustee nor any such agent shall be affected by notice to
the contrary.

     THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

     The obligations created by the Agreement and the Trust 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 final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust.

     The Agreement additionally provides that the Servicer or the Certificate
Insurer may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property in the Trust Fund then constituting
part of the Trust Estate, and thereby effect early retirement of the
Certificates, on and after the Distribution Date on which the Aggregate Loan
Balance is less than or equal to 10% of the Cut-off Date Pool Balance.

     Unless the certificate of authentication hereon has been executed by the
Trust Administrator, 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 Trust Administrator has caused this Certificate to
be duly executed.

Dated:  July __, 2000

                                               U.S. BANK NATIONAL ASSOCIATION,
                                               as Trust Administrator

                                               By _____________________________
                                                        Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

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

                                               U.S. BANK NATIONAL ASSOCIATION,
                                               as Trust Administrator

                                               By _____________________________
                                                        Authorized Officer

                                      A-1-5

<PAGE>

                                                    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
Certificate and hereby authorizes the transfer of registration of such interest
to such assignee on the Certificate Register of the Trust.

     I (we) further direct the Trustee 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

                                      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 ____________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________________, as
its agent.

                                      A-1-7

<PAGE>

                                   EXHIBIT A-2

                          FORM OF CLASS P CERTIFICATES

                               CLASS P CERTIFICATE

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

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT IN
COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

                                      A-2-1

<PAGE>

Series 2000-NCB, Class P                    No. 1 Aggregate Certificate
                                            Principal Balance of the Class P
Date of Pooling and Servicing Agreement     Certificates as of the Issue Date:
and Cut-off Date: July 1, 2000              $100.00

First Distribution Date:                    Denomination: $100.00
August 25, 2000
                                            Servicer:
                                            Countrywide Home Loans, Inc.

                                            Trustee: Firstar Bank, N.A.

                                            Trust Administrator:  U.S. Bank
                                            National Association

                                            Issue Date: July 28, 2000

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 AS THE DENOMINATION OF THIS CERTIFICATE.

                                      A-2-2

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Estate established by NEW
CENTURY MORTGAGE SECURITIES, INC. consisting primarily of a pool of residential,
fixed-rate and adjustable-rate, first and second lien mortgage loans originated
by, or purchased from others by,

                      NEW CENTURY MORTGAGE SECURITIES, INC.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN NEW CENTURY
MORTGAGE SECURITIES, INC., THE SERVICER, THE TRUSTEE, THE TRUST ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in the REMIC created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among New Century Mortgage Securities, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, 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 Record Date, 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 P 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 the Trust Administrator 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 Trust
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
P Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class P Certificates, or otherwise
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.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trust Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the

                                      A-2-3

<PAGE>

office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Floating Rate Mortgage Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, 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 Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Trust Administrator and the rights of
the Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Trustee and the Trust Administrator with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. 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 Trust Administrator 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 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 the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"),

                                      A-2-4

<PAGE>

and an effective registration or qualification under applicable state securities
laws, or is made in a transaction that does not require such registration or
qualification. In the event that such a transfer of this Certificate is to be
made without registration or qualification, the Trust Administrator shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit F-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Trust Administrator or the Servicer in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Trust Administrator 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 Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trust Administrator 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 Servicer, the Trustee, or the Trust Administrator
and any agent of the Depositor, the Servicer, the Trustee, or the Trust
Administrator may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee nor the Trust Administrator 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 the Trust Administrator 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
Loan remaining in the REMIC and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from the REMIC of
all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the REMIC all the

                                      A-2-5

<PAGE>

Mortgage Loans and all property acquired in respect of any Mortgage Loan 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 Stated Principal Balance of the Mortgage Loans at the
time of purchase being less than 10% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Trust Administrator assumes
responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trust Administrator, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-2-6

<PAGE>

          IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.

Dated: July __, 2000

                                            U.S. BANK NATIONAL ASSOCIATION
                                            as Trust Administrator

                                            By:________________________________
                                                    Authorized Officer

                                           CERTIFICATE OF AUTHENTICATION

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

                                            U.S. BANK NATIONAL ASSOCIATION
                                            as Trust Administrator

                                            By:________________________________
                                                   Authorized Signatory

                                      A-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 Minors Act
JT TEN  - as joint tenants with right                      ______________
          if survivorship and not as                          (State)
          tenants in common

    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 Floating Rate
Mortgage Pass-Through 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 Trustee or the Trust Administrator 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-2-8

<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.

<PAGE>

                                   EXHIBIT A-3

                          FORM OF CLASS R CERTIFICATES

THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON- UNITED STATES PERSON.

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

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE TRUSTEE THAT (A)
SUCH TRANSFEREE IS A "PERMITTED TRANSFEREE," WHICH INCLUDE ANY UNITED STATES
PERSON THAT IS NOT (1) THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE)
THAT 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, (3) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED
TO AS A "DISQUALIFIED ORGANIZATION"), (4) AN AGENT OF A DISQUALIFIED
ORGANIZATION OR (5) AN "ELECTING LARGE PARTNERSHIP" (AS DESCRIBED SECTION 775 OF
THE CODE) AND (B) NO PURPOSE OF SUCH TRANSFER

<PAGE>

IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE
SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
PERSON OTHER THAN A PERMITTED TRANSFEREE OR AN AGENT OF A PERSON OTHER THAN A
PERMITTED TRANSFEREE, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE
OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY
ACCEPTANCE HEREOF 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 PERSON OTHER THAN A PERMITTED
TRANSFEREE IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS
CERTIFICATE.

New Century Home Equity Loan Trust,
Series 2000-NCB, Class R

Certificate Percentage Interest: 100%             Date of Pooling and Servicing
                                                  Agreement and Cut-Off Date:
                                                  July 1, 2000

First Distribution Date:  August 25, 2000         Issue Date:  July __, 2000

Certificate No. 1

                                      A-3-2

<PAGE>

               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCB
                    HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
                                     CLASS R

evidencing a beneficial ownership interest in a Trust Estate established by NEW
CENTURY MORTGAGE SECURITIES, INC. consisting primarily of a pool of residential,
fixed-rate and adjustable-rate, first lien mortgage loans originated by, or
purchased from others by,

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     This Certificate is payable solely from the assets of the Trust and does
not represent an obligation of or interest in New Century Mortgage Corporation,
NC Capital Corporation, New Century Mortgage Securities, Inc., Countrywide Home
Loans, Inc., the Trustee, the Trust Administrator or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by any
agency or instrumentality of the United States.

     This certifies that ______________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Percentage Interest of this Certificate as set forth above by 100%, such amount
being the initial aggregate Class R Percentage Interest of all of the Class R
Certificates) in the Trust created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Countrywide Home
Loans, Inc. as Servicer (the "Servicer," which term includes any successor
entity under the Agreement), New Century Mortgage Securities, Inc. as depositor,
U.S. Bank National Association as trust administrator (the "Trust
Administrator") and Firstar Bank, N.A. as trustee (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 are required to 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 at the close of business on the Business Day
immediately preceding the Distribution Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount to be distributed to such Class as of such Distribution Date.

     All distributions under the Agreement on the Class R Certificates will be
made or caused to be made by the Trust Administrator by (i) wire transfer of
immediately available funds to the account of the Person entitled thereto at a
bank or other entity having appropriate facilities therefor, if such Person
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R Certificates evidencing a Percentage Interest
aggregating at least 10% or (ii) check mailed by first

                                      A-3-3

<PAGE>

class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register.

     This Certificate is one of a duly authorized issue of Certificates
designated as New Century Home Equity Loan Trust, Series 2000-NCB, Asset Backed
Pass-Through Certificates of the series specified on the front page hereof
(herein called the "Certificates") and representing the Percentage Interest
specified on the front page hereof in the Class R Certificates.

     The final distribution on this Certificate will be made only upon
presentation and surrender of this Certificate at the office or agency of the
Trust Administrator in St. Paul, Minnesota. The Agreement provides that, in any
event, upon the making of the final distribution due on this Certificate, this
Certificate shall be deemed canceled for all purposes under the Agreement.

     The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. As provided in the Agreement, withdrawals from the
Collection Account and the Certificate 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 Loans.

     The Agreement permits, with certain exceptions therein provided, the
amendment thereof by the Depositor, the Servicer, the Trust Administrator and
the Trustee with the consent of the Majority Certificateholders; PROVIDED,
HOWEVER, that no such amendment or waiver shall reduce in any manner the amount
of, or delay the timing of, distributions on any Certificate without the consent
of the Holder thereof, or adversely affect in any respect the interests of the
Holders of any Class of Certificates without the consent of the Holders of
Certificates evidencing at least a 66% Percentage Interest in such Class. No
amendment shall reduce the percentage of Voting Rights required in the previous
sentence without the consent of the Holders of all Certificates of such Class
then outstanding. 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.

     As provided in the Agreement and subject to certain limitations therein set
forth and referred to on the face hereof, the transfer of this Certificate is
registrable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the office or agency appointed by the Trust
Administrator as provided in the Agreement, duly endorsed by, or accompanied by
a written instrument of transfer in the form attached hereto 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 in Classes and
denominations

                                      A-3-4

<PAGE>

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 the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit G, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust or of the Depositor, the Trustee, the Trust
Administrator or the Servicer in their respective capacities as such), together
with copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee upon
which such Opinion of Counsel is based. None of the Depositor, the Trustee or
the Trust Administrator 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 Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any Person using "Plan Assets" to acquire this Certificate shall be made
except in accordance with Section 5.02(b)(ii) of the Agreement.

     Prior to registration of any transfer, sale or other disposition of this
Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is a Permitted Transferee or the
agent (including a broker, nominee or middleman) of a Permitted Transferee, and
(ii) a certificate that acknowledges that (A) the Class R Certificates have been
designated as a residual interest in a REMIC, (B) it will include in its income
a PRO RATA share of the net income of the Trust and that such income may be an
"excess inclusion," as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, and (C) it
expects to have the financial means to satisfy all of its tax obligations
including those relating to holding the Class R Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Permitted Transferee or an agent (including
a broker, nominee or middleman) of a Permitted Transferee, 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

                                      A-3-5

<PAGE>

for any purpose, including, but not limited to, the receipt of distributions in
respect of this Certificate.

     The Holder of this Certificate, by its acceptance hereof, shall be deemed
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 a REMIC or cause the imposition of a tax upon the REMIC.

     No service charge will be made for any such registration of transfer or
exchange, but the Trust Administrator 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 Servicer, the Depositor, the Trust Administrator and the Trustee and
any agent of the Servicer, the Depositor, the Trust Administrator or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Servicer, the Depositor, the Trust
Administrator and the Trustee nor any such agent shall be affected by notice to
the contrary.

     THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

     The obligations created by the Agreement and the Trust 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 final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust.

     The Agreement additionally provides that the Servicer or the Certificate
Insurer may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property in the Trust Fund then constituting
part of the Trust Estate, and thereby effect early retirement of the
Certificates, on and after the Distribution Date on which the Aggregate Loan
Balance is less than or equal to 10% of the Cut-off Date Pool Balance.

     Unless the certificate of authentication hereon has been executed by the
Trust Administrator, by manual signature, this Certificate shall not be entitled
to any benefit under the Agreement or be valid for any purpose.

                                      A-3-6

<PAGE>

     IN WITNESS WHEREOF, the Trust Administrator has caused this Certificate to
be duly executed.

Dated:  July __, 2000

                                            U.S. BANK NATIONAL ASSOCIATION,
                                            as Trust Administrator

                                            By:________________________________
                                                     Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

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

                                            U.S. BANK NATIONAL ASSOCIATION,
                                            as Trust Administrator

                                            By:________________________________
                                                     Authorized Officer

                                      A-3-7

<PAGE>

                                   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 Certificate and hereby
authorizes the transfer of registration of such interest to such assignee on the
Certificate Register of the Trust.
________________________________________________________________________________
I (we) further direct the Trustee 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

                                      A-3-8

<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.

                                      A-3-9

<PAGE>

                                    EXHIBIT B

                                   [RESERVED]

                                       B-1

<PAGE>

                                    EXHIBIT C

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

                                       C-1

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

                               Dated July 27, 2000

                        NEW CENTURY MORTGAGE CORPORATION
                                   Originator

                             NC CAPITAL CORPORATION
                                     Seller

                      NEW CENTURY MORTGAGE SECURITIES, INC.
                                    Purchaser

<PAGE>

                                    CONTENTS
                                    --------

                                                                            PAGE
                                                                            ----

ARTICLE I     DEFINITIONS...................................................-2-

ARTICLE II    CONVEYANCE OF THE MORTGAGE LOANS..............................-4-

ARTICLE III   REPRESENTATIONS AND WARRANTIES OF THE SELLER

              AND THE ORIGINATOR............................................-8-

ARTICLE IV    [RESERVED]...................................................-10-

ARTICLE V     MISCELLANEOUS................................................-11-

SCHEDULE A    MORTGAGE LOANS
EXHIBIT A     REPRESENTATIONS AND WARRANTIES RELATING TO THE
              MORTGAGE LOANS

<PAGE>

                          STATEMENT OF THE TRANSACTION

     This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated July
27, 2000, among NC Capital Corporation, a California corporation (the "Seller"),
New Century Mortgage Securities, Inc., a Delaware corporation (the "Purchaser")
and New Century Mortgage Corporation, a California corporation (the
"Originator").

     Subject to the terms and conditions hereof, the Seller hereby agrees to
sell and transfer to the Purchaser, and the Purchaser hereby agrees to purchase
and accept from the Seller, the mortgage loans (the "Mortgage Loans") identified
in Schedule A of this Agreement (the "Mortgage Loan Schedule") having an
aggregate Cut-off Date Principal Balance of approximately $384,965,205 in
exchange for the purchase price which shall consist of (i) immediately available
funds in an amount equal to the net sale proceeds of the Class A Certificates
and (ii) delivery to NC Residual II Corporation upon the order of the Seller the
Class R Certificates and the Class P Certificates. The Seller shall deliver the
Mortgage Loan Schedule to the Purchaser on or prior to the Closing Date. The
Mortgage Loan Schedule and purchase price of the Mortgage Loans shall be subject
to the following adjustments: (a) Mortgage Loans identified by the Purchaser
prior to the Closing Date as not conforming to its requirements or which the
Purchaser has not selected for purchase shall be deleted; (b) the Seller shall
delete any and all Mortgage Loans that have been prepaid or as to which the
representations and warranties of the Seller (as described in Section 3.01(i)(q)
and 3.01(ii)(l) hereof) cannot be made as of the Closing Date and (c) Mortgage
Loans acceptable to the Purchaser to be substituted for Mortgage Loans deleted
as provided above shall be added. It is understood that the sale of the Mortgage
Loans by the Seller to the Purchaser does not include the sale of any contract
servicing rights or any assumption of any and all of the duties and obligations
relating to the servicing rights with respect to the Mortgage Loans. It is
further understood that such contract servicing rights will be sold by the
Seller to Countrywide Home Loans, Inc. pursuant to a Loan Servicing Purchase and
Sale Agreement and subject to the Pooling and Servicing Agreement among the
Purchaser as depositor, Countrywide Home Loans, Inc., Firstar Bank, N.A. and
U.S. Bank National Association.

     It is understood that the Mortgage Loans which are the subject of this
Agreement are expected to be sold by the Purchaser on the Closing Date to a
trust (the "Trust") in exchange for New Century Home Equity Loan Trust, Series
2000-NCB, Asset Backed Pass-Through Certificates (the "Certificates"), including
one class of Class P Certificates (the "Class P Certificates") and one class of
Class R Certificates (the "Class R Certificates") representing the residual
interest in the Trust relating to the Mortgage Loans. The Seller agrees to
cooperate and use its best efforts to facilitate the execution and delivery of
the Pooling and Servicing Agreement, dated as of July 1, 2000, among the
Purchaser as depositor, Countrywide Home Loans, Inc. as servicer (the
"Servicer"), U.S. Bank National Association as trust administrator (the "Trust
Administrator") and Firstar Bank, N.A. as trustee (the "Trustee"), pursuant to
which the Certificates will be issued (the "Pooling Agreement").

     Each Mortgage Loan will be serviced by the Servicer, in its capacity as
Servicer under the Pooling Agreement, for the related Servicing Fee specified in
the Pooling Agreement, and the Mortgage Loans will be serviced in accordance
with the terms of such Pooling Agreement.

<PAGE>

     The following sets forth the terms and conditions of the contemplated
transaction, to which the parties have agreed, as evidenced by the execution of
this Agreement.

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS
                                   -----------

     Section 1.01. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings (capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Pooling Agreement):

          AGREEMENT: This Mortgage Loan Purchase Agreement, including all
exhibits, schedules, amendments and supplements to this Agreement.

          LOAN BALANCE: As defined in the Pooling Agreement.

          MORTGAGE FILE: As to each Mortgage Loan:

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

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

          (iii) an original Assignment of the Mortgage executed in the following
form: "Firstar Bank, N.A., as Trustee under the applicable agreement" or in
blank;

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

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

          (vi) the original lender's title insurance policy, together with all
endorsements or riders that were issued with or subsequent to the issuance of
such policy, insuring the priority of the Mortgage as a first lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by the title
insurance or escrow company.

          MORTGAGE LOANS: As defined in the Statement of the Transaction herein.

          MORTGAGE LOAN SCHEDULE: As defined in the Pooling Agreement.

                                       -2-

<PAGE>

          OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Purchaser, the Originator or the Seller, reasonably acceptable to the
Trust Administrator; PROVIDED, HOWEVER, that, any opinion of counsel relating to
(a) qualification of the Trust as a REMIC or compliance with the REMIC
Provisions must be an opinion of counsel who is a tax counsel experienced in
REMIC matters and (b) the qualification of any account required to be maintained
pursuant to this Agreement as an Eligible Account must (i) in fact be
Independent of the Purchaser, the Originator and the Seller, (ii) not have any
direct financial interest in the Purchaser, the Originator or the Seller or in
any affiliate of either, and (iii) not be connected with the Purchaser, the
Originator or the Seller as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.

          PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated July 27, 2000,
as amended or supplemented, relating to the proposed public offering by the
Underwriters of New Century Home Equity Loan Trust, Series 2000-NCB, Asset
Backed Pass-Through Certificates, Class A representing interests in the Mortgage
Loans.

          PURCHASE PRICE: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.03 or 2.04 of this Agreement, an
amount equal to the sum, without duplication, of (i) 100% of the Loan Balance as
of the end of the previous Due Period (or, if such purchase occurs on the first
day of any calendar month, as of the end of such day), (ii) any unreimbursed
Servicing Advances or Delinquency Advances (and any previously reimbursed Non-
Recoverable Advances) allocable to such Mortgage Loan, (iii) interest from the
date interest was last paid by the Mortgagor through the day before the Due Date
in the Due Period relating to the Distribution Date in which the Purchase Price
will be remitted at a rate per annum equal to the applicable Net Mortgage Rate
(to the extent such amounts are not already counted in (ii)), (iv) in the event
the Mortgage Loan is required to be purchased pursuant to Section 2.06 of the
Pooling Agreement, expenses reasonably incurred or to be incurred by the
Servicer or the Trustee in respect of the breach or defect giving rise to the
purchase obligation, including any reasonable expenses arising out of the
enforcement of the purchase obligation and (v) the principal portion of any
scheduled monthly payment which was due during any previous Due Period for which
a Delinquency Advance was not made.

                                   ARTICLE II
                                   ----------

                        CONVEYANCE OF THE MORTGAGE LOANS
                        --------------------------------

     Section 2.01. CONVEYANCE OF MORTGAGE LOANS.

     The Seller, concurrently with the execution and delivery hereof, hereby
sells, transfers, assigns, sets over and otherwise conveys to the Purchaser,
without recourse, all the right, title and interest of the Seller in and to the
Mortgage Loans, including all interest and principal due on or with respect to
the Mortgage Loans after the Cut-off Date (to the extent not applied in
computing the Cut-off Date Loan Balance thereof).

                                       -3-

<PAGE>

     On or prior to the Closing Date, the Seller shall authorize the release to
the Purchaser of the Mortgage File for each Mortgage Loan on the Mortgage Loan
Schedule, but the Seller shall remain subject to the substitution, repurchase
and other obligations set forth herein. Such release shall be made to the
Purchaser or, at the Purchaser's direction, to a designee of the Purchaser
against payment by the Purchaser of the purchase price set forth above under
"Statement of the Transaction" (as adjusted) for the Mortgage Loans to be
delivered on the Closing Date, by wire transfer of immediately available funds,
or such other method of payment as to which the parties hereto may agree, and
delivery to NC Residual II Corporation of the Class R Certificates and the Class
P Certificates.

     The Seller shall pay the out-of pocket costs and expenses incurred by the
Purchaser or any assignee, transferee or designee of the Purchaser in connection
with the recording of each Assignment referred to in clauses (iii) and (iv) of
the definition of Mortgage File. If the Originator or the Seller receives
recording information for a Mortgage, the Originator or the Seller, as
applicable, shall forward such information to the Purchaser or any assignee,
transferee or designee of the Purchaser. In the event that any such Assignment
is lost or returned unrecorded because of a defect therein, the Seller promptly
shall prepare or cause to be prepared a substitute Assignment or cure or cause
to be cured such defect, as the case may be, and thereafter cause each such
Assignment to be duly recorded.

     Notwithstanding anything to the contrary contained in this Section 2.01,
with respect to a maximum of 1.0% of the Mortgage Loans, by aggregate principal
balance of the Mortgage Loans as of the Cut-off Date, if any original Mortgage
Note referred to clause (i) of the definition of Mortgage File above cannot be
located, the obligations of the Seller to deliver such documents shall be deemed
to be satisfied upon delivery to the Purchaser or any assignee, transferee or
designee of the Purchaser of a photocopy of such Mortgage Note, if available,
with a lost note affidavit substantially in the form of Exhibit __ attached
hereto. If any of the original Mortgage Notes for which a lost note affidavit
was delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser is subsequently located, such original Mortgage Note shall be
delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser within three Business Days; and if any document referred to in clause
(ii), (iii) or (iv) of the definition of Mortgage File above has 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 Seller hereunder
shall be deemed to have been satisfied upon (1) delivery to the Purchaser or any
assignee, transferee or designee of the Purchaser of a copy of each such
document certified by the Originator 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 Originator, delivery to the Purchaser or any assignee,
transferee or designee of the Purchaser promptly upon receipt thereof of either
the original or a copy of such document certified by the applicable public
recording office to be a true and complete copy of the original. Notice shall be
provided to the Purchaser or any assignee, transferee or designee of the
Purchaser by the Seller if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date.

     In the event that the original lender's title insurance policy has not yet
been issued, the Seller shall deliver to the Purchaser or any assignee,
transferee or designee of the Purchaser a

                                       -4-

<PAGE>

written commitment or interim binder or preliminary report of title issued by
the title insurance or escrow company. The Seller shall deliver to the Purchaser
or any assignee, transferee or designee of the Purchaser promptly upon receipt
by the Seller of any such original title insurance policy.

     Each original document relating to a Mortgage Loan which is not delivered
to the Purchaser or its assignee, transferee or designee, if held by the Seller,
shall be so held for the benefit of the Purchaser, its assignee, transferee or
designee.

     Section 2.02. CLOSING.

     The closing for the purchase and sale of the Mortgage Loans shall be in
person or by telephone confirmed by letter or wire as the parties shall agree.

     Section 2.03. CURE BY ORIGINATOR OF DEFECTS.

     The Originator shall promptly correct or cure any defect included in the
Trust Administrator's Final Certification within 90 days after the date on which
the Originator or the Seller was notified of such defect and, if the Originator
does not correct or cure such defect within such period, the Originator shall
either (a) if the time to cure such defect expires prior to the end of the
second anniversary of the Closing Date, substitute for the related Mortgage Loan
a Qualified Substitute Mortgage Loan, which substitution shall be accomplished,
in the manner and subject to the conditions set forth in Section 2.06 of the
Pooling Agreement or (b) purchase such Mortgage Loan from the Trust
Administrator, within 90 days after the date on which the Originator or the
Seller was notified of such defect or breach in writing at the Purchase Price of
such Mortgage Loan; PROVIDED, HOWEVER, that any such substitution pursuant to
clause (a) above or repurchase pursuant to clause (b) above shall not be
effected prior to the delivery to the Trust Administrator of any Opinion of
Counsel required by the Pooling Agreement and any such substitution pursuant to
clause (a) above shall not be effected prior to the additional delivery of an
Officers' Certificate which states that such Qualified Substitute Mortgage Loan
meets with the requirements of the Pooling Agreement. The Purchase Price for any
such Mortgage Loan shall be deposited by the Originator into the Collection
Account. Upon any such substitution and the deposit of the Purchase Price into
the Collection Account, the Purchaser shall, promptly after the Trust
Administrator has released to the Purchaser pursuant to the Pooling Agreement
the Mortgage File relating to such Deleted Mortgage Loan (as defined below),
release such Mortgage File to the Originator.

     Section 2.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
                   REPURCHASE OBLIGATION OF ORIGINATOR

     It is understood and agreed that within 60 days after the earlier of the
Originator's or the Seller's discovery or its receipt of written notice of
breach of any representation or warranty set forth in Section 3.01 of this
Agreement which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Originator or the Seller, as
applicable, shall cure such breach in all material respects and, if such breach
is not so cured, shall, subject to the second following sentence, either (a) if
such 60-day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the trust fund
created pursuant to the Pooling Agreement (the "Trust Fund") and substitute in
its place a Qualified

                                       -5-

<PAGE>

Substitute Mortgage Loan, in the manner and subject to the conditions set forth
in Section 2.06 of the Pooling Agreement or (b) repurchase each affected
Mortgage Loan from the Trust Administrator at the Purchase Price in the manner
set forth below. The Originator or the Seller, as applicable, shall promptly
reimburse the Trust Administrator for any expenses reasonably incurred by the
Trust Administrator in respect of enforcing the remedies for such breach (to the
extent such expenses were not included in the Purchase Price).

     To the extent that the Seller would otherwise be required to remedy a
breach of any of the representations and warranties made by it in Section 3.01
of this Agreement and such obligation results from the breach of any of the
obligations of the Originator under this Agreement with respect to any of the
representations or warranties made by the Originator in Section 3.01 of this
Agreement, then the Originator (and not the Seller) shall be required to remedy
the affected Mortgage Loans in the manner set forth in this Agreement, and the
Purchaser shall have no remedy against the Seller therefor unless the Originator
fails to perform its repurchase obligations.

     With respect to the representations and warranties described in Section
3.01 of this Agreement which are made to the best of the Originator's or the
Seller's knowledge, if it is discovered by any of the Purchaser, the Seller, the
Originator or the Trust Administrator that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan, notwithstanding the Originator's or the
Seller's lack of knowledge with respect to the substance of such representation
or warranty, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.

     With respect to any Qualified Substitute Mortgage Loan or Loans, the
Originator or the Seller (as applicable) shall deliver to the Trust
Administrator for the benefit of the Certificateholders, with respect to such
Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage,
the related Assignment, and such other documents and agreements as are required
by Section 2.04 of the Pooling Agreement, with the Mortgage Note endorsed and
the Mortgage assigned as required by Section 2.04 of the Pooling Agreement. No
substitution will be made in any calendar month after the Determination Date for
such month. Monthly payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution shall not be part of the Trust Fund and will
be retained by the Originator. For the month of substitution, the Purchaser
agrees that distributions to Certificateholders will include the monthly payment
due on any Deleted Mortgage Loan for such month and thereafter the Originator or
the Seller (as applicable) shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. The Purchaser agrees that the Trust
Administrator will be obligated under the terms of the Pooling Agreement to
amend the Mortgage Loan Schedule attached hereto as Schedule A for the benefit
of the Certificateholders to reflect the removal of such Deleted Mortgage Loan
or Loans and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, the Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, and the
Originator or the Seller (as applicable) shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 3.01 of
this Agreement.

     For any month in which the Originator or the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Trust Administrator as

                                       -6-

<PAGE>

assignee of the Purchaser will determine, based upon information supplied by the
Servicer, and inform the Originator or the Seller (as applicable) of, the amount
(the "Substitution Shortfall Amount"), if any, by which the aggregate Loan
Balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the Aggregate Loan Balance of all such Deleted
Mortgage Loans as of such date plus the aggregate amount of all unreimbursed
Servicing Advances and Delinquency Advances relating to such Deleted Mortgage
Loans as of such date. On the date of such substitution, the Originator or the
Seller (as applicable) will remit to the Servicer the Originator's or the
Seller's (as applicable) own funds for deposit into the Collection Account
pursuant to Section 3.10(a)(vii) of the Pooling Agreement in an amount equal to
the Substitution Shortfall Amount, if any, without reimbursement therefor, and
the Trust Administrator as assignee of the Purchaser upon (i) receipt of (A) the
related Qualified Substitute Mortgage Loan or Loans and (B) an Officers'
Certificate of the Servicer as to the deposit of such Substitution Shortfall
Amount into the Collection Account and (ii) confirmation that such deposit has
been made, shall release or cause to be released to the Originator or the Seller
(as applicable) the related Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment as are furnished by the Originator or
the Seller (as applicable), in each case without recourse, as shall be necessary
to vest in the Originator or the Seller (as applicable) title to any Deleted
Mortgage Loan released pursuant hereto and the Trust Administrator as assignee
of the purchaser shall have no further responsibility or liability (except as to
its own acts) with regard to such Mortgage Loan.

                                       -7-

<PAGE>

                                   ARTICLE III
                                   -----------

         REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE ORIGINATOR
         ---------------------------------------------------------------

     Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE SELLER
                   AND THE ORIGINATOR

     (i) The Seller hereby represents and warrants to the Purchaser that, as of
the date hereof and as of the Closing Date:

          (a) The Seller is a corporation duly organized, validly existing and
     in good standing under the laws of the State of California and has, and had
     at all relevant times, full corporate power to originate or purchase the
     Mortgage Loans, to own its property, to carry on its business as currently
     conducted and to enter into and perform its obligations under this
     Agreement;

          (b) The execution and delivery of this Agreement by the Seller and its
     performance of and compliance with the terms of this Agreement will not
     violate the Seller's articles of incorporation or by-laws or constitute a
     default (or an event which, with notice or lapse of time, or both, would
     constitute a default) under, or result in the breach or acceleration of,
     any material contract, agreement or other instrument to which the Seller is
     a party or which may be applicable to the Seller or any of its assets;

          (c) The Seller has the full power and authority to enter into and
     consummate all transactions contemplated by this Agreement to be
     consummated by it, has duly authorized the execution, delivery and
     performance of this Agreement, and has duly executed and delivered this
     Agreement. This Agreement, assuming due authorization, execution and
     delivery by the Purchaser and the Originator, constitutes a valid, legal
     and binding obligation of the Seller, enforceable against it in accordance
     with the terms hereof, except as such enforcement may be limited by
     bankruptcy, insolvency, reorganization, receivership, moratorium or other
     similar laws relating to or affecting the rights of creditors generally,
     and by general equity principles (regardless of whether such enforcement is
     considered in a proceeding in equity or at law);

          (d) The Seller is not in violation of, and the execution and delivery
     of this Agreement by the Seller and its performance and compliance with the
     terms of this Agreement will not constitute a violation with respect to,
     any order or decree of any court or any order or regulation of any federal,
     state, municipal or other governmental agency having jurisdiction, which
     violation would materially and adversely affect the condition (financial or
     otherwise) or operations of the Seller or its properties or materially and
     adversely affect the performance of its duties hereunder;

          (e) There are no actions or proceedings against, or investigations of,
     the Seller pending or, to the knowledge of the Seller, threatened, before
     any court, administrative agency or other tribunal (A) that, if determined
     adversely, would prohibit its entering into this Agreement or render the
     Certificates invalid, (B) seeking to prevent the issuance of the
     Certificates or the consummation of any of the transactions contemplated by
     this Agreement

                                       -8-

<PAGE>

     or (C) that, if determined adversely, would prohibit or materially and
     adversely affect the performance by the Seller of its obligations under, or
     the validity or enforceability of, this Agreement or the Certificates;

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

          (g) The Seller did not sell the Mortgage Loans to the Purchaser with
     any intent to hinder, delay or defraud any of its creditors; the Seller
     will not be rendered insolvent as a result of the sale of the Mortgage
     Loans to the Purchaser;

          (h) As of the Closing Date, immediately prior to the sale to the
     Purchaser, the Seller had good title to, and was the sole owner of, each
     Mortgage Loan free and clear of any lien other than any such lien released
     simultaneously with the sale contemplated herein, and, immediately upon
     each transfer and assignment herein contemplated, the Seller will have
     taken all steps necessary so that the Purchaser will have good title to,
     and will be the sole owner of, each Mortgage Loan free and clear of any
     lien (except for such liens as may exist consistent with the
     representations and warranties made in clauses (c) and (h) of Exhibit A
     hereto);

          (i) The Seller acquired title to the Mortgage Loans in good faith,
     without notice of any adverse claim;

          (j) The collection practices used by or on behalf of the Seller with
     respect to the Mortgage Loans have been, in all material respects, legal,
     proper, prudent and customary in the non-conforming mortgage servicing
     business;

          (k) No Officers' Certificate, statement, report or other document
     prepared by the Seller and furnished or to be furnished by it pursuant to
     this Agreement or in connection with the transactions contemplated hereby
     contains any untrue statement of material fact or omits to state a material
     fact necessary to make the statements contained herein or therein not
     misleading;

          (l) The transfer, assignment and conveyance of the Mortgage Notes and
     the Mortgages by the Seller pursuant to this Agreement are not subject to
     the bulk transfer laws or any similar statutory provisions in effect in any
     applicable jurisdiction;

          (m) The Seller is duly licensed where required as a "Licensee" or is
     otherwise qualified in each state in which it transacts business and is not
     in default of such state's applicable laws, rules and regulations, except
     where the failure to so qualify or such default would not have a material
     adverse effect on the ability of the Seller to conduct its business or
     perform its obligations hereunder;

                                       -9-

<PAGE>

          (n) The Seller is solvent, is able to pay its debts as they become due
     and has capital sufficient to carry on its business and its obligations
     hereunder; it will not be rendered insolvent by the execution and delivery
     of this Agreement or by the performance of its obligations hereunder; no
     petition of bankruptcy (or similar insolvency proceeding) has been filed by
     or against the Seller prior to the date hereof;

          (o) The Seller is not required to be registered as an "investment
     company" under the Investment Company Act of 1940, as amended;

          (p) Upon execution of this Agreement, the Seller shall have sold,
     transferred, assigned, set over and otherwise conveyed to the Purchaser all
     of its right, title and interest in and to each Mortgage Loan; and

          (q) As to the Mortgage Loans, each of the representations and
     warranties as set forth on Exhibit A hereto is true and correct.

     (ii) The Originator hereby represents and warrants to the Purchaser that,
as of the date hereof and as of the Closing Date:

          (a) The Originator is a corporation licensed as a mortgage banker duly
     organized, validly existing and in good standing under the laws of the
     State of California and has, and had at all relevant times, full corporate
     power to originate or purchase the Mortgage Loans, to own its property, to
     carry on its business as currently conducted and to enter into and perform
     its obligations under this Agreement;

          (b) The execution and delivery of this Agreement by the Originator and
     its performance of and compliance with the terms of this Agreement will not
     violate the Originator's articles of incorporation or by-laws or constitute
     a default (or an event which, with notice or lapse of time, or both, would
     constitute a default) under, or result in the breach or acceleration of,
     any material contract, agreement or other instrument to which the
     Originator is a party or which may be applicable to the Originator or any
     of its assets;

          (c) The Originator has the full power and authority to enter into and
     consummate all transactions contemplated by this Agreement to be
     consummated by it, has duly authorized the execution, delivery and
     performance of this Agreement, and has duly executed and delivered this
     Agreement. This Agreement, assuming due authorization, execution and
     delivery by the Purchaser and the Seller, constitutes a valid, legal and
     binding obligation of the Originator, enforceable against it in accordance
     with the terms hereof, except as such enforcement may be limited by
     bankruptcy, insolvency, reorganization, receivership, moratorium or other
     similar laws relating to or affecting the rights of creditors generally,
     and by general equity principles (regardless of whether such enforcement is
     considered in a proceeding in equity or at law);

          (d) The Originator is not in violation of, and the execution and
     delivery of this Agreement by the Originator and its performance and
     compliance with the terms of this Agreement will not constitute a violation
     with respect to, any order or decree of any court or

                                      -10-

<PAGE>

     any order or regulation of any federal, state, municipal or other
     governmental agency having jurisdiction, which violation would materially
     and adversely affect the condition (financial or otherwise) or operations
     of the Originator or its properties or materially and adversely affect the
     performance of its duties hereunder;

          (e) There are no actions or proceedings against, or investigations of,
     the Originator pending or, to the knowledge of the Originator, threatened,
     before any court, administrative agency or other tribunal (A) that, if
     determined adversely, would prohibit its entering into this Agreement or
     render the Certificates invalid, (B) seeking to prevent the issuance of the
     Certificates or the consummation of any of the transactions contemplated by
     this Agreement or (C) that, if determined adversely, would prohibit or
     materially and adversely affect the performance by the Originator of its
     obligations under, or the validity or enforceability of, this Agreement or
     the Certificates;

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

          (g) The collection practices used by the Originator with respect to
     the Mortgage Loans have been, in all material respects, legal, proper,
     prudent and customary in the non-conforming mortgage servicing business;

          (h) No Officers' Certificate, statement, report or other document
     prepared by the Originator and furnished or to be furnished by it pursuant
     to this Agreement or in connection with the transactions contemplated
     hereby contains any untrue statement of material fact or omits to state a
     material fact necessary to make the statements contained herein or therein
     not misleading;

          (i) The Originator is duly licensed where required as a "Licensee" or
     is otherwise qualified in each state in which it transacts business and is
     not in default of such state's applicable laws, rules and regulations,
     except where the failure to so qualify or such default would not have a
     material adverse effect on the ability of the Originator to conduct its
     business or perform its obligations hereunder;

          (j) The Originator is solvent, is able to pay its debts as they become
     due and has capital sufficient to carry on its business and its obligations
     hereunder; it will not be rendered insolvent by the execution and delivery
     of this Agreement or by the performance of its obligations hereunder; no
     petition of bankruptcy (or similar insolvency proceeding) has been filed by
     or against the Originator prior to the date hereof;

          (k) The Originator is not required to be registered as an "investment
     company" under the Investment Company Act of 1940, as amended; and

                                      -11-

<PAGE>

          (l) As to the Mortgage Loans, each of the representations and
warranties set forth on Exhibit A hereto is true and correct.

     Section 3.02. ADDITIONAL DOCUMENTS.

     Each of the Seller and the Originator agrees to use its best efforts to
furnish (or cause to be furnished) such information and to execute such
documents or instruments as the Purchaser may reasonably request in connection
with the transactions herein contemplated and the issuance of the New Century
Home Equity Loan Trust, Series 2000-NCB, Asset Backed Pass-Through Certificates,
including, but not limited to, officers' certificates, opinions of counsel and
letters of accountants.

     Section 3.03. COSTS AND EXPENSES.

     The Seller will pay all costs and expenses in connection with the transfer
and delivery of the Mortgage Loans in the manner contemplated herein, including,
but not limited to, the costs and expenses in connection with the preparation
and recordation of any Assignments referred to herein.

                                   ARTICLE IV
                                   ----------

                                   [RESERVED]
                                   ----------

                                      -12-

<PAGE>

                                    ARTICLE V
                                    ---------

                                  MISCELLANEOUS
                                  -------------

     Section 5.01. RECORDATION OF AGREEMENT.

     This Agreement or a memorandum hereof is subject to recordation in all
appropriate public offices for real property records in each state and county or
other comparable jurisdiction in which any of the Mortgaged Property is
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Seller and at its expense, on direction
by the Purchaser, but only upon direction preceded or accompanied by an advice
of counsel to the Purchaser to the effect that failure to record would adversely
affect the interests of the Purchaser, the Trustee, the Trust Administrator or
any Certificateholder.

     Section 5.02. NOTICES.

     All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed by registered or certified
mail, return receipt requested, or, if by other means, when received by the
other party or at the address, in the case of the Originator, the Seller or the
Purchaser: New Century Mortgage Corporation, NC Capital Corporation or New
Century Mortgage Securities, Inc., as applicable: 18400 Von Karman, Suite 1000,
Irvine, California 92612, Attn: Patrick J. Flanagan, or such other address as
may hereafter be furnished to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been given on the date
delivered to the premises of the addressee (as evidenced, in the case of
registered or certified mail, by the date noted on the return receipt).

     Section 5.03. SEVERABILITY CLAUSE.

     Any part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate in good faith to develop a structure the economic effect
of which is as nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.

                                      -13-

<PAGE>

     Section 5.04. COUNTERPARTS.

     For the purpose of facilitating the proving of this Agreement, as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.

     Section 5.05. PLACE OF DELIVERY AND GOVERNING LAW.

     The Agreement shall be deemed in effect when a fully executed counterpart
hereof is received by the Purchaser in New York. The Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.

     Section 5.06. REMEDIES CUMULATIVE; NO WAIVER.

     All rights and remedies of the Purchaser or any assignee of the Purchaser
under this Agreement shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other rights and remedies available
to the Purchaser or such assignee; and no failure to exercise any right or power
accruing upon any default occurring and continuing as aforesaid shall impair any
such right or power, or shall be construed to be a waiver of any such default or
an acquiescence therein; and every right and remedy arising under this Agreement
or by law to the Purchaser or such assignee may be exercised from time to time,
and as often as shall be deemed expedient, by the Purchaser or such assignee.

     Section 5.07. MISCELLANEOUS.

     This Agreement may be amended or supplemented from time to time only with
the written consent of the Originator, the Seller and the Purchaser and any
assignee of the Purchaser. This Agreement contains the entire understanding and
agreement of the parties and supersedes and incorporates all prior negotiations,
understandings and agreements which are fully merged herein.

     Section 5.08. AGREEMENT OF PARTIES.

     The Originator, the Seller and the Purchaser agree to execute and deliver
such instruments and take such actions as the other may, from time to time,
reasonably request in order to effect the purpose and to carry out the terms of
this Agreement.

     Section 5.09. SUCCESSORS AND ASSIGNS.

     This Agreement shall bind and inure to the benefit of and be enforceable by
and against the Originator, the Seller, the Purchaser, and the respective
successors and assigns of the Originator, the Seller and the Purchaser. The
parties hereto acknowledge that the Purchaser is acquiring the Mortgage Loans
for the purpose of contributing them to the Trust which will issue the
Certificates representing undivided interests in the Mortgage Loans. As an
inducement to the Purchaser to purchase the Mortgage Loans, the each of the
Originator and the Seller acknowledges and consents

                                      -14-

<PAGE>

to the assignment to the Trustee by the Purchaser of all of the Purchaser's
rights against the Originator and the Seller hereunder in respect of the
Mortgage Loans and affirms that the enforcement or exercise of any right or
remedy against the Originator or the Seller hereunder by the Trustee or any
holder of a Certificate to the extent permitted under the Pooling Agreement
shall have the same force and effect as if enforced or exercised by the
Purchaser directly.

     Section 5.10. THIRD PARTY BENEFICIARY.

     The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.

     Section 5.11. MANDATORY DELIVERY.

     The sale and delivery on the Closing Date of the Mortgage Loans described
on the Mortgage Loan Schedule is mandatory, it being specifically understood and
agreed that each Mortgage Loan is unique and identifiable on the date hereof and
that an award of money damages would be insufficient to compensate the Purchaser
for the losses and damages incurred by the Purchaser in the event of the
Seller's failure to deliver the Mortgage Loans on or before the Closing Date.

                                  *  *  *  *

                                      -15-

<PAGE>

     IN WITNESS WHEREOF, the Seller, the Purchaser and the Originator 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.

                                         NC CAPITAL CORPORATION,
                                         Seller

                                         By:_________________________________
                                         Name:
                                         Title:

                                         NEW CENTURY MORTGAGE SECURITIES, INC.,
                                         Purchaser

                                         By:_________________________________
                                         Name:
                                         Title:

                                         NEW CENTURY MORTGAGE CORPORATION,
                                         Originator

                                         By:_________________________________

                                         Name:
                                         Title:

                                      -16-

<PAGE>

                                   SCHEDULE A
                                   ----------

                                 Mortgage Loans

                             Available Upon Request

<PAGE>

                                    EXHIBIT A

          Representations and Warranties Relating to the Mortgage Loans

     The Originator and the Seller hereby represent and warrant to the
Purchaser, the Trustee, the Trust Administrator, the Certificateholders and the
Certificate Insurer, with respect to each Mortgage Loan as of the Closing Date
(or in the case of certain specified representations and warranties, as of the
applicable Cut-off Date) or as of such other date specifically provided herein
(except that with respect to any Qualified Substitute Mortgage Loan such
representations and warranties shall be as of the date of substitution and made
by the Originator), that:

          (a) The information set forth in the Mortgage Loan Schedule relating
     to the Mortgage Loans is complete, true and correct in all material
     respects as of the applicable Cut-off Date;

          (b) The Mortgage Note and the Mortgage are not assigned or pledged by
     the Seller to a Person other than the Purchaser, and immediately prior to
     the transfer of the Mortgage Loans from the Seller to the Purchaser, the
     Seller had good and marketable title thereto, and was the sole owner and
     holder of the Mortgage Loan free and clear of any and all liens, claims,
     encumbrances, participation interests, equities, pledges, charges or
     security interests of any nature (collectively, a "Lien"), other than any
     such Lien released simultaneously with the sale contemplated herein, and
     had full right and authority, subject to no interest or participation of,
     or agreement with, any other party, to sell and assign the same pursuant to
     this Agreement, and immediately upon the transfer and assignment of each
     Mortgage Loan as herein contemplated, the Purchaser shall have good title
     to, and will be the sole legal owner of, each Mortgage Loan free and clear
     of any Lien;

          (c) The Mortgage is a valid and existing lien on the property therein
     described, and the Mortgaged Property is free and clear of all encumbrances
     and liens having priority over the lien of the Mortgage, except (i) liens
     for real estate taxes and special assessments not yet due and payable and
     (ii) in the case of a Mortgaged Property that is a condominium or an
     individual unit in a planned unit development, liens for common charges
     permitted by statute. Any security agreement, chattel mortgage or
     equivalent document related to the Mortgage and delivered to the Purchaser
     establishes in the Originator a valid and subsisting lien on the property
     described therein, and the Seller has full right to sell and assign the
     same to the Purchaser;

          (d) The terms of the Mortgage Note and the Mortgage have not been
     impaired, altered or modified in any respect which would have any adverse
     effect on the Certificateholders or the Certificate Insurer, except by a
     written instrument which has been recorded, if necessary to protect the
     interests of the Certificateholders, and which has been delivered to the
     Purchaser. The substance of any such alteration or modification is
     reflected in the Mortgage Loan Schedule;

          (e) No instrument of release or waiver has been executed in connection
     with the Mortgage Loan, and no Mortgagor has been released, in whole or in
     part, except in

<PAGE>

     connection with an assumption agreement which has been approved by the
     primary mortgage guaranty insurer, if any, and which has been delivered to
     the Purchaser;

          (f) As of the Delinquency Statistic Date, except with respect to
     delinquencies described in clause (m) hereof, no Mortgagor is in default in
     complying with the terms of the Mortgage Note or the Mortgage and there
     exists no event which, with the passage of time or notice or both, would
     constitute a default thereunder, and neither the Originator nor the Seller
     has waived any default, breach, violation or event of acceleration except
     that the Originator or the Seller may have accepted late payments. At
     origination all taxes, governmental assessments, insurance premiums, or
     water, sewer and municipal charges and rents under all ground leases which
     previously became due and owing have been paid, and each Mortgage Note
     and/or the related Mortgage obligate the related Mortgagor to pay all
     similar amounts as they become due. Neither the Originator nor the Seller
     has advanced funds, or induced, solicited or knowingly received any advance
     of funds by a party other than the Mortgagor, directly or indirectly, for
     the payment of any amount required by the Mortgage, except for interest
     accruing from the date of the Mortgage Note or date of disbursement of the
     Mortgage proceeds, whichever is more recent, to the day which precedes by
     one day the Due Date of the first installment of principal and interest;

          (g) There is no proceeding pending or, to the best of the Originator's
     or the Seller's knowledge, threatened for the total or partial condemnation
     of the Mortgaged Property, nor is such a proceeding currently occurring,
     and such property is undamaged by waste, fire, water, earthquake or earth
     movement, windstorm, flood, tornado, or otherwise, so as to affect
     adversely the value of the Mortgaged Property as security for the Mortgage
     Loan or the use for which the premises were intended;

          (h) There are no mechanics' or similar liens or claims which have been
     filed for work, labor or material (and no rights are outstanding that under
     law could give rise to such lien) affecting the Mortgaged Property which
     are, or may be, liens prior or equal to, or coordinate with, the lien of
     the Mortgage except those that are stated in the title insurance policy and
     for which related losses are affirmatively insured against by such policy;

          (i) All of the improvements that were included for the purpose of
     determining the Value of the Mortgaged Property lie wholly within the
     boundaries and building restriction lines of such property, and no
     improvements on adjoining properties encroach upon the Mortgaged Property
     except those that are stated in the title insurance policy and for which
     related losses are affirmatively insured against by such policy;

          (j) [Reserved.]

          (k) To the Originator's or the Seller's knowledge, no improvement
     located on or being part of the Mortgaged Property is in violation of any
     applicable zoning law or regulation. To the Originator's or the Seller's
     knowledge, all inspections, licenses and certificates required to be made
     or issued with respect to all occupied portions of the Mortgaged Property
     and, with respect to the use and occupancy of the same, including, but not
     limited to, certificates of occupancy and fire underwriting certificates,
     have been made

                                       -2-

<PAGE>

     or obtained from the appropriate authorities and the Mortgaged Property is
     lawfully occupied under applicable law;

          (l) All parties that have had any interest in the Mortgage Loan,
     whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
     period in which they held and disposed of such interest, were) (1) in
     compliance with any and all licensing requirements of the United States and
     of the laws of the state wherein the Mortgaged Property is located that are
     applicable to such parties, and (2)(A) organized under the laws of such
     state, or (B) qualified to do business in such state or exempt from such
     qualification in a manner so as not to affect adversely the enforceability
     of such Mortgage Loan, or (C) federal savings associations or national
     banks having principal offices in such state, or (D) not doing business in
     such state;

          (m) As of the Delinquency Statistic Date, approximately 1.14% of the
     Mortgage Loans by aggregate Cut-off Date Loan Balance, failed to make their
     monthly payment that was due on the Cut-off Date;

          (n) The Mortgage File contains each of the documents and instruments
     specified to be included therein duly executed and in due and proper form
     and each such document or instrument is in a form generally acceptable to
     prudent institutional mortgage lenders that regularly originate or purchase
     mortgage loans comparable to the Mortgage Loans for sale to prudent
     investors in the secondary market that invest in mortgage loans such as the
     Mortgage Loans;

          (o) The Mortgage Note and the related Mortgage are genuine, and each
     is the legal, valid and binding obligation of the maker thereof,
     enforceable in accordance with its terms, except as such enforcement may be
     limited by bankruptcy, insolvency, reorganization, receivership, moratorium
     or other similar laws relating to or affecting the rights of creditors
     generally, and by general equity principles (regardless of whether such
     enforcement is considered in a proceeding in equity or at law). All parties
     to the Mortgage Note and the Mortgage had legal capacity to execute the
     Mortgage Note and the Mortgage, and each Mortgage Note and Mortgage has
     been duly and properly executed by such parties. The Mortgagor is a natural
     person who is a party to the Mortgage Note and the Mortgage in an
     individual capacity, and not in the capacity of a trustee or otherwise;

          (p) Any and all requirements of any federal, state or local law,
     including, without limitation, usury, truth-in-lending, real estate
     settlement procedures, consumer credit protection, equal credit opportunity
     or disclosure laws, applicable to the Mortgage Loan have been complied
     with, and the Originator has and shall maintain in its possession,
     available for the Purchaser's inspection, and shall deliver to the
     Purchaser upon demand, evidence of compliance with all such requirements;

          (q) The proceeds of the Mortgage Loan have been fully disbursed, there
     is no requirement for future advances thereunder and any and all
     requirements as to completion of any on-site or off-site improvements and
     as to disbursements of any escrow funds therefor

                                       -3-

<PAGE>

     have been complied with. All costs, fees and expenses incurred in making,
     closing or recording the Mortgage Loan were paid;

          (r) Any future advances made after the date of origination of each
     Mortgage Loan but prior to the Cut-off Date have been consolidated with the
     outstanding principal amount secured by the related Mortgage, and the
     secured principal amount, as consolidated, bears a single interest rate and
     single repayment term reflected on the Mortgage Loan Schedule. The lien of
     the Mortgage securing the consolidated principal amount is expressly
     insured as having first lien priority, by a title insurance policy or an
     endorsement to the policy insuring the mortgagee's consolidated interest.
     The consolidated principal amount does not exceed the original principal
     amount of the Mortgage Loan. The Originator shall not be obligated to make
     future advances after the Cut-off Date;

          (s) Each Mortgage Loan is covered by an ALTA mortgage title insurance
     policy or such other form of policy acceptable to Fannie Mae or Freddie
     Mac, issued by and constituting the valid and binding obligation of a title
     insurer generally acceptable to prudent mortgage lenders, which regularly
     originate or purchase mortgage loans comparable to the Mortgage Loans for
     sale to prudent investors in the secondary market that invest in mortgage
     loans such as the Mortgage Loans, and qualified to do business in the
     jurisdiction wherein the Mortgaged Property is located, insuring the
     Originator, its successors and assigns, as to the first priority lien of
     the Mortgage in the case of a First Mortgage Loan, in the original
     principal amount of the Mortgage Loan. The Originator is the sole payee of
     such mortgage title insurance policy, the assignment to the Purchaser of
     the Originator's or the Seller's interest in such mortgage title insurance
     policy does not require the consent of or notification to the insurer or
     the same has been obtained, and such mortgage title insurance policy is in
     full force and effect and will be in full force and effect and inure to the
     benefit of the Purchaser upon the consummation of the transactions
     contemplated by this Agreement. No claims have been made under such
     mortgage title insurance policy and no prior holder of the related
     Mortgage, including the Originator and the Seller, has done, by act or
     omission, anything that would impair the coverage of such mortgage title
     insurance policy;

          (t) All improvements upon the Mortgaged Property are insured by an
     insurer who meets Fannie Mae and/or Freddie Mac guidelines against loss by
     fire, hazards of extended coverage and such other hazards as are customary
     in the area where the Mortgaged Property is located pursuant to insurance
     policies conforming to the requirements of Section 3.13 of the Pooling
     Agreement. If the Mortgaged Property was, at the time of origination of the
     related Mortgage Loan, in an area identified on a Flood Hazard Boundary Map
     or Flood Hazard Rate Map issued by the Federal Emergency Management Agency
     as having special flood hazards (and if the flood insurance policy
     referenced herein has been made available), a flood insurance policy is in
     effect with respect to such Mortgaged Property with a generally acceptable
     carrier in an amount representing coverage described in Section 3.13 of the
     Pooling Agreement. All individual insurance policies (collectively, the
     "hazard insurance policy") are the valid and binding obligation of the
     insurer and contain a standard mortgagee clause naming the Originator, its
     successors and assigns, as mortgagee. All premiums thereon have been paid.
     The Mortgage obligates the Mortgagor thereunder to maintain all such
     insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
     failure to do

                                       -4-

<PAGE>

     so, authorizes the holder of the Mortgage to obtain and maintain such
     insurance at the Mortgagor's cost and expense and to seek reimbursement
     therefor from the Mortgagor;

          (u) The Mortgage Loan is not subject to any right of rescission,
     set-off, counterclaim or defense, including the defense of usury, nor will
     the operation of any of the terms of the Mortgage Note or the Mortgage, or
     the exercise of any right thereunder, render either the Mortgage Note or
     the Mortgage unenforceable, in whole or in part, or subject to any right of
     rescission, set-off, counterclaim or defense, including the defense of
     usury, and no such right of rescission, set-off, counterclaim or defense
     has been asserted with respect thereto;

          (v) The Mortgage Loans were originated or purchased and
     re-underwritten by the Originator in accordance with the Originator's
     underwriting guidelines, including provisions in such guidelines for making
     exceptions. No Mortgage Loan has been modified except as such modification
     may be reflected in the related Mortgage File;

          (w) The Mortgage Loan is a closed-end first lien Mortgage Loan having
     an original term of not more than 30 years to maturity. Each Mortgage Loan
     is payable in equal monthly installments of principal and interest which
     would be sufficient, in the absence of late payments, to fully amortize
     such loan within the term thereof, beginning no later than 60 days after
     disbursement of the proceeds of the Mortgage Loan and bears a fixed
     interest rate for the term of the Mortgage Loan;

          (x) The Mortgage contains a customary provision for the acceleration
     of the payment of the unpaid principal balance of the Mortgage Loan in the
     event the related Mortgaged Property is sold without the prior consent of
     the holder of the Mortgage;

          (y) With respect to approximately 92.82% of the Mortgage Loans
     measured by Cut-off Date Loan Balances, at the time that each such Mortgage
     Loan was originated the related Mortgagor represented that such Mortgagor
     would occupy the related Mortgaged Property as such Mortgagor's primary
     residence, and neither the Originator nor the Seller has received notice
     that such representation of the Mortgagor is no longer true. No Mortgage
     Loan is a construction loan. Each Mortgaged Property is lawfully occupied
     under applicable law;

          (z) The Mortgage Note is not and has not been secured by any
     collateral, pledged account or other security except the lien of the
     corresponding Mortgage and the security interest of any applicable security
     agreement or chattel mortgage;

          (aa) The Mortgage contains customary and enforceable provisions which
     render the rights and remedies of the holder thereof adequate for the
     realization against the Mortgaged Property of the benefits of the security,
     including, (i) in the case of a Mortgage designated as a deed of trust, by
     trustee's sale, and (ii) otherwise by judicial or non-judicial foreclosure.
     Other than applicable homestead provisions which may delay the realization
     against the Mortgaged Property, or exemptions that may arise in the event a
     petition under the Bankruptcy Code is filed with respect to the Mortgagor,
     there is no homestead or other

                                       -5-

<PAGE>

     exemption available to the Mortgagor that would interfere with the right to
     sell the Mortgaged Property at a trustee's sale or the right to foreclose
     the Mortgage;

          (bb) With respect to each Mortgage constituting a deed of trust, a
     trustee, duly qualified under applicable law to serve as such, has been
     properly designated and currently so serves and is named in such Mortgage,
     and no fees or expenses are or will become payable by the Trust
     Administrator or the Certificateholders to the trustee under the deed of
     trust, except in connection with a trustee's sale after default by the
     Mortgagor, which fees and expenses shall constitute Servicing Advances;

          (cc) The Mortgaged Property is located in the state identified in the
     Mortgage Loan Schedule and consists of at least one parcel of real property
     with a one-family residence erected thereon, a two- to four-family
     dwelling, an individual condominium unit, a unit in a planned unit
     development; PROVIDED, HOWEVER, that no residence or unit or a mobile home
     which is not permanently affixed, but which may be a pre-fabricated or
     manufactured unit affixed to a permanent foundation. As of the Cut-off Date
     with respect to the aggregate Cut-off Date Loan Balance of the related
     Mortgage Loans, (i) not more than 6.26% of the Mortgage Loans by Cut-off
     Date Loan Balance, are secured by real property improved by two- to
     four-family dwellings; (ii) not more than 3.42% of the Mortgage Loans by
     Cut-off Date Loan Balance, are secured by real property improved by
     individual condominium units; (iii) at least 79.72% of the Mortgage Loans
     by Cut-off Date Loan Balance, are secured by real property with a detached
     or attached single-family residence erected thereon; and (iv) not more than
     0.99% of the Mortgage Loans by Cut-off Date Loan Balance, have been
     originated under a Stated Income Program; and with respect to each
     Mortgaged Property subject to a ground lease: (i) the current ground lessor
     has been identified and all ground rents which have previously become due
     and owing have been paid, (ii) the ground lease term extends, or is
     automatically renewable, for at least five years beyond the maturity date
     of the related Mortgage Loan, (iii) the ground lease has been duly executed
     and recorded, (iv) the amount of the ground rent and any increases therein
     are clearly identified in the lease and are for predetermined amounts at
     predetermined times, (v) the ground rent payment is included in the
     Mortgagor's monthly payment as an expense item, (vi) the Trust has the
     right to cure defaults on the ground lease and (vii) the terms and
     conditions of the leasehold do not prevent the free and absolute
     marketability of such Mortgaged Property.

          (dd) The Loan-to-Value Ratio of each first lien Mortgage Loan (or
     combined Loan-to-Value Ratio in the case of each second lien Mortgage Loan)
     was not more than 95.00%; the weighted average Loan-to-Value Ratios of the
     first lien Mortgage Loans and the combined Loan-to-Value Ratios of the
     second lien Mortgage Loans was approximately 77.97%.

          (ee) [Reserved.]

          (ff) There exist no deficiencies with respect to escrow deposits and
     payments, if such are required, for which customary arrangements for
     repayment thereof have not been made, and no escrow deposits or payments of
     other charges or payments due the Originator have been capitalized under
     the Mortgage or the related Mortgage Note;

                                       -6-

<PAGE>

          (gg) No Mortgage Loan was originated under a buydown plan;

          (hh) Other than as provided by this Agreement, there is no obligation
     with respect to the Mortgage Loan on the part of the Originator or any
     other party to make payments in addition to those made by the Mortgagor;

          (ii) Subject to the provisions of Section 2.04 of the Pooling
     Agreement, the Mortgage Note, the Mortgage, the Assignment and any other
     documents required to be delivered have been delivered to the Purchaser.
     The Originator is in possession of a complete Mortgage File, except those
     documents delivered to the Purchaser, and there are no custodial agreements
     in effect adversely affecting the right or ability of the Originator to
     make the document deliveries required hereby. Each original Mortgage was
     recorded, and all subsequent Assignments of the original Mortgage have been
     recorded in the appropriate jurisdictions wherein such recordation is
     necessary to perfect the lien thereof as against creditors of the
     Originator (subject to the provisions of Section 2.04 of the Pooling
     Agreement with respect to Mortgages and Assignments which are in the
     process of being recorded);

          (jj) No Mortgage Loan was selected for inclusion under this Agreement
     on any basis which was intended to have a material adverse effect on the
     Certificateholders;

          (kk) No Mortgage Loan has a shared appreciation or other contingent
     interest feature;

          (ll) No more than 0.52% of the Mortgage Loans by Cut-off Date Loan
     Balance, are secured by Mortgaged Properties located within any single
     five-digit ZIP code area;

          (mm) The weighted average Mortgage Rate of the Mortgage Loans as of
     the Cut-off Date was approximately 10.59% and no Mortgage Rate for any
     Mortgage Loan was greater than 16.35% or less than 7.00%. With respect to
     the Mortgage Loans that are Adjustable Rate Mortgage Loans, as of the
     Cut-off Date, (i) the weighted average Maximum Mortgage Rate was 17.42%,
     and no Maximum Mortgage Rate for any Mortgage Loan was greater than 22.55%
     or less than 14.20%, (ii) the weighted average Minimum Mortgage Rate was
     10.42%, and no Minimum Mortgage Rate for any Mortgage Loan was greater than
     15.55% or less than 7.20%, (iii) the weighted average Gross Margin was
     6.12%, and no Gross Margin for any Mortgage Loan was greater than 7.20% or
     less than 4.25%, (iv) the weighted average next Adjustment Date was October
     2002 and the latest next Adjustment Date of any Mortgage Loan was July
     2005;

          (nn) [Reserved].

          (oo) The Originator has caused or will cause to be performed any and
     all acts required to be performed to preserve the rights and remedies of
     the Trustee in any insurance policies applicable to the Mortgage Loans,
     including, without limitation, any necessary notifications of insurers,
     assignments of policies or interests therein, and establishments of
     co-insured, joint loss payee and mortgagee rights in favor of the Trustee;

                                       -7-

<PAGE>

          (pp) All amounts due and received after the Cut-off Date (and all
     amounts received on or before the Cut-off Date that are due after the
     Cut-off Date) with respect to the Mortgage Loans to which the Originator is
     not entitled are, as of the Closing Date, in the Collection Account;

          (qq) Each Mortgage Loan conforms and all Mortgage Loans in the
     aggregate conform, to the descriptions thereof to be set forth in the
     Prospectus Supplement (subject to the variances specified therein);

          (rr) A full appraisal on forms approved by Fannie Mae or Freddie Mac
     was performed in connection with the origination of the related Mortgage
     Loan;

          (ss) There is no indication in the Mortgage File that the Mortgaged
     Property was, as of the Cut-off Date, located within a one-mile radius of
     any site listed in the National Priorities List as defined under the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended, or on any similar state list of hazardous waste sites
     which are known to contain any hazardous substance or hazardous waste;

          (tt) None of the Mortgage Loans is subject to a bankruptcy plan;

          (uu) No less than 63.89% of the of the Mortgage Loans measured by
     Cut-off Date Loan Balances, relate to Mortgage Loans originated or
     purchased under the Originator's Full Documentation Program;

          (vv) To the best of the Originator's knowledge, no statement, report
     or other document constituting a part of the Mortgage File contains any
     material untrue statement of fact or omits to state a fact necessary to
     make the statements contained therein not misleading which would, either
     individually or in the aggregate, have a material adverse effect on the
     Certificateholders; no error or omission, misrepresentations, negligence,
     fraud or similar occurrence with respect to a Mortgage Loan has taken place
     on the part of any person, including, without limitation, the Mortgagor,
     any appraiser, any builder or developer, or any other party involved in the
     origination of the Mortgage Loan or in the application for any insurance in
     relation to the Mortgage Loan;

          (ww) [reserved];

          (xx) Each Mortgage Loan constitutes a "qualified mortgage" within the
     meaning of Section 860G(a)(3) of the Code;

          (yy) The Originator has the full authority to sell and transfer each
     Mortgage Note and Mortgage and such transfer and sale will not impair the
     enforceability of any Mortgage;

          (zz) [reserved];

          (aaa) With respect to each Mortgaged Property subject to a land trust
     (a "Land Trust Mortgage"), (i) a trustee, duly qualified under applicable
     law to serve as such, has been

                                       -8-

<PAGE>

     properly designated and currently so serves and is named as such in the
     land trust agreement and such trustee is named in the Land Trust Mortgage
     as Mortgagor; (ii) all fees and expenses of the land trustee which have
     previously become due and owing have been paid and no fees or expenses are
     or will become payable by the Certificateholders or the Trust to the land
     trustee under the land trust agreement; (iii) the beneficiary is solely
     obligated to pay any fees and expenses of the land trustee and the priority
     of the lien of the Land Trust Mortgage is not and will not be primed by the
     land trustee; (iv) the beneficiary is obligated to make payments under the
     related promissory note and will have personal liability for deficiency
     judgments; (v) the related Land Trust Mortgage together with each
     assignment of beneficial interest relating thereto was made in compliance
     with the related land trust agreement, was validly entered into by the
     related land trustee or beneficiary and did not, does not currently, and
     will not in the future, violate any provision of such land trust agreement
     or any agreement between or among the beneficiaries of such land trust;
     (vi) the assignment of the beneficial interest relating to such Land Trust
     Mortgage was accepted by, and noted in the records of the respective land
     trust trustee, subsequent assignments of such beneficial interest in whole
     or in part have not been made, and such subsequent assignments of such
     beneficial interest or any part thereof are not permitted pursuant to a
     written agreement between the respective beneficiary and the related
     mortgagee, until the expiration of the promissory note in such land trust;
     (vii) the Land Trust Mortgage is the first lien on the related Mortgaged
     Property; no liens are in place against the beneficial interests, or any
     part thereof, of such Land Trust Mortgage or collateral assignment of
     beneficial interest, which liens are superior to the interest held by the
     Originator or the Seller, and the beneficial interest, or any part thereof,
     of any Land Trust Mortgage; (viii) the terms and conditions of the land
     trust agreement do not prevent the free and absolute marketability of the
     Mortgaged Property; and (ix) each Land Trust Mortgage contains, and will
     contain, a "due-on-sale" provision permitting the mortgagee under the
     Mortgage Note and Land Trust Mortgage to foreclose or otherwise exercise
     remedies thereunder upon a transfer of the beneficial interest in the
     related Mortgaged Property;

          (bbb) Each of the Mortgage Loans provides for the calculation of
     interest on the basis of a 360-day year consisting of twelve 30-day months;

          (ccc) No Mortgage Note provides for negative amortization;

          (ddd) None of the Mortgage Loans by Cut-off Date Loan Balance, are
     "high cost mortgages" pursuant to Section 226.32 of the Truth-in-Lending
     Act, as amended;

          (eee) There are no delinquent taxes, ground rents, water charges,
     sewer rents, assessments, insurance premiums, leasehold payments, including
     assessments payable in future installments or other outstanding charges
     affecting the related Mortgaged Property;

          (fff) The origination and collection practices used by the Originator
     or the Seller with respect to each Mortgage Note and Mortgage have been in
     all respects legal, proper prudent and customary in the mortgage
     origination and servicing industry. The Mortgage Loan has been serviced by
     the Originator (directly or through a subservicer) and any predecessor
     servicer in accordance with the terms of the Mortgage Note. With respect to

                                       -9-

<PAGE>

     escrow deposits and Escrow Payments, if any, all such payments are in the
     possession of, or under the control of, the Originator and there exist no
     deficiencies in connection therewith for which customary arrangements for
     repayment thereof have not been made. No escrow deposits or Escrow Payments
     or other charges or payments due the Originator or the Seller have been
     capitalized under any Mortgage or the related Mortgage Note. With respect
     to each Adjustable Rate Mortgage Loan on each Adjustment Date, the Mortgage
     Rate will be adjusted to equal the Index plus the Gross Margin, rounded to
     the nearest 0.125%, subject to the Periodic Rate Cap, the Maximum Rate and
     the Minimum Rate and each such adjustment has been and will be made in
     accordance with the terms of the related Mortgage Note.

          (ggg) The Mortgaged Property is free of damage and waste and there is
     no proceeding pending for the total or partial condemnation thereof;

          (hhh) Any Mortgage Loan subject to the provisions of the Homeownership
     and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160 was
     originated in compliance therewith;

          (iii) The Originator has not dealt with any broker or agent or other
     Person who might be entitled to a fee, commission or compensation in
     connection with the transaction contemplated by this Agreement other than
     the Purchaser; and

          (jjj) Approximately 740 of the Mortgage Loans, are covered by the PMI
     Policy, and 62 loans are covered by a binder which will expire on September
     28, 2000;

          (kkk) Each of the Mortgage Loans that is identified on Schedule 1
     hereto is covered by the PMI Policy;

          (lll) As of the Closing Date, with respect to each Mortgage Loan that
     is subject to the PMI Policy, to the best knowledge of the Originator,
     there are no existing circumstances which would cause the PMI Insurer to
     deny a claim with respect to such Mortgage Loan; and

          (mmm)All of the Mortgage Loans that are identified on Schedule 2 are
covered by a binder issued by the PMI Insurer that will expire on September 28,
2000; each of those Mortgage Loans will be covered by the permanent policy of
the PMI Insurer by September 28, 2000.

     It is understood and agreed that the representations and warranties set
forth in this Agreement shall survive delivery of the respective Mortgage Files
to the Trust Administrator and shall inure to the benefit of the Purchaser, the
Servicer, each Subservicer, the Certificateholders, the Trustee and the
Certificate Insurer, notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Seller, the Purchaser, the Servicer,
the Trust Administrator or the Trustee of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of any Mortgage Loan or the interests of the Certificateholders and the
Certificate Insurer therein (without giving effect to any qualification
contained in such representation or warranty relating to the Seller's or the
Originator's knowledge), the party discovering such breach shall give prompt
written notice to the other parties, and in no event later than two Business
Days

                                      -10-

<PAGE>

after the date of such discovery. It is understood and agreed that the
obligations of the Seller and the Originator set forth in Section 2.06(a) of the
Pooling Agreement to cure any breach or to substitute for or repurchase a
defective Mortgage Loan constitute the sole remedies available to the
Certificateholders, the Servicer, the Trustee and the Certificate Insurer
respecting a breach of the representations and warranties contained in this
Agreement. Notwithstanding the foregoing, with respect to representation (p)
above, to the extent that such representation (as it relates to Section 129 of
the federal Truth-in-Lending Act, 15 U.S.C. ss. 1639, as implemented by ss.ss.
226.31 and 226.32 of Regulation Z) is breached and such breach can not, in the
determination of the Certificate Insurer, be cured through substitution or
repurchase of the affected Mortgage Loans, the Originator hereby agrees to
indemnify the Purchaser and any assignee or designee of the Purchaser for the
damages resulting from such breach.

                                      -11-

<PAGE>

                                   EXHIBIT D-1

                               REQUEST FOR RELEASE
                    (Mortgage Loan Servicing or Foreclosure)

LOAN INFORMATION

     Name of Mortgagor:             ________________________________

     Servicer Loan No.:             ________________________________

TRUSTEE

     Name:                          ________________________________

     Address:                       ________________________________

     Trustee Mortgage File No.:     ________________________________

SELLER

     Name:                          ________________________________

     Address:                       ________________________________

     Certificates:                  New Century Home Equity Loan Trust 2000-NCB,
                                    Asset Backed Pass-Through Certificates.

REASON FOR REQUEST  (check one)

____  1.  Mortgage Loan liquidated.
____  2.  Mortgage Loan in foreclosure.
____  3.  Mortgage Loan repurchased.
____  4.  Mortgage Loan substituted.
____  5.  Other (explain) ________________________________

                                      D-1-1

<PAGE>

     The undersigned Servicer hereby requests delivery to it from the Trustee of
the documents referred to below (the "Documents"). Upon the Servicer's receipt
of the Documents, the Servicer will provide the Trust Administrator with a
written acknowledgement of such receipt. All capitalized terms not otherwise
defined in this Request for Release shall have the meanings given them in the
Pooling and Servicing Agreement dated as of July 1, 2000, among the Trustee, the
Trust Administrator, the Servicer and the Depositor.

( )  Promissory Note dated _______________, 20__, in the original principal sum
     of $_____________, made by __________________________, payable to, or
     endorsed to the order of, the Trustee.

( )  Mortgage recorded on __________________ as instrument no. ________________
     in the County Recorder's Office of the County of _________________, State
     of ________________ in book/reel/docket _______________ of official records
     at page/image _______________.

( )  Deed of Trust recorded on _______________ as instrument no.
     _______________ in the County Recorder's Office of the County of
     __________________, State of __________________ in book\reel\docket of
     official records at page/image __________________.

( )  Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
     __________________ as instrument no. __________________ in the County
     Recorder's Office of the County of __________________, State of
     __________________ in book/reel/docket __________________.

( )  Other documents, including any amendments, assignments or other assumptions
     of the Mortgage Note or Mortgage.

     ( ) ____________________________________
     ( ) ____________________________________
     ( ) ____________________________________
     ( ) ____________________________________

     The Servicer hereby acknowledges and agrees as follows:

     (1) The Servicer shall hold and retain possession of the Documents in trust
for the benefit of the Trustee, solely for the purposes provided in the
Agreement.

     (2) The Servicer shall not cause or permit the Documents to become subject
to, or encumbered by, any claim, liens, security interest, charges, writs of
attachment or other impositions nor shall the Servicer assert or seek to assert
any claims or rights of setoff to or against the Documents or any proceeds
thereof.

                                      D-1-2

<PAGE>

     (3) The Servicer shall return each and every Document previously requested
from the Mortgage File to the Trustee when the need therefor no longer exists,
unless the Mortgage Loan relating to the Documents has been liquidated and the
proceeds thereof have been remitted to the Collection Account and except as
expressly provided in the Agreement.

     (4) The Documents and any proceeds thereof, including any proceeds of
proceeds, shall at all times be earmarked for the account of the Trustee except
as expressly provided in the Agreement, and the Servicer shall keep the
Documents and any proceeds separate and distinct from all other property in the
Servicer's possession, custody or control.

                                     COUNTRYWIDE HOME LOANS, INC.,
                                     as Servicer

                                     By:____________________________________
                                        Its:

Date: __________________, 20___

                                      D-1-3

<PAGE>

                                   EXHIBIT D-2

                               REQUEST FOR RELEASE
                          (Mortgage Loans Paid in Full)

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCB
                     ASSET BACKED PASS-THROUGH CERTIFICATES

______________________________ HEREBY CERTIFIES THAT HE/SHE IS AN OFFICER OF THE
SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER SIGNATURE, AND HEREBY
FURTHER CERTIFIES AS FOLLOWS: __________________________________________________
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER: __________             BORROWER'S NAME ________________________
COUNTY: _______________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT HAVE BEEN OR WILL BE CREDITED.

DATED: _____________________

/ /       VICE PRESIDENT
/ /   ASSISTANT VICE PRESIDENT

<PAGE>

                                   EXHIBIT E-1

                FORM OF TRUST ADMINISTRATOR INITIAL CERTIFICATION

                                                     July __, 2000

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

Countrywide Home Loans, Inc.
400 Countrywide Way
Simi Valley, California 93065

          Re:  Pooling and Servicing Agreement, dated as of July 1, 2000, among
               New Century Mortgage Securities, Inc., Countrywide Home Loans,
               Inc. and Firstar Bank, N.A., U.S. Bank National Association,
               Asset Backed Pass-Through Certificates, Series 2000-NCB
               -----------------------------------------------------------------

Ladies and Gentlemen:

          Attached is the Trust Administrator's preliminary exception report
delivered in accordance with the referenced Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"). Capitalized terms used but not otherwise
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.

          The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File pertaining
to the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or (iii) whether any Mortgage File included any of the documents specified
in clause (v) of Section 2.04 of the Pooling and Servicing Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION

                                     By:______________________________
                                     Name:
                                     Title:

<PAGE>

                                   EXHIBIT E-2

                FORM OF TRUST ADMINISTRATOR'S FINAL CERTIFICATION

                                                    [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

Countrywide Home Loans, Inc.
18400 Von Karman, Suite 1000
Irvine, California  92612

          Re:  Pooling and Servicing Agreement, dated as of July 1, 2000, among
               New Century Mortgage Securities, Inc., Countrywide Home Loans,
               Inc. and Firstar Bank, N.A., U.S. Bank National Association,
               Asset Backed Pass-Through Certificates, Series 2000-NCB
               ----------------------------------------------------------------

Ladies and Gentlemen:

     In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:

          (i) the original recorded Mortgage, and the original recorded power of
     attorney, if the Mortgage was executed pursuant to a power of attorney, or
     a certified copy thereof in those instances where the public recording
     office retains the original or where the original has been lost;

          (ii) an original executed Assignment together with the original
     recorded Assignment or Assignments showing a complete chain of assignment
     from the originator, or a certified copy of such Assignments in those
     instances where the public recording retains the original or where original
     has been lost; and

          (iii) the original lender's title insurance policy.

<PAGE>

     The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
the Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                         U.S. BANK NATIONAL ASSOCIATION

                                         By:__________________________________
                                         Name:
                                         Title:

                                      E-2-2

<PAGE>

                                   EXHIBIT E-3

               FORM OF TRUST ADMINISTRATOR QUARTERLY CERTIFICATION

                                                _______________________

New Century Mortgage Securities, Inc.
18400 Von Karman
Irvine, California 92612

Countrywide Home Loans, Inc.
400 Countrywide Way
Simi Valley, California

          Re:  Pooling and Servicing Agreement, dated as of July 1, 2000, among
               New Century Mortgage Securities, Inc., Countrywide Home Loans,
               Inc. and Firstar Bank, N.A., U.S. Bank National Association,
               Asset Backed Pass-Through Certificates, Series 2000-NCB
               ----------------------------------------------------------------

Ladies and Gentlemen:

     In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as Trust Administrator, hereby sets forth
an updated exception report from the previous Trust Administrator's
Certification issued [INSERT DATE].

     The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, execution by a Responsible Officer, or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan or (iii)
the existence of any document specified in clause (v) of Section 2.04(a).

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trust Administrator

                                     By: _______________________________
                                     Name:
                                     Title:

<PAGE>

                                    EXHIBIT F

                           FORM OF LIQUIDATION REPORT

Customer Name:
Account Number:
Original Principal Balance:

1.       Type of Liquidation (REO disposition/charge-off/short pay-off)
         -  Date last paid
         -  Date of foreclosure
         -  Date of REO
         -  Date of REO Disposition
         -  Property Sale Price/Estimated Market Value at disposition

2.       Liquidation Proceeds
         Principal Prepayment               $___________
         Property Sale Proceeds             ___________
         Insurance Proceeds                 ___________
         Other (itemize)                    ___________

         Total Proceeds                     $___________

3.       Liquidation Expenses
         Servicing Advances                 $___________
         Monthly Advances                   ___________
         Contingency Fees                   ___________
         Excess Servicing Fees              ___________
         Servicing Fees                     ___________
         Annual Expense
              Escrow Amount                 ___________
         Supplemental Fee (if any)          ___________
         Additional Interest (if any)       ___________

         Total Advances                     $___________

4.  Net Liquidation Proceeds                         $___________
    (Item 2 minus Item 3)

5.  Principal Balance of Mortgage Loan               $___________

6.  Loss, if any (Item 5 minus Item 4)               $___________

<PAGE>

                                    EXHIBIT G

                         FORM OF TRANSFER CERTIFICATION

                                     [Date]

U.S. Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101

          Re:  Pooling and Servicing Agreement, dated as of July 1, 2000, among
               New Century Mortgage Securities, Inc., Countrywide Home Loans,
               Inc. and Firstar Bank, N.A., U.S. Bank National Association,
               Asset Backed Pass-Through Certificates, Series 2000-NCB
               ----------------------------------------------------------------

Ladies and Gentlemen:

          In connection with the transfer by ________________ (the "Transferor")
to ________________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), the Transferor hereby certifies as follows:

          Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of July
1, 2000, among New Century Mortgage Securities, Inc. as Depositor, Countrywide
Home Loans, Inc. as Servicer, Firstar Bank, N.A. as Trustee and U.S. Bank
National Association as Trust Administrator (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.

<PAGE>

          Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                     Very truly yours,

                                     [Transferor]

                                     By:____________________________________
                                     Name:
                                     Title:

                                       G-2

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                         [Date]

U.S. Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101

          Re:  Pooling and Servicing Agreement, dated as of July 1, 2000, among
               New Century Mortgage Securities, Inc., Countrywide Home Loans,
               Inc. and Firstar Bank, N.A., U.S. Bank National Association,
               Asset Backed Pass-Through Certificates, Series 2000-NCB
               ----------------------------------------------------------------

Ladies and Gentlemen:

          In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

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

          2. The Transferee has been furnished with all information regarding
     (a) the Certificates and distributions thereon, (b) the nature, performance
     and servicing of the Mortgage Loans, (c) the Pooling and Servicing
     Agreement referred to below, and (d) any credit enhancement mechanism
     associated with the Certificates, that it has requested.

          All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of July 1, 2000, among New Century Mortgage Securities, Inc. as
Depositor, Countrywide Home Loans, Inc. as Servicer, Firstar Bank, N.A. as
Trustee and U.S. Bank National Association as Trust Administrator, pursuant to
which the Certificates were issued.

                                     [TRANSFEREE]

                                     By:____________________________________
                                     Name:
                                     Title:

<PAGE>

                                                            ANNEX 1 TO EXHIBIT G
                                                            --------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trust Administrator,
with respect to the mortgage pass- through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee 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 Transferee's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Transferee satisfies the criteria in the category marked
below.

     ___  CORPORATION, ETC. The Transferee is a corporation (other than a bank,
          savings and loan association or similar institution), Massachusetts or
          similar business trust, partnership, or any organization described in
          Section 501(c)(3) of the Internal Revenue Code of 1986.

     ___  BANK. The Transferee (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 Transferee (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 Transferee is a dealer registered pursuant to
          Section 15 of the Securities Exchange Act of 1934.

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

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

<PAGE>

     ___  INSURANCE COMPANY. The Transferee 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 Transferee 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 Transferee is an employee benefit plan within the
          meaning of Title I of the Employee Retirement Income Security Act of
          1974.

     ___  INVESTMENT ADVISOR. The Transferee is an investment advisor registered
          under the Investment Advisers Act of 1940.

          3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

          4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the Securities Exchange Act of 1934.

          5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.

      ___   ___    Will the Transferee be purchasing the Certificates
      Yes   No     only for the Transferee's own account?

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

<PAGE>

          7. The Transferee 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 Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.

Dated:

                                     ____________________________________
                                     Print Name of Transferee

                                     By:_________________________________
                                     Name:
                                     Title:

<PAGE>

                                                            ANNEX 2 TO EXHIBIT G
                                                            --------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trust Administrator,
with respect to the mortgage pass- through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee'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
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.

____      The Transferee owned $___________________ in securities (other than
          the excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

____      The Transferee 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
          Transferee'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 Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

          5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made

<PAGE>

herein because one or more sales to the Transferee will be in reliance on Rule
144A. In addition, the Transferee will only purchase for the Transferee's own
account.

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

Dated:

                                     ____________________________________
                                     Print Name of Transferee or Advisor

                                     By:_________________________________
                                     Name:
                                     Title:

                                     IF AN ADVISER:

                                     ____________________________________
                                     Print Name of Transferee

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

          The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:

          1. I am an executive officer of the Purchaser.

          2. The Purchaser is a "qualified institutional buyer", as defined in
     Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.

          3. As of the date specified below (which is not earlier than the last
     day of the Purchaser's most recent fiscal year), the amount of
     "securities", computed for purposes of Rule 144A, owned and invested on a
     discretionary basis by the Purchaser was in excess of $100,000,000.

Name of Purchaser ______________________________________________________________

By:      (Signature)____________________________________________________________

Name of Signatory ______________________________________________________________

Title __________________________________________________________________________

Date of this certificate________________________________________________________

Date of information provided in paragraph 3 ____________________________________

<PAGE>

                                    EXHIBIT H

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK                    )
                                     : ss.:
COUNTY OF NEW YORK                   )

          ____________________________________ , being duly sworn, deposes,
represents and warrants as follows:

     1.        I am a ______________________ of ___________________________ (the
          "Owner") a corporation duly organized and existing under the laws of
          ______________, the record owner of New Century Home Equity Loan
          Trust, Series 2000-NCB, Asset Backed Pass-Through Certificates, Class
          R (the "Class R Certificates"), on behalf of whom I make this
          affidavit and agreement. Capitalized terms used but not defined herein
          have the respective meanings assigned thereto in the Pooling and
          Servicing Agreement pursuant to which the Class R Certificates were
          issued.

     2.        The Owner (i) is and will be a "Permitted Transferee" as of
          ____________________, 20__ and (ii) is acquiring the Class R
          Certificates for its own account or for the account of another Owner
          from which it has received an affidavit in substantially the same form
          as this affidavit. A "Permitted Transferee" is any person other than a
          "disqualified organization" or a possession of the United States. For
          this purpose, a "disqualified organization" means the United States,
          any state or political subdivision thereof, any agency or
          instrumentality of any of the foregoing (other than an instrumentality
          all of the activities of which are subject to tax and, except for the
          Federal Home Loan Mortgage Corporation, a majority of whose board of
          directors is not selected by any such governmental entity) or any
          foreign government, international organization or any agency or
          instrumentality of such foreign government or organization, any rural
          electric or telephone cooperative, or any organization (other than
          certain farmers' cooperatives) that is generally exempt from federal
          income tax unless such organization is subject to the tax on unrelated
          business taxable income.

     3.        The Owner is aware (i) of the tax that would be imposed on
          transfers of the Class R Certificates to disqualified organizations
          under the Internal Revenue Code of 1986 that applies to all transfers
          of the Class R Certificates after March 31, 1988; (ii) that such tax
          would be on the transferor or, if such transfer is through an agent
          (which person includes a broker, nominee or middleman) for a non-
          Permitted Transferee, on the agent; (iii) that the person otherwise
          liable for the tax shall be relieved of liability for the tax if the
          transferee furnishes to such person an affidavit that the transferee
          is a Permitted Transferee and, at the time of transfer, such person
          does not have actual knowledge that the affidavit is false; and (iv)
          that each of the Class R Certificates may be a "noneconomic residual
          interest" within the meaning of proposed Treasury regulations
          promulgated under 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

<PAGE>

          is to impede the assessment or collection of tax.

     4.        The Owner is aware of the tax imposed on a "pass-through entity"
          holding the Class R Certificates if, at any time during the taxable
          year of the pass-through entity, a non-Permitted Transferee is the
          record holder of an interest in such entity. (For this purpose, a
          "pass-through entity" includes a regulated investment company, a real
          estate investment trust or common trust fund, a partnership, trust or
          estate, and certain cooperatives.)

     5.       The Owner is aware that the Trustee will not register the transfer
          of any Class R Certificate unless the transferee, or the transferee's
          agent, delivers to the Trustee, among other things, an affidavit in
          substantially the same form as this affidavit. The Owner expressly
          agrees that it will not consummate any such transfer if it knows or
          believes that any of the representations contained in such affidavit
          and agreement are false.

     6.        The Owner consents to any additional restrictions or arrangements
          that shall be deemed necessary upon advice of counsel to constitute a
          reasonable arrangement to ensure that the Class R Certificates will
          only be owned, directly or indirectly, by an Owner that is a Permitted
          Transferee.

     7.        The Owner's taxpayer identification number is __________________.

     8.        The Owner has reviewed the restrictions set forth on the face of
          the Class R Certificates and the provisions of Section 5.02(c) of the
          Pooling and Servicing Agreement under which the Class R Certificates
          were issued (in particular, clauses (iii)(A) and (iii)(B) of Section
          5.02(c) which authorize the Trustee to deliver payments to a person
          other than the Owner and negotiate a mandatory sale by the Trustee in
          the event that the Owner holds such Certificate in violation of
          Section 5.02(c)); and that the Owner expressly agrees to be bound by
          and to comply with such restrictions and provisions.

     9.        The Owner is not acquiring and will not transfer the Class R
          Certificates in order to impede the assessment or collection of any
          tax.

     10.       The Owner anticipates that it will, so long as it holds the Class
          R Certificates, have sufficient assets to pay any taxes owed by the
          holder of such Class R Certificates, and hereby represents to and for
          the benefit of the person from whom it acquired the Class R
          Certificates that the Owner intends to pay taxes associated with
          holding such Class R Certificates as they become due, fully
          understanding that it may incur tax liabilities in excess of any cash
          flows generated by the Class R Certificates.

     11.      The Owner has no present knowledge that it may become insolvent or
          subject to a bankruptcy proceeding for so long as it holds the Class R
          Certificates.

     12.       The Owner has no present knowledge or expectation that it will be
          unable to pay any United States taxes owed by it so long as any of the
          Certificates remain outstanding.

                                       H-2

<PAGE>

     13.     The Owner is not acquiring the Class R Certificates with the intent
          to transfer the Class R Certificates to any person or entity that will
          not have sufficient assets to pay any taxes owed by the holder of such
          Class R Certificates, or that may become insolvent or subject to a
          bankruptcy proceeding, for so long as the Class R Certificates remain
          outstanding.

     14.    The Owner will, in connection with any transfer that it makes of the
          Class R Certificates, obtain from its transferee the representations
          required by Section 5.02(c) of the Pooling and Servicing Agreement
          under which the Class R Certificate were issued and will not
          consummate any such transfer if it knows, or knows facts that should
          lead it to believe, that any such representations are false.

     15.       The Owner will, in connection with any transfer that it makes of
          the Class R Certificates, deliver to the Trustee an affidavit, which
          represents and warrants that it is not transferring the Class R
          Certificates to impede the assessment or collection of any tax and
          that it has no actual knowledge that the proposed transferee: (i) has
          insufficient assets to pay any taxes owed by such transferee as holder
          of the Class R Certificates; (ii) may become insolvent or subject to a
          bankruptcy proceeding for so long as the Class R Certificates remains
          outstanding; and (iii) is not a "Permitted Transferee".

     16.       The Owner is a citizen or resident of the United States, a
          corporation, partnership or other entity created or organized in, or
          under the laws of, the United States or any political subdivision
          thereof, or an estate or trust whose income from sources without the
          United States may be included in gross income for United States
          federal income tax purposes regardless of its connection with the
          conduct of a trade or business within the United States.

                                       H-3

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                         [OWNER]

                                         By:____________________________________
                                         Name:
                                         Title:       [Vice] President

ATTEST:

By:__________________________
Name:
Title: [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 a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.

          Subscribed and sworn before me this ____ day of __________, 20__.

                                             __________________________
                                                  Notary Public

                                             County of ______________
                                             State of _______________

                                             My Commission expires:

                                       H-4

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK               )
                                : ss. :
COUNTY OF NEW YORK              )

          __________________________ , being duly sworn, deposes, represents and
warrants as follows:

1.   I am a ____________________ of ___________________________ (the "Owner"), a
corporation duly organized and existing under the laws of ______________, on
behalf of whom I make this affidavit.

          2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

          3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

          4. The Owner understands that the Purchaser has delivered to the Trust
Administrator a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit H. The Owner does not know or believe
that any representation contained therein is false.

          5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E- 1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

          6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.

                                       H-5

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                             [OWNER]

                                             By:_____________________________
                                             Name:
                                             Title:      [Vice] President

ATTEST:

By:_____________________________
Name:
Title:  [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 a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.

          Subscribed and sworn before me this ____ day of __________, 20__.

                                             __________________________
                                                     Notary Public

                                             County of _____________
                                             State of ______________

                                             My Commission expires:

<PAGE>

                                    EXHIBIT I
                      FORM OF CERTIFICATE INSURANCE POLICY

                                                      FINANCIAL GUARANTY
                                                      INSURANCE POLICY

Trust: As described in Endorsement No. 1              Policy No.:  [________]
Certificates: ______ New Century Home Equity Loan     Date of Issuance: [______]
              Trust 2000-NCB, Asset-Backed Pass-
              Through Certificates, Class A

     FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration
received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the Trustee for
the benefit of each Holder, subject only to the terms of this Policy (which
includes each endorsement hereto), the full and complete payment of Guaranteed
Distributions with respect to the Certificates of the Trust referred to above.

     For the further protection of each Holder, Financial Security irrevocably
and unconditionally guarantees payment of the amount of any distribution of
principal or interest with respect to the Certificates made during the Term of
this Policy to such Holder that is subsequently avoided in whole or in part as a
preference payment under applicable law.

     Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.

     Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.

     Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.

     This Policy sets forth in full the undertaking of Financial Security, and
shall not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment thereto. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever. This Policy may not be canceled or
revoked during the Term of this Policy. An acceleration payment shall not be due
under this Policy unless such acceleration is at the sole option of Financial
Security. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY
FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

     In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.

                                             FINANCIAL SECURITY ASSURANCE INC.

                                             By________________________________
                                                      AUTHORIZED OFFICER

A subsidiary of Financial Security Assurance Holdings Ltd.

                                       I-1

<PAGE>

350 Park Avenue, New York, NY  10022-6022

                              ENDORSEMENT NO. 1 TO
                       FINANCIAL GUARANTY INSURANCE POLICY

FINANCIAL SECURITY ASSURANCE INC.

TRUST:              Established pursuant to the Pooling and Servicing Agreement
                    dated as of July 1, 2000 among New Century Mortgage
                    Securities, Inc., as Depositor, Countrywide Home Loans,
                    Inc., as Servicer, NC Capital Corporation, as Seller,
                    Firstar Bank, National Association, as Trustee and U.S. Bank
                    National Association, as Trust Administrator.

CERTIFICATES:       $____________ New Century Home Equity Loan Trust, Series
                    2000-NCB, Asset Backed Pass-Through Certificates, Class A.

POLICY              NO.: [________]

DATE OF ISSUANCE:   July __, 2000

     1. DEFINITIONS. For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in the
Pooling and Servicing Agreement unless the context shall otherwise require.

     "BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the State of California, the State of New
York or in the cities in which the Corporate Trust Office of the Trustee and the
Trust Administrator are located, are authorized or obligated by law or executive
order to be closed.

     "FINAL DISTRIBUTION DATE" means the Distribution Date coinciding with or
following a purchase by the Servicer in accordance with the terms of Section
10.01(b) of the Pooling and Servicing Agreement.

     "GUARANTEED DISTRIBUTIONS" means, with respect to any Distribution Date,
the distribution to be made to the Certificates on such Distribution Date, in an
aggregate amount equal to the sum of (i) the Interest Distribution Amount and
(ii) the OC Deficit, in each case in accordance with the original terms of the
Certificates when issued and without regard to any amendment or modification of
the Certificates or the Pooling and Servicing Agreement which has not been
consented to by Financial Security. Guaranteed Distributions shall not include,
nor shall coverage be provided under this Policy in respect of any taxes,
withholding or other charge imposed by any governmental authority.

     "MATURITY DATE" means the Distribution Date coinciding with or following
the final payment or other liquidation of the last Mortgage Loan or REO Property
as described in Section 10.01(a) of the Pooling and Servicing Agreement, subject
to the proviso set forth therein.

     "POLICY" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.

     "POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing Agreement
dated as of July 1, 2000 among New Century Mortgage Securities, Inc.,
Countrywide Home Loans, Inc., NC Capital Corporation, Firstar Bank, N.A. and
U.S. Bank National Association with respect to the New Century Home Equity Loan

                                       I-2

<PAGE>

Policy No.: [________]                                    Date of Issuance: July
                                                          __, 2000

Trust, Series 2000-NCB, as amended from time to time with the consent of
Financial Security.

     "RECEIPT" and "RECEIVED" mean actual delivery to Financial Security and to
the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New York
City time, on a Business Day; delivery either on a day that is not a Business
Day, or after 12:00 noon, New York City time, shall be deemed to be Received on
the next succeeding Business Day. If any notice or certificate given hereunder
by the Trust Administrator is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its Fiscal Agent shall promptly so advise the Trust
Administrator and the Trust Administrator may submit an amended notice.

     "TERM OF THIS POLICY" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all of the Certificates is zero, (ii) any period during which any
payment on the Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding has
been entered.

     "TRUST ADMINISTRATOR" means U.S. Bank National Association, in its capacity
as Trust Administrator under the Pooling and Servicing Agreement and any
successor in such capacity.

     "TRUSTEE" means Firstar Bank, N.A., in its capacity as Trustee under the
Pooling and Servicing Agreement and any successor in such capacity.

     2. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED
DISTRIBUTIONS. Following Receipt by Financial Security of a notice and
certificate from the Trust Administrator in the form attached as Exhibit A to
this Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the second Business
Day following such Receipt and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed Distributions will be disbursed by wire transfer of immediately
available funds to the Policy Payments Account established pursuant to the
Pooling and Servicing Agreement or, if no such Policy Payments Account has been
established, to the Trust Administrator.

     Financial Security shall be entitled to pay any amount hereunder in respect
of Guaranteed Distributions whether or not any notice and certificate shall have
been Received by Financial Security as provided above, provided, however, that
by acceptance of this Policy the Trustee, and the Trust Administrator on behalf
of the Trustee, agree to provide upon request to Financial Security a notice and
certificate in respect of any such payments made by Financial Security.
Financial Security's obligations hereunder in respect of Guaranteed
Distributions shall be discharged to the extent funds are disbursed by Financial
Security as provided herein whether or not such funds are properly applied by
the Trust Administrator.

     3. NOTICES AND CONDITIONS TO PAYMENT IN RESPECT OF GUARANTEED DISTRIBUTIONS
AVOIDED AS PREFERENCE PAYMENTS. If any Guaranteed Distribution is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Trustee of (A) a certified
copy of the order of the court or other governmental body which exercised
jurisdiction to the effect that the Holder is required to return principal or
interest distributed with respect to the Certificates

                                       I-3

<PAGE>

Policy No.: [________]                                  Date of Issuance:  July
                                                        __, 2000

during the Term of this Policy because such distributions were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Holder that the Order has been entered and is not subject to
any stay and (C) an assignment duly executed and delivered by the Holder, in
such form as is reasonably required by Financial Security and provided to the
Holder by Financial Security, irrevocably assigning to Financial Security all
rights and claims of the Holder relating to or arising under the Certificates
against the debtor which made such preference payment or otherwise with respect
to such preference payment or (ii) the date of Receipt by Financial Security
from the Trust Administrator of the items referred to in clauses (A), (B) and
(C) above if, at least four Business Days prior to such date of Receipt,
Financial Security shall have Received written notice from the Trust
Administrator that such items were to be delivered on such date and such date
was specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trustee, the Trust Administrator or any Holder directly (unless a
Holder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trust Administrator for distribution to
such Holder upon proof of such payment reasonably satisfactory to Financial
Security). In connection with the foregoing, Financial Security shall have the
rights provided pursuant to Sections 4.02(d), 4.02(f) and 9.04 of the Pooling
and Servicing Agreement.

     4. GOVERNING LAW. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

     5. FISCAL AGENT. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trust Administrator at the notice address
specified in the Pooling and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Trust Administrator, (i) copies of all notices and documents required to
be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Fiscal Agent and to Financial Security and shall
not be deemed Received until Received by both and (ii) all payments required to
be made by Financial Security under this Policy may be made directly by
Financial Security or by the Fiscal Agent on behalf of Financial Security. The
Fiscal Agent is the agent of Financial Security only and the Fiscal Agent shall
in no event be liable to any Holder for any acts of the Fiscal Agent or any
failure of Financial Security to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.

     6. WAIVER OF DEFENSES. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.

     7. NOTICES. Alt notices to be given hereunder shall be in writing (except
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:

                      Financial Security Assurance Inc.
                      350 Park Avenue
                      New York, NY  10022
                      Attention:  Senior Vice President - Surveillance
                      Re: New Century Home Equity Loan Trust, Series 2000-NCB

                                       I-4

<PAGE>

Policy No.: [________]                                   Date of Issuance: July
                                                         __, 2000

                      Telecopy No.: (212) 339-3518
                      Confirmation: (212) 826-0100

Financial Security may specify a different address or addresses by writing,
mailed or delivered to the Trust Administrator.

     8. PRIORITIES. In the event any term or provision on the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.

     9. EXCLUSIONS FROM INSURANCE GUARANTY FUNDS. This Policy is not covered by
the Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not covered by the Florida Insurance Guaranty
Association created under Part II of Chapter 631 of the Florida Insurance Code.
In the event Financial Security were to become insolvent, any claims arising
under this Policy are excluded from coverage by the California Insurance
Guaranty Association, established pursuant to Article 14.2 of Chapter 1 of Part
2 of Division 1 of the California Insurance Code.

     10. SURRENDER OF POLICY. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.

     IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.

                                               FINANCIAL SECURITY ASSURANCE INC.

                                               By:  ___________________________
                                                        Authorized Officer

                                       I-5

<PAGE>

Policy No.: [________]                                   Date of Issuance: July
                                                         __, 2000

                                                               Exhibit A
                                                         To Endorsement 1

                         NOTICE OF CLAIM AND CERTIFICATE
                         -------------------------------

Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022

     The undersigned, a duly authorized officer of U.S. Bank National
Association (the "Trust Administrator"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security") with reference to Financial Guaranty
Insurance Policy No. [________] dated July __, 2000 (the "Policy") issued by
Financial Security in respect of the New Century Home Equity Loan Trust, Series
2000-NCB, Asset Backed Pass- Through Certificates, Class A (the "Certificates"),
that:

          (i) The Trust Administrator is the Trust Administrator under the
     Pooling and Servicing Agreement for the Holders.

          (ii) The sum of all amounts on deposit (or scheduled to be on deposit)
     in the Distribution Account and available for distribution to the Holders
     of the Guaranteed Distributions pursuant to the Pooling and Servicing
     Agreement will be $________ (the "Shortfall") less than the Guaranteed
     Distributions with respect to the Distribution Date occurring on
     _______________.

          (iii) The Trust Administrator is making a claim under the Policy for
     the Shortfall to be applied to distributions of principal or interest or
     both with respect to the Certificates.

          (iv) The Trust Administrator agrees that, following receipt of funds
     from Financial Security, it shall (a) hold such amounts in trust and apply
     the same directly to the payment of Guaranteed Distributions on the
     Certificates when due; (b) not apply such funds for any other purpose; (c)
     not commingle such funds with other funds held by the Trust Administrator
     and (d) maintain an accurate record of such payments with respect to each
     Certificate and the corresponding claim on the Policy and proceeds thereof
     and, if the Certificate is required to be surrendered for such payment,
     shall stamp on each such Certificate the legend "$[INSERT APPLICABLE
     AMOUNT] paid by Financial Security and the balance hereof has been canceled
     and reissued" and then shall deliver such Certificate to Financial
     Security.

          (v) The Trust Administrator, on behalf of the Trustee and the Holders,
     hereby assigns to Financial Security the rights of the Holders with respect
     to the Certificates to the extent of any payments under the Policy,
     including, without limitation, any amounts due to the Holders in respect of
     securities law violations arising from the offer and sale of the
     Certificates. The foregoing assignment is in addition to, and not in
     limitation of, rights of subrogation otherwise available to Financial
     Security in respect of such payments. The Trust Administrator shall take
     such action and deliver such instruments as may be reasonably requested or
     required by Financial Security to effectuate the purpose or provisions of
     this clause (v).

          (vi) The Trust Administrator, on its behalf and on behalf of the
     Trustee and the Holders, hereby appoints Financial Security as agent and
     attorney-in-fact for the Trust Administrator, the Trustee and each such
     Holder in any legal proceeding with respect to the Certificates. The Trust

                                       A-1

<PAGE>

Policy No.: [________]                                  Date of Issuance: July
                                                        __, 2000

     Administrator hereby agrees, for itself and on behalf of the Trustee, that,
     so long as a Certificate Insurer Default (as defined in the Pooling and
     Servicing Agreement) shall not exist, Financial Security may at any time
     during the continuation of any proceeding by or against the Seller, the
     Servicer or the Depositor under the United States Bankruptcy Code or any
     other applicable bankruptcy, insolvency, receivership, rehabilitation or
     similar law (an "Insolvency Proceeding") direct all matters relating to
     such Insolvency Proceeding. In addition, the Trust Administrator, for
     itself and on behalf of the Trustee, hereby agrees that Financial Security
     shall be subrogated to, and the Trustee on its behalf and on behalf of the
     Trustee and each Holder, hereby delegates and assigns, to the fullest
     extent permitted by law, the rights of the Trustee, Trust Administrator and
     each Holder in the conduct of any Insolvency Proceeding, including, without
     limitation, all rights of any party to an adversary proceeding or action
     with respect to any court order issued in connection with any such
     Insolvency Proceeding.

          (vii) Payment should be made by wire transfer directed to Policy
     Payments Account.

     Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.

                                       A-2

<PAGE>

     IN WITNESS WHEREOF, the Trust Administrator has executed and delivered this
Notice of Claim and Certificate as of the _______ day of _________________,
____.

                                                FIRSTAR BANK, N.A.

                                                By:  _________________________
                                                Title: _______________________

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

For Financial Security or Fiscal Agent Use Only

Wire transfer sent on _______________ by ____________________
Confirmation Number ________________________

<PAGE>

                                    EXHIBIT J

                             MORTGAGE LOAN SCHEDULE

                                 FILED BY PAPER

<PAGE>

                                    EXHIBIT K

                           PREPAYMENT CHARGE SCHEDULE

                             AVAILABLE UPON REQUEST

<PAGE>

                                    EXHIBIT L

                           PROJECTED PRINCIPAL BALANCE

<PAGE>

                                   SCHEDULE 1

                               PMI MORTGAGE LOANSExhibit 10.1

                              EXPRESS SCRIPTS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                   AS AMENDED

                                TABLE OF CONTENTS

                                                                      Page No.

1. PURPOSE..................................................................3

2. DEFINITIONS..............................................................3
   2.1 Accounting Date......................................................3
   2.2 Basic Company Credit.................................................3
   2.3 Beneficiary..........................................................3
   2.4 Board................................................................3
   2.5 Business Day.........................................................3
   2.6 Committee............................................................3
   2.7 Common Stock.........................................................3
   2.8 Common Stock Fund....................................................3
   2.9 Company..............................................................3
   2.10 Company Credits.....................................................4
   2.11 Compensation........................................................4
   2.12 Compensation Account(s).............................................4
   2.13 Credit Date.........................................................4
   2.14 Deferred Compensation...............................................4
   2.15 Disability..........................................................4
   2.16 Effective Date......................................................4
   2.17 Election............................................................4
   2.18 Employee............................................................4
   2.19 Exchange Act........................................................4
   2.20 Fair Market Value...................................................4
   2.21 In-Service Account..................................................5
   2.22 Participant.........................................................5
   2.23 Past Service Credit.................................................5
   2.24 Plan................................................................5
   2.25 Plan Year...........................................................5
   2.26 Retirement..........................................................5
   2.27 Retirement Account..................................................5
   2.28 Service Year........................................................5
   2.29 Stock Unit(s).......................................................5
   2.30 Termination.........................................................5

3. ADMINISTRATION...........................................................5

4. ELIGIBILITY..............................................................6

5. PARTICIPANT ACCOUNTS.....................................................6

6. ELECTION TO PARTICIPATE..................................................6
   6.1 In General...........................................................6
   6.2 Investment Alternatives For Existing Balances........................7

7. COMPANY CREDITS..........................................................7
   7.1 Vesting..............................................................7
   7.2 Forfeiture...........................................................7

8. DISTRIBUTION.............................................................7
   8.1 Retirement Account...................................................7
   8.2 In-Service Account...................................................7
   8.3 Termination..........................................................8
   8.4 Death................................................................8
   8.5 Form of Distribution.................................................8

9. FINANCIAL HARDSHIP.......................................................8

10. BENEFICIARY DESIGNATION.................................................8

11. UNSECURED GENERAL CREDITOR STATUS OF EMPLOYEE...........................8

12. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION...............9

13. INALIENABILITY OF BENEFITS..............................................9

14. GOVERNING LAW...........................................................9

15. AMENDMENTS..............................................................9

                              EXPRESS SCRIPTS, INC.
                      EXECUTIVE DEFERRED COMPENSATION PLAN

1.       PURPOSE

The purpose of this Express Scripts,  Inc. Executive Deferred  Compensation Plan
(the  "Plan")  is to provide  eligible  key  employees  of the  Company  with an
opportunity  to defer  compensation  to be earned by them from the  Company as a
means of saving for  retirement  or other  future  purposes  and to provide such
employees with  competitive  retirement and capital  accumulation  benefits.  In
addition,  the Plan is intended to provide  eligible  key  employees  additional
incentive   to  remain   employed  by  the   Company  and  to  attract   certain
executive-level employees.

2.       DEFINITIONS

         The following definitions shall be applicable throughout the Plan:

2.1     Accounting Date.

        "Accounting   Date"  means  each   Business  Day  on  which  a
calculation concerning a Participant's  Compensation Account is performed, or as
otherwise defined by the Committee.

2.2     Basic Company Credit.

         "Basic Company Credit" means an amount,  if any, credited to a
Participant's Retirement Account as described in Section 7.

2.3     Beneficiary.

        "Beneficiary"  means the person or persons  designated  by the
Participant  in  accordance  with  Section 10, or if no person or persons are so
designated, the estate of a deceased Participant.

2.4     Board.

         "Board" means the Board of Directors of Express Scripts, Inc. or its
designee.

2.5      Business Day.

         Business Day" means a day on which the New York Stock  Exchange is open
for trading activity.

2.6      Committee.

         "Committee" means the Compensation Committee of the Board.

2.7      Common Stock.

         "Common  Stock"  means the Class A Common  Stock,  $0.01 par value,  of
Express Scripts, Inc.

2.8      Common Stock Fund.

         "Common  Stock  Fund"  means that  investment  option,  approved by the
Committee,  in which a Participant's  Compensation  Accounts may be deemed to be
invested  and  may  earn  income  (or  incur  losses)  based  on a  hypothetical
investment in Common Stock.

2.9      Company.

         "Company" means Express Scripts, Inc., its divisions, subsidiaries and
affiliates.

2.10     Company Credits.

         "Company  Credits"  means  amounts  credited  as either  Basic  Company
Credits or Past Service Credits by the Company to Compensation  Accounts, in the
sole discretion of the Committee, pursuant to Section 7.

2.11     Compensation.

         "Compensation"  means  any  employee  compensation  determined  by  the
Committee to be properly deferrable under the Plan.

2.12     Compensation Account(s).

         "Compensation  Account(s)"  means the  Retirement  Account  and/or  the
In-Service Accounts.

2.13     Credit Date.

         "Credit  Date"  means  each  date on  which  Deferred  Compensation  is
credited to  Compensation  Accounts in accordance  with rules  prescribed by the
Committee.

2.14     Deferred Compensation.

         "Deferred   Compensation"   means  the  Compensation   elected  by  the
Participant to be deferred pursuant to the Plan.

2.15     Disability.

         "Disability"  means  qualification  for  disability  benefits  under  a
long-term  disability  plan under  which a  Participant  is covered and which is
maintained by the Company.

2.16     Effective Date.

         "Effective Date" means January 1, 1999.

2.17     Election.

         "Election"  means a  Participant's  delivery  of a  written  notice  of
election  to the  Committee  or its  designee  electing  to defer  payment  of a
specified  percentage  of his or her  Compensation  (in  accordance  with  rules
prescribed by the Committee) either until  Retirement,  death or such other time
as further permitted by the Committee.

2.18     Employee.

         "Employee"  means  an  individual  classified  by  the  Committee  as a
full-time,  regular  salaried  employee of the  Company,  its present and future
subsidiary  corporations as defined in Section 424 of the Internal  Revenue Code
of 1986, as amended, or its affiliates.

2.19     Exchange Act.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.20     Fair Market Value.

         "Fair Market Value" means,  as of any specified date, the closing sales
price of a share of Common Stock,  as reported on the Nasdaq  National Market on
that date (or, if there are no sales on that date,  the last  preceding  date on
which there was a sale),  or, in the event the Common Stock is listed on a stock
exchange,  the closing  sales price of a share of Common  Stock,  as reported on
such  exchange  on that date (or,  if there are no sales on that date,  the last
preceding date on which there was a sale).  In the absence of any listing of the
Common Stock on the Nasdaq National Market or on any established stock exchange,
Fair  Market  Value  means  the fair  market  value of the  Common  Stock on any
specified date as determined in good faith by the Committee.

2.21     In-Service Account.

         "In-Service   Account"  means  the  account  or  accounts  to  which  a
Participant elects to contribute Deferred  Compensation and from which, pursuant
to Section 8.2, distributions are made.

2.22     Participant.

         "Participant"   means  an  Employee   selected  by  the   Committee  to
participate  in the Plan who has elected to defer payment of all or a portion of
his or her Compensation under the Plan.

2.23     Past Service Credit.

         "Past  Service  Credit"  means  an  amount,   if  any,  credited  to  a
Participant's Retirement Account as described in Section 7.

2.24     Plan.

         "Plan" means this Express Scripts, Inc. Executive Deferred Compensation
Plan, as amended from time to time.

2.25     Plan Year.

         "Plan Year" means the annual period commencing January 1 and ending the
following December 31.

2.26     Retirement.

         "Retirement"  means a  Participant's  termination  of  employment on or
after age 57 or upon  attaining age 55 with ten (10) Service Years in a position
at least as senior as a senior vice-president.

2.27     Retirement Account.

         "Retirement Account" means the account to which a Participant elects to
contribute Deferred Compensation and to which Company Credits are made, and from
which, pursuant to Section 8.1, distributions are made.

2.28     Service Year.

         "Service  Year" means,  as  designated by the  Committee,  such year or
portion  thereof  during which the services  have been rendered by a Participant
for which Compensation is payable.

2.29     Stock Unit(s).

         "Stock  Unit(s)"  means the share  equivalents  credited  to the Common
Stock Fund of a Participant's  Compensation  Account in accordance with Sections
5, 6 and 7.

2.30     Termination.

         "Termination"  means  termination  of services  as an Employee  for any
reason other than  Retirement.  In the event of a  Participant's  Disability,  a
Termination  will  be  deemed  to have  occurred  as of the  earlier  of (a) the
Committee's  determination  that a Participant  has experienced a termination of
services or (b) the date which is nine (9) months after the date the Participant
begins  receiving   disability  benefits  under  a  long-term   disability  plan
maintained by the Company.

3.       ADMINISTRATION

         Full power and authority to construe, interpret and administer the Plan
shall be vested in the Committee.  This power and authority includes, but is not
limited to,  selecting  which Employees are eligible to participate in the Plan,
selecting  Compensation  eligible for deferral,  selecting  investment  indices,
establishing  the level of Company  Credits  (if any) to the Plan,  establishing
deferral terms and conditions,  receiving and approving beneficiary  designation
forms,  and adopting  modifications,  amendments and procedures as may be deemed
necessary,  appropriate  or  convenient  by  the  Committee.  Decisions  of  the
Committee  shall  be  final,  conclusive  and  binding  upon  all  parties.  The
Committee, in its sole discretion, may delegate day-to-day administration of the
Plan  to  an  employee  or  employees  of  the  Company  or  to  a   third-party
administrator.  The  Committee  may also rely on  outside  counsel,  independent
accountants  or other  consultants  or  advisors  for advice and  assistance  in
fulfilling its administrative duties under the Plan.

4.       ELIGIBILITY

         The  Committee  shall have the authority to select from senior and vice
president-level  executives those Employees who shall be eligible to participate
in the Plan.

5.       PARTICIPANT ACCOUNTS

         Upon a Participant's initial election to participate in the Plan, there
shall  be  established  a  Retirement  Account  and an  In-Service  Account,  as
designated  by the  Participant,  to which there shall be credited  any Deferred
Compensation as of each Credit Date. In addition,  Company Credits, if any, made
pursuant to Section 7 shall be allocated to a Participant's  Retirement  Account
in accordance  with rules  prescribed by the Committee.  Each such  Compensation
Account shall be credited (or debited) on each  Accounting  Date with income (or
loss) based upon a hypothetical  investment in any one or more of the investment
options  available  under the  Plan,  as  prescribed  by the  Committee  for the
particular Compensation credited, which may include a Common Stock Fund.

         If a  Participant  elects to invest  all or any  portion  of his or her
Compensation   Account(s)  in  the  Common  Stock  Fund,  that  portion  of  the
Participant's Compensation Account(s) shall be credited on each Credit Date with
Stock Units equal to the number of shares of Common Stock  (including  fractions
of a share)  that could  have been  purchased  with the amount of such  Deferred
Compensation at the Fair Market Value on the Credit Date. As of any date for the
payment of cash dividends on the Common Stock, the portion of the  Participant's
Compensation  Account(s)  invested in the Common  Stock Fund as of the  dividend
record date shall be credited with additional Stock Units calculated by dividing
(i) the product of (a) the dollar value of the dividend declared in respect of a
share of Common Stock  multiplied  by (b) the number of Stock Units  credited to
the Participant's Compensation Account(s) as of the dividend record date by (ii)
the Fair Market Value of a share of Common Stock on the dividend payment date.

6.       ELECTION TO PARTICIPATE

        6.1(1)  In General.

                  Any Employee  selected by the Committee to  participate in the
Plan may  elect to do so by  delivering  to the  Committee  or its  designee  an
Election on a form  prescribed by the Committee,  designating  the  Compensation
Account to which the  Deferred  Compensation  is to be  credited,  electing  the
timing and form of distribution (if applicable), and setting forth the manner in
which such Deferred Compensation shall be invested in accordance with Section 5.
A Participant's initial Election must be filed at such time as designated by the
Committee,  but in no event later than the day immediately preceding the date on
which the Participant  becomes eligible to participate in the Plan. Such initial
Election  shall only be  effective  as to the Plan Year to which  such  Election
relates.  A Participant must submit a new Election for each subsequent Plan Year
in order to defer  Compensation.  Such subsequent Election must be filed at such
time  as  designated  by the  Committee,  but in no  event  later  than  the day
immediately  preceding  the first day of the Plan  Year to which  such  Election
relates.  An  effective  Election  may not be  revoked  or  modified  except  as
otherwise determined by the Committee or as stated in the Plan.

[FN]

(1)     Section 6.1 was amended on November 22, 1999.  Prior to its amendment,
Section 6.1 read as follows in its entirety:

     Any Employee selected by the Committee to participate in the Plan may elect
to do so by  delivering  to the  Committee or its designee an Election on a form
prescribed by the Committee,  designating the Compensation  Account to which the
Deferred  Compensation  is to be  credited,  electing  the  timing  and  form of
distribution  (if  applicable),  and  setting  forth the  manner  in which  such
Deferred  Compensation  shall  be  invested  in  accordance  with  Section  5. A
Participant's initial Election must be filed within thirty (30) days of the date
on which the  Participant  becomes  eligible to  participate  in the Plan.  Such
initial  Election  shall  only be  effective  as to the Plan Year to which  such
Election  relates.  A Participant must submit a new Election for each subsequent
Plan Year in order to defer Compensation. Such subsequent Election must be filed
at least  thirty (30) days prior to the first day of the Plan Year to which such
Election relates. An effective Election may not be revoked or modified except as
otherwise determined by the Committee or as stated in the Plan.
</FN>

         6.2 Investment Alternatives For Existing Balances.

                  A Participant may elect to change an existing  selection as to
the investment  alternatives in effect with respect to an existing  Compensation
Account (in  increments  prescribed by the  Committee)  as often,  and with such
restrictions, as determined by the Committee.

7.       COMPANY CREDITS

         In the sole  discretion  of the  Committee,  in a given Plan Year,  the
Company may credit a specified percentage of a Participant's Compensation to the
Participant's  Retirement Account as a Basic Company Credit.  The Committee,  in
its sole  discretion,  may cause the Company to credit such Basic Company Credit
for all or any  portion of the  participants  in the Plan in such Plan Year.  In
addition, the Committee may cause the Company to credit a Past Service Credit to
recognize  past  service  as  the  Committee,  in  its  sole  discretion,  deems
appropriate. Such Basic Company Credit and Past Service Credit, if any, shall be
credited  to a  Participant's  Retirement  Account  and shall be  subject to the
limitations  determined  appropriate by the Committee,  including the limitation
contained in Section 8.3 and the limitations described below in this Section 7.

         7.1  Vesting.

              A  Participant's  Deferred  Compensation  shall be immediately
one-hundred   percent  (100%)   nonforfeitable   upon  being  credited  to  such
Participant's Retirement or In-Service Account.

              A  Participant's  Basic  Company  Credit for a Plan Year shall
become  nonforfeitable  three (3) years  after the end of the Plan Year to which
such Basic Company Credit relates.

              A  Participant's  Past Service  Credit shall be  fifty-percent
(50%)  nonforfeitable upon being credited to his or her Retirement Account.  The
remaining  fifty-percent (50%) shall become  nonforfeitable as follows:  one (1)
year after the end of the Plan Year in which the Past Service Credit is credited
to the  Participant's  Retirement  Account,  the Participant  shall be one-third
(1/3) vested in the remaining  fifty percent (50%);  two (2) years after the end
of  the  Plan  Year  in  which  the  Past  Service  Credit  is  credited  to the
Participant's  Retirement  Account,  the Participant  shall be two-thirds  (2/3)
vested in the remaining  fifty percent (50%);  and three (3) years after the end
of  the  Plan  Year  in  which  the  Past  Service  Credit  is  credited  to the
Participant's  Retirement Account,  the Participant shall be one-hundred percent
(100%) vested in the remaining fifty percent (50%).

               Upon a Participant's  termination of employment for any reason
prior to attaining  age 57, he or she shall forfeit any  nonvested  benefits.  A
Participant  shall have a one-hundred  percent  (100%)  nonforfeitable  right to
Basic Company Credits and Past Service Credits upon attaining age 57.

         7.2    Forfeiture.

                Upon a  Participant's  Termination or Retirement,  the Company
reserves  the  right  to  withhold  payment  of a  portion  of  a  Participant's
Retirement Account attributable to Basic Company Credits or Past Service Credits
made  under  Section  7 (and  earnings  thereon)  in  the  event  the  Committee
determines   that  the   Participant   has  violated  the   Company's   standard
noncompetition  and  nondisclosure  agreement or any other employment  agreement
executed by the  Participant,  or otherwise  acts  against the  interests of the
Company, as determined by the Committee in its sole discretion.

8.       DISTRIBUTION

         8.1    Retirement Account.

                In the event of a Participant's Retirement,  the Participant's
Retirement Account shall be distributed at the time and in the manner elected by
the  Participant  in his or her  initial  Election.  If no Election is made by a
Participant  as to the timing of  distribution  or form of payment of his or her
Retirement Account, upon the Participant's Retirement such account shall be paid
in a single lump sum.

         8.2    In-Service Account.

                Deferred Compensation  credited to a Participant's  In-Service
Account  shall  be  distributed  at the time and in the  manner  elected  by the
Participant in his or her Election. A Participant may not change the Election as
to the  distribution of Deferred  Compensation in his or her In-Service  Account
except as otherwise permitted in Section 9.

         8.3    Termination.

                In the event of a Participant's Termination, the Participant's
Compensation  Accounts  shall  be  distributed  in a  single  lump  sum to  such
Participant  as  soon  as  administratively  practicable  following  his  or her
Termination.

         8.4    Death.

                In the  event  of the  Participant's  death  (a)  while in the
employment of the Company or (b) after the  Participant's  Termination but prior
to the payment of such Participant's  Compensation  Accounts pursuant to Section
8.3,  the  Company  shall  pay  the  following   amounts  to  the  Participant's
Beneficiary in a single lump sum:

               (1)  the remaining amounts, if any, in a Participant's In-Service
                    Account; and

               (2)  the amounts in the Participant's Retirement Account.

                  In the event of the Participant's death following  Retirement,
the Company shall pay the amount in the Participant's  Retirement Account to the
Participant's Beneficiary in the form and at the time elected by the Participant
pursuant to Section 6.1.

         8.5    Form of Distribution.

                  Distribution of a Participant's Compensation Accounts shall be
made in  cash;  provided  that,  any  amounts  in a  Participant's  Compensation
Accounts  invested  in  the  Common  Stock  Fund  shall  be  distributed  to the
Participant  in wholes  shares of Common  Stock with  fractional  shares paid in
cash.

9.       FINANCIAL HARDSHIP

         Upon the written  request of a  Participant  or a  Participant's  legal
representative  and  a  finding  that  continued  deferral  will  result  in  an
unforeseeable financial emergency to the Participant, the Committee (in its sole
discretion)  may authorize  (a) the payment of all or a part of a  Participant's
Compensation Accounts representing Deferred Compensation and earnings thereon in
a single  lump sum prior to his or her  ceasing  to be a  Participant,  or (b) a
Participant to cease  contributing  Deferred  Compensation  to the Plan during a
Plan Year. It is intended that the Committee's  determinations as to whether the
Participant has suffered an  "unforeseeable  financial  emergency" shall be made
consistent with the  requirements  under Section 457(d) of the Internal  Revenue
Code of 1986, as amended.

10.      BENEFICIARY DESIGNATION

         A Participant may designate one or more persons  (including a trust) to
whom  or to  which  payments  are to be  made  if the  Participant  dies  before
receiving  distribution of all amounts due under the Plan. A Participant may, at
any time,  elect to change the  designation of a  Beneficiary.  A designation of
Beneficiary  will be effective only after the signed  designation of Beneficiary
is filed with the Committee or its designee  while the  Participant is alive and
will cancel all  designations  of Beneficiary  signed and filed earlier.  If the
Participant  fails to designate a Beneficiary  as provided  above or if all of a
Participant's  Beneficiaries  predecease  him or her  and  he or  she  fails  to
designate a new  Beneficiary,  the remaining unpaid amounts shall be paid in one
lump  sum to the  estate  of  such  Participant.  If  all  Beneficiaries  of the
Participant die after the Participant but before complete payment of all amounts
due hereunder, the remaining unpaid amounts shall be paid in one lump sum to the
estate of the last to die of such Beneficiaries.

11.      UNSECURED GENERAL CREDITOR STATUS OF EMPLOYEE

         The payments to Participants and their Beneficiaries hereunder shall be
made from the general corporate assets of the Company.  No person shall have any
interest  in any such  assets by  virtue of the  provisions  of this  Plan.  The
Company's obligation hereunder shall be an unfunded and unsecured promise to pay
money in the future.  To the extent that any person  acquires a right to receive
payments from the Company under the  provisions  hereof,  such right shall be no
greater than the right of any unsecured general creditor of the Company; no such
person shall have nor acquire any legal or equitable right, interest or claim in
or to any property or assets of the Company.  Any accounts maintained under this
Plan shall be  hypothetical  in nature and shall be maintained  for  bookkeeping
purposes  only.  Neither the Plan nor any account shall hold any actual funds or
assets.

12.      SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION

         An  aggregate  of 50,000  shares of Common  Stock  have been  initially
allocated to the Plan and reserved for the distribution of Compensation Accounts
as described in Section 8.5,  subject to  adjustment  under this Section 12. The
Company may, in its discretion,  use shares held in the Treasury under this Plan
in lieu of authorized but unissued shares of Common Stock.

         In the  event of any  change  in the  outstanding  Common  Stock of the
Company by reason of any stock split, share dividend, recapitalization,  merger,
consolidation,  reorganization,  combination, or exchange or reclassification of
shares, split-up,  split-off,  spin-off,  liquidation or other similar change in
capitalization,  or any  distribution  to common  shareholders  other  than cash
dividends,  the  number or kind of shares or Stock  Units  that may be  credited
under  the  Plan  shall be  automatically  adjusted  so that  the  proportionate
interest of the  Participants  shall be maintained  as before the  occurrence of
such event.  Such adjustment shall be conclusive and binding for all purposes of
the Plan.

13.      INALIENABILITY OF BENEFITS

         The interests of the  Participants  and their  Beneficiaries  under the
Plan may not in any way be voluntarily or involuntarily  transferred,  alienated
or assigned,  nor subject to  attachment,  execution,  garnishment or other such
equitable  or legal  process.  A  Participant  or  Beneficiary  cannot waive the
provisions of this Section 13.

14.      GOVERNING LAW

         The  provisions  of this plan shall be  interpreted  and  construed  in
accordance  with  the  laws of the  State  of  Missouri,  except  to the  extent
preempted by Federal law.

15.      AMENDMENTS

         The  Committee  may  amend,  alter or  terminate  this Plan at any time
without the prior approval of the Board;  provided,  however, that the Committee
may not,  without  approval  by the  Board,  materially  increase  the  benefits
accruing to Participants under the Plan.

        IN WITNESS WHEREOF,  the Express Scripts,  Inc.  Executive  Deferred
Compensation Plan is effective as of January 1, 1999.

                           EXPRESS SCRIPTS, INC.

                           By: /s/ Barrett A. Toan

                           Title: President and Chief Executive Officer

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